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Supporting MDGs through
Growth-Driven Poverty
Reduction
Japan’s ODA and Asia
October 9, 2002
Izumi Ohno
National Graduate Institute for Policy Studies
Background
• Ongoing global poverty reduction
partnership
– World Bank’s CDF/PRSP(1998/99- )
– UN’s Millennium Development Goals
(2000/01-)
– Poverty-terrorism nexus (2001.9.11)
• EU and US pledge to increase ODA
• Japan’s policy silence (and ODA cut)
– But, new engagement is beginning
MDGs: Significance
• Reaffirming the shared goals among
development partners
– “Symbolic” significance
• Containing “aid fatigue”
• Unresolved tasks (on substance)
– How to operationalize MDGs/PRSP?
Japan and MDGs/PRSP
• Opportunity for reshaping Japan’s
ODA policy
• Opportunity for promoting Japan’s
engagement in global development
agenda
• Japan’s crucial role in Asia’s
development
– Leading donor, more than 60% of
bilateral ODA directed to Asia
– Various aid schemes (grants, loans, TA)
Donor Composition
Vietnam : Major Donors
1998-2000　Average
Others
17.2%
Denmark
2.8%
Germany
3.6%
France
4.6%
ADB
12.0%
Japan
46.3%
IDA
13.5%
Donor Composition
Uganda: Major Donors
1998-2000 Average
UK
20.3%
Others
38.0%
Tanzania: Major Donors
1998-2000　Average
UK
13.2%
Others
41.0%
Japan
12.4%
IDA
14.1%
Nether
land
5.0%
IDA
12.2%
USA
6.9%
EU
7.4%
Denmark
9.2%
Germany Denmark
7.0%
7.2%
Nether
land
8.0%
ODA Composition:
Grants vs. Loans
Vietnam
Bolivia
Grants
Loans
Uganda
Tanzania
0%
20%
40%
60%
80%
100%
MDGs/PRSP: Issues for Asia
• Coverage mismatch
– MDGs (global) > PRSP (limited to IDA
countries): China, India?
• Even for PRSP countries, slow start in
Asia (except for Vietnam)
– Importance to reflect the lessons from
early PRSP countries (e.g., Africa, LAC)
– Opportunity to improve the current
approach by incorporating Asia’s
development experiences
Regional Distribution: Population
in Extreme Poverty
ECA 1%
MENA 1%
Latin American and
Caribbean 7% (77)
East Asia
and Pacific
23% (260)
South Asia
42% (490)
Sub-Saharan
Africa 26%
(300)
Souce: World Bank
Total: 1,151millions
PRPS Countries by Progress (Aug. 2002)
No. of countries
Africa (35)
East Asia (6)
South Asia (4)
Europe &
Central Asia (10)
Middle East &
North Africa (2)
Latin America &
Caribbean (4)
11
1
3
1
3
1
17
7
2
7
2
Full-PRSP
1 1
Interim-PRSP
4
before Interim-PRSP
Asian Perspectives
• Differences from early PRSPs
– Linkage with HIPC debt relief
– Stages of development, relationship with
int’l financial community
– History of aid coordination (e.g., role of
new aid modality, existing development
plan)
PRSP Countries by HIPC Status (Aug.
2002)
No. of Countries
5
Africa (35)
East Asia (6)
1 1
South Asia (4)
17
7
2
4
4
HIPC Completion Points reached
4
HIPC Decision Points reached
Europe &
Central Asia (10)
Middle East &
North Africa (2)
Latin America &
Caribbean (4)
10
HIPC Decision Points not yet reached
HIPC Sustainable Cases
1 1
Non-HIPC
1
3
Asian Perspectives
• Growth-driven poverty reduction-particularly in East Asia:
– Halving income poverty in 90s
(--key target already achieved before MDGs launch)
– Development driven by trade & investment
– Participation in regional/global production
network through int’l division of labor
• Beyond MDGs/PRSP
– Narrow “poverty reduction” approach, not
enough
East Asia Reduced Poverty
Despite Currency Crisis
Population in Extreme Poverty (%)
(%)
60.0
50.0
44.0
40.0
30.0
47.7 46.7
36.9
1990
27.6
20.0
14.2
1999
16.8 15.1
10.0
0.0
East Asia and Latin American
and Caribbean
Pacific
Source: World Bank
South Asia
Sub-Saharan
Africa
Share in World Export
Per Capita GNP Growth
(%)
(%)
7
18
6
16
East Asia
14
5
East Asia
12
4
10
3
8
Sub Saharan Africa
2
6
Sub Saharan Africa
4
1
2
0
0
60s
70s
80s
90s
Source: Ministry of Economy, Trade and Industry, White Paper on International Trade 2001, p.78.
60s
70s
80s
90s
Vietnam’s Experience
• Asia’s first CDF/PRSP pilot country
– Full PRSP completed in May 2002
– Establishment of localized VDTs
• Recognized internationally as “good
practice”: strong country ownership
– Building on the existing development
vision (i.e., 10-Year Strategy, 5-Year Plan)
Vietnam’s Experience
• Growth orientation: PRSP renamed to
“Comprehensive Poverty Reduction &
Growth Strategy” (CPRGS)
– East Asia’s aspiration for catch-up
– National goal: “Modernization &
Industrialization” by 2020
– Growth and equity
– Sustainability of poverty-reduction efforts
New Trend? (Post-Monterrey)
• WSSD (Johannesburg Summit)
– Expressed interest by African leaders in
East Asian development experiences
(IDEA: Foreign Minister Kawaguchi)
– Prof. Jeffrey Sachs: importance of trade &
investment in African development
(METI seminar)
• IMF/World Bank Annual Meetings
– Trade as a vital engine for povertyreducing growth
New Trend? (Post-Monterrey)
• Relevance not just in Asia….
• Move for the next generation of PRSP
beginning in African countries
– From “PRSP” to “PRS”
– Adding growth agenda (“scaling up”)
• Forthcoming int’l conferences
– SPA, TICAD 3 etc.
Likely Future Developments
• Emerging consensus: growth-driven
poverty reduction
• Remaining unresolved issues:
– “Framework vs. ingredient” approach
(Prof. Yanagihara): Japan’s real-sector
concern, not just framework
– The role of government in industrial
support in the age of globalization
• Revival of policy debates in the early
90s? (e.g., East Asian Miracle 1993)
Implications for Japan’s ODA
• Excellent opportunity for active
engagement in improving the current
MDGs/PRSP approach
• To this end, however, Japan’s ODA
needs reform:
– Stronger country-focus
– Partnership approach, particularly in
deepening growth agenda in the
multilateral framework
Implications for Japan’s ODA
– Field delegation
– Reinforcing intellectual network
– Focusing on “core competence” and
positively participating in aid modality
discussions, etc.
• Importance to take advantage of the
ongoing ODA reform momentum
Recommendations
• Starting from Asia…
– Full-fledged PRSP implementation
expected in Asia (e.g., Indonesia,
Cambodia, Lao PDR, Bangladesh…)
– Country Assistance Program to be
revised/formulated (Vietnam, Sri Lanka)
• Building on the recently initiated
Japan’s efforts (particularly on external
initiatives)
– IDEA, TICAD3 (MOFA)
Recommendations
– Efforts to reinforce Japan’s relationship
with World Bank (MOF)
– Study on East Asia’s development &
cooperation, “Asian Dynamism” (METI)
… THE END
For our support to ODA reform, please see
website of GRIPS Development Forum:
http://www.grips.ac.jp/forum/ (Japanese)
http://www.grips.ac.jp/forum-e/(English)