Draft for Comments

Mission Report to Germany and the UK(summary version1)
Izumi Ohno (professor) and Sayoko Uesu (research associate)
GRIPS Development Forum (GDF), August 13, 2009
We visited Germany (Bonn, Eschborn, Frankfurt) and the UK (London) during July 28 toAugust 6, 2009 and had precious opportunities to meet policymakers, practitioners, andresearchers in the areas of development cooperation in the two countries. The purposes ofour mission were to: (i) update our knowledge of international development debates,
especially on growth strategies and donor support; (ii) gather information on the German
and British approaches to industrial development and public-private partnership (PPP); and(iii) introduce our policy research activities, including industrial support in East Asia
(especially, Vietnam) and Africa (especially, Ethiopia)2. In addition, in Germany, we met theofficials involved in bilateral cooperation to Ethiopia (largest bilateral cooperation inGermany) and presented the Japan-UK Report, featuring Diversity and Complementarity in
Development Aid: East Asian Lessons for African Growth (published by GRIPS
Development Forum, February 2008)3.
The mission had a series of meetings with the BMZ (Federal Ministry of Economic
Cooperation and Development), GTZ (German Agency for Technical Cooperation) and GTZ
IS (International Services), DED (German Development Service), CIM (Centre for Migration
and Development), InWent (Capacity Building International), SEQUA (Foundation for
Economic Development and Vocational Training), and GDI (German Development Institute)(in Germany), and the Department for International Development (DFID) and theInternational Growth Centre (IGC), located in the London School of Economics (LSE) (in theUK).
We had productive discussions and received inspirations from both German and British
partners. We would like to express our sincere appreciation to all of them who kindly
provided support to our mission. The visits to Germany and the UK provided valuable
opportunities for us to assess objectively the Japanese approach to industrial development
and PPP (which have been extensively implemented in Asia), from comparative
perspectives of those of Germany and the UK, and to gain insights of how Japan should
formulate and implement its enhanced growth support in Africa, where Japanese presence(both ODA and business activities) is yet limited. Furthermore, we were pleased to discuss1

The views expressed in this report purely belong to the mission members. They do not
represent the views of JICA or GRIPS. Although we had extensive discussions on German
development cooperation in Ethiopia, the summary primarily focuses on generic issues.
2 This mission is part of the larger study on “International Development Strategies and Japanese
Growth Support Approach,” financed by the JICA Research Institute.
3 GRIPS Development Forum, Diversity and Complementarity in Development Aid: East Asian
Lessons for African Growth, 2008. http://www.grips.ac.jp/forum-e/D&CinDA.htm

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and identify a set of issues where research and operational collaboration with German and
the British partners might be pursued, especially in the areas of industrial development andEast Asian development experiences.
The following summarize our reflections and findings of the mission.
1. Overall Issues
No single model for growth support: Germany and the UK have put sustainable growth
one of the highest priorities in their development cooperation to developing countries. In
doing so, both countries share the need to go beyond the “Washington Consensus.” At thesame time, the two countries take different approaches to growth support. On the one hand,
the UK takes the “market development approach” with attention to market functions and thebusiness environment. On the other hand, Germany takes “multi-level approach,” paying
attention not only to the investment and business climate (macro-level), but also to industrial
structure, skills and labor market, players of the market economy such as businessassociations and firms (meso- and micro-levels).
Approaches and instruments for growth support reflect the historical evolution of the society
and the economy of each donor country. The German approach has real-sector orientationand mobilizes pragmatic instruments, and we have found a lot of similarities to the Japaneseapproach (although their instruments and actors are not identical). In our views, uniquefeatures of German development cooperation in industry and private sector development
are: (i) close interaction with the private sector, in particular, the role played by the chambersof commerce and business associations, and (ii) the emphasis on employment creation,
supported by TVET and labor market linkages. Japan also has a variety of instruments to
support industrial development based on its own catch-up experiences in the past, such as
kaizen (Japanese management system, based on continuous improvement through the
involvement of the entire workforce), shindanshi (Japanese business management
consultant system), to name a few. On the other hand, being a global financial center, theUK has developed sophisticated financial instruments to mobilize private sector resources(both funding and knowledge, expertise) for development. Through financial innovation andengineering, the UK has been playing a prominent role in pushing the private sector toaccelerate the development/deepening of markets of relevance to the poor. We believe thatboth approaches are useful, and it is important to apply and combine these instruments
according to country-specific situations. They should be viewed as complementary, notexclusive.
Different implementation approaches to growth support and PPP: Although the morein-depth analysis is needed, we have found that Germany and the UK also differ in theirapproaches to implementing growth support. Once country assistance strategies and sector
strategies have been formulated, DFID is less directly involved in the implementation on the2Draft for Comments

ground, using country systems (typically budget support), Challenge Funds, multi-donor
facilities and international systems, etc. In doing so, DFID aims to making the country orinternational system work for effective aid delivery. In Germany, executing agencies (GTZ,
KfW, DED, CIM, SES, InWent, SEQUA etc.) are made responsible for delivering aid on the
ground, guided by the policy framework of the BMZ. Particularly in the case of technicalcooperation, each agency supports capacity development at the organizational andindividual levels, building on respective stakeholder relations (e.g., experts, chambers ofcommerce, TVET centers).
Since the late 1990s, Germany and the UK have been promoting PPP and accumulated
important experiences. Through PPP, both countries intend to share initial risks with theprivate sector and help kick-start sustainable pro-poor businesses (that might not happen
without ODA funds) in developing countries. Nevertheless, we have found some differencesin their PPP approaches. As noted in the above, DFID uses Challenge Funds, which offer
grants to businesses on a competitive basis, in order to help cover part of the cost (up to50%) of getting new commercial ventures going. DFID contracts out fund management to
the private sector, and an independent assessment panel is set up to make funding
decisions. Examples of Challenge Funds include: Financial Deepening Challenge Fund
(FDCF, 1999-2007), Business Linkages Challenge Fund (BLCF, 2000-08), African
Enterprise Challenge Fund (AECF, 2008- ), Food Retail Industry Challenge Fund (FRICH,
2007- ). DFID does not have preference to the nationality of companies.
Germany (BMZ) revised the initial PPP approach last year, and since January 2009, hasbeen implementing PPP under the new framework, called “DeveloPPP.de.” This revision
was built on the review of the past 10-year experiences of PPP. We were impressed by thedepth and extent of serious discussions that took place among various stakeholders toenhance German PPP approach. Highly debated issues include: selection procedures of
PPP projects (competitive bidding vs. case-by-case approach), subsidiarity and additionality(in contrast to subsidies) as criteria for using ODA fund to support core business activities, apossibility of alliance with lead firms, need for flexibility (e.g., quick decisions, potential
trade-off between the goals of supporting private sector-driven initiatives and the generaltendencies for raising aid effectiveness by concentrating on certain focal areas) 4.
New elements under “DeveloPPP.de” are the introduction of proposal competition andgreater clarity and transparency in the eligibility criteria and appraisal process (especially,4th

The 10 International Business Forum, organized in 2005 by InWent, World Bank Institute, UN
Global Compact, and Niethos Brazil, contributed to addressing some critical and sensitive issues
arising from PPP (multi-sector partnerships). The Report “Fighting Poverty: A Business
Opportunity” contains useful perspectives for Japan to design its own PPP approach and criteria.
We also understand that the GDI carried out an assessment of German PPP approach based oncomparative analysis of the UK and Danish approaches. The results of the GDI evaluation werediscussed with the ministry and agencies concerned (e.g., BMZ, GTZ) and incorporated into thecurrent “DeveloPPP.de” framework.

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ideas competitions). Under the previous framework, PPP proposals were examined byresponsible executing agencies (i.e., GTZ for technical cooperation, DEG for investment
finance, SEQUA for TVET) on a first come, first serve basis. German PPP approachcontinues to target German and European companies and their subsidiaries in developing
and transition countries and emerging economies (except for GTZ’s PPP Africa Facility,
which targets Africa-based companies). It also retains room for a case-by-case approachand joint project formulation by business and executing agencies (especially, for Strategic
PPP alliance, and the detailed project design stage in the case of idea competition andinnovation competition). GTZ, DEG, and SEQUA are responsible for project appraisal andjoint formulation of detailed project design (for those proposals that passed the initial
selection).
In growth support, Japanese development cooperation emphasizes industrial structure,skills and labor market, players of the market economy, as well as capacity development
and implementation on the ground. The GRIPS Development Forum, in our past publication,compared the Western and Japanese development approaches, by contrasting “framework
approach” (which focuses on the framework of an economic system and its management) vs.
“ingredient approach” (which focuses on an economy as the sum of its ingredients orcomponent parts)5. In this light, Germany appears to share more similarities with Japan(compared to the UK). Nevertheless, differences also exist. For example, German
development cooperation takes a systemic perspective and addresses different intervention
levels (“multi-level approach”), focusing on the inter-linkages between the regulatory
framework (at the macro level), the institutional environment (the meso level), and inter-firm
relationship (the micro level) as a basis of the competitiveness of an economy. Japan may
wish to make greater efforts to link its meso- and micro-level support to the macro-level.
Moreover, German ministry and agencies seems to be more exposed to international
competition and debates than Japanese counterparts. For example, in terms of technicalcooperation, German agencies (GTZ, DED, CIM, InWent, SEQUA, etc.) recruit experts andcompanies from EU member countries, as well (not limited to German nationality). GTZ IS(consulting service department of GTZ) provides services to world-wide partners. As amember of EU, there is keen awareness among BMZ and most of the executing agencies of
the nature of debates taking place at the OECD DAC, for example, on the aid effectivenessissues (Paris Declaration (2005), Accra Agenda for Action (2008)). We have observed suchawareness in the most of agencies concerned.
The table below provides a rough comparison of growth support and PPP approaches
among Germany, the UK, and Japan. In our view, Germany falls on the middle groundbetween the UK and Japan.
5 GRIPS Development Forum (2008). This terminology was originated from Toru Yanagihara,“Development and Dynamic Efficiency: “Framework Approach” versus “Ingredient Approach” in
Chapter 4, Japanese Views on Economic Development: Diverse Paths to the Market, edited by
Kenichi Ohno and Izumi Ohno, Routlege, 1998.

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Comparison of Growth Support and PPP Approaches
The UK
GrowthsupportapproachGermany・ “Framework approach”
or “market development
approach” (focusing onmarket functions and・ “Multi-level
which“framework”

Japanapproach”
combinesand“ingredient” approaches.

infrastructures,

・ Social and EcologicalMarket Economy, as basic

competitiveenvironment)

concept;

interestedinindustrial policy.
PPP
approach

・ Challenge
Funds(proposal competition,
fundmanagement

・ “DeveloPPP.de,” based on
the revision of the 1999
PPP・ “Ingredientapproach”(focusing on industrial
structure,skillsandapproach.

capacity

development of key actorsof the market economy).
・ Interested
policy.

inindustrial

Under consideration(In Asia, PPP has worked
spontaneously—tripartite

delegated to the private

Combination of proposal

partnershipsector); no target on thecompetition

trade and investment.)

nationality

case-by-case, joint projectofcompanies.

formulation

・ Emphasis on proceduraltransparency and lowtransaction

costs

for

DFID.
・ Established criteria for
using
ODA
for
supporting

and

among

ODA,

with

companies; targeted toGerman and European
companies.
・ Established criteria forusing ODA for supporting
business activities.

business

activities.
Implement
ation
approach・ Aid delivery, primarily
through country system

・ Aid delivery by various
executing agencies under

and international systemtheunder the DFID country

framework of BMZ.

assistance/sector
strategies.
・ Budget support aims atbuilding the entire
country system.

overallpolicy・ Aid delivery by executing
agencies under the overall
policy framework of thegovernment.

・ Technicalcooperation(esp. GTZ) aims at

・ Technicalcooperation
aims
atcapacity

capacity development at

development, primarily at

the

the

different

levels(macro-meso-micro),bydirectly mobilizing experts.

organizational

individual(meso-micro),contracting

andlevelsbyconsultantsand experts.
Based on such observation, we would like to note that: (i) there exists ample ground forcomplementary between British and Japanese development cooperation to growth support,
base on the principle of diversity and complementarity; and (ii) Japan and Germany could

5Draft for Comments

collaborate to synthesize and eventually disseminate their approaches to growth support in
the international development community. Regarding PPP, Japan has been for decades
practicing public-private partnerships in many East Asian countries. It is widely acceptedthat Japanese ODA in East Asia—mainly in the areas of infrastructure and industrial humanresource development (loans, grants and technical cooperation)—has played a catalytic rolein inducing trade and investment of Japanese private sector, and thus contributed to the“East Asian Miracle.” The Ministry of Economy, Trade and Industry (METI) views suchtripartite relationship among ODA, trade, and investment as the “Japan ODA Model.” But,
Japan faces challenges of extending such model outside Asia, where the presence ofJapanese ODA and business is less prominent. To this end, Japan needs to make more
conscious and systematic efforts to design PPP approach by examining risk sharing
arrangements between the public and private sectors. In this sense, Japan can and should
learn from the PPP experiences in Germany and the UK.
Strategic partnerships with emerging countries: We have observed that both German
and the UK are actively engaged in building new partnerships with emerging countries(BRICs), China in particular. For example, the GDI has started strategic network building
with anchor countries designated by BMZ. DFID retains its country office in Beijing, for the
purpose of continuous country engagement, even after China graduated from British
development cooperation. This might be partly driven by their concern that the era of G8 iscoming to an end, urging the advanced European countries to explore new global
governance arrangement under the G20 framework.
2. Germany“Social and Ecological Market Economy” as key concept of German development
cooperation:
In Germany, development cooperation draws upon a successful
development model of post-war “German Miracle”, as well as long-standing German andEuropean tradition of economic and social policy design. The BMZ’s recently announced
principles of “the Social and Ecological Market Economy”6 are firmly based on German andEuropean value and policy (“the Social Market Economy”), which seek to create a balancedsocial partnership among individuals, firms, business associations, trade unions, and civilsociety etc. German researchers have consistently argued for “systematic competitiveness”,
even at the time when the structural adjustment policy had dominated the development
agenda. They hold views that the structural adjustment policy neglected the role ofintermediary institutions and suggest that greater attention be paid to the different levels of
the economy (individual companies, specific institutions, and the regulatory framework). In
our meeting, the GDI researchers also stressed the role of industrial policies in low andlower-middle income countries, arguing that the World Bank’s the Doing Business approach
6“Social and Ecological Market Economy: Principles in German Development Cooperation
Policy,” BMZ Strategies 158, July 2007. See also, The Social and Ecological Market
Economy—A Model for Asian Development?, GTZ, May 2008.

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is not enough7.
Fragmentation or diversity?:
Like Japan, the German system for development
cooperation is complex at first sight, because a number of agencies are involved in aid
delivery. In this regard, many German professionals whom we met showed strong interests
in new JICA, which was established in October 2008 through the merger of previous JICA
and ODA loan operations of previous JBIC. Although it is often noted that a single agency
model (like DFID) might be more efficient in aid delivery and ensure policy consistency, we
believe the need for paying attention to the historical aspects and societal factors that form
development cooperation in each country. We think that bilateral development cooperation
is closely linked to respective country experiences and history. It is important to assess theirproper roles and expertise, rather than just looking at the formality of institutional set-up.
Having met various German actors involved in industry and private sector development, wefeel it is this diversity that brings development cooperation closer to domestic constituencies.
Such perspective should deserve receiving attention, particularly in the case of growth
support, where close interaction with the private sector is essential.
In Germany, many agencies participate in development cooperation under the overall policy
framework established by BMZ. BMZ decides partner countries and focal areas ofcooperation, country assistance strategies, sector policy and strategies (e.g., “social andecological market economy”, PPP approach and criteria); and various executing agencies(GTZ, KfW, DED, CIM, SES, InWent, SEQUA, etc.) are responsible for deliveringdevelopment cooperation on the ground, building on respective expertise and comparativeadvantages. We have found that BMZ policies and strategies are broadly understood among
the executing agencies.
We have also found that various agencies participate in development cooperation, building
on respective stakeholder relations. For example, DED mobilizes and dispatches technicalexperts (advisors) in TVET, small and medium enterprises (SMEs), and microfinance, basedon its long experiences. CIM is a joint operation of GTZ and the International Placement
Services of the Federal Employment Agency, and plays a role in linking the labor market(German and European labor markets and diaspora) by recruiting “Integrated Experts” and“Returning Experts” for the line position of local organizations. Having the private sector as ashareholder, SEQUA and InWent have strong networks with SMEs, business associations
and TVET centers. We believe that such institutional diversity provides room for making
development cooperation an integral part of the German society. Compared to Germany,
Japanese development cooperation tends to be isolated from domestic constituencies,
leading to a weak basis of public support. Therefore, it might be useful for Japan to analyze
more deeply the institutional arrangements and key actors of German development

7 UNIDO-GTZ-BMZ Creating an Enabling Environment for Private Sector Development in
Sub-Saharan Africa, 2008 (authored by Tilman Altenburg and Christian von Drachenfels).

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cooperation, especially in light of how they are linked to domestic constituencies (such as
businesses and civil society). As the figure below shows, it is our observation that theGerman ministry and agencies are jointly taking “multi-level approach.”
Joined-up and Multi-level Approach of German Development Cooperation
PublicMulti-level Approach

PrivateBusi. associations,

WG

Chambers of

BMZ

Policy (macro)
Implementation(macro～GDI
GTZ,
GTZ/IS

KfW

DEG

meso）
Implementation(micro)commerce

InWent
SEQUA
CIM

SES

DED

Note: The organizations marked bold are those visited by the GDF mission.
BMZ-Federal Ministry for Economic Cooperation; KfW - KfW Development Bank; DEG-German Investment andDevelopment Cooperation; GTZ-German Agency for Technical Cooperation; DED-German Development Service;
GDI-German Development Institute; InWent-Capacity Building International; CIM-Centre for Migration and Development;
SEQUA- Foundation for Economic Development and Vocational Training; SES-Senior Expert Service

It appears that the aid effectiveness debates and the nature of discussions at the OECD
DAC have been broadly share among BMZ and executing agencies. The majority of theprofessionals we met made reference to the Paris Declaration and the Accra Agenda for
Action, and explained how these debates might affect their aid delivery. In Germany, theextent of awareness seems to be much broader and deeper than that in Japan.
In this regard, we were pleased to know that our Japan-UK Report Complementarity andDiversity in Development Aid—East Asian Lessons for African Growth had attracted interest
among German professionals in development cooperation (especially, GTZ). We havereceived inspirations from meetings at GTZ, DED and GDI, which discussed: (i) the
importance of providing opportunities to developing countries to make “informed choice”
based on policy multiplicity; (ii) the importance of “Think Together” approach and patience injoint policy formulation (with reference to Japan’s experience in the ”Ishikawa Project” inVietnam and the “Vietnam-Japan Joint Initiatives to Improve Business Environment with aView to Strengthen Vietnam’s Competitiveness”); (iii) the need to re-balance policy content
against excessive procedural (managerial) harmonization; and (iv) the issues associatedwith the rigidity and inflexibility on the ground when extreme “division of labour (DoL)” hasbeen pushed for. We think that these issues should be analyzed and disseminated, ideally,

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jointly by Germany and Japan, which are the donors with extensive field-based experiencesin growth support and private sector development.
The role of GDI in bridging policy and research: GDI has been engaged in a broad
range of research and training activities—academic research, policy proposals,commissioned studies (not only from BMZ and German agencies, but also from other donor
agencies), training of young and mid-career professionals for German development
cooperation, and strategic network building with emerging countries. It appears that GDI,
through these academic and practical activities, serves as an important intellectual hub
linking research, policies, and practices in German development cooperation. For example,
the evaluation of the previous PPP framework was conducted by GDI, which has led BMZ toestablish new DeveloPPP.de. It also seems that the concept of “social and ecological market
economy” and German approach to sustainable economic development have been
intensively discussed among BMZ, GDI, GTZ and other agencies concerned. The role andfunctions of GDI should provide important insights for how Japan should organize its policy
think tanks, especially, in the area of development cooperation.
3. The UK
Strong political and public support to international development: We were impressedby strong political commitment to international development in the UK. Despite the very
difficult fiscal situations under global financial crises, there exists firm national consensus on
and public support to increasing the ODA budget to 0.7% of GNI by 2013. The latest DFIDWhite Paper, Eliminating World Poverty: Building our Common Future (published in July2009) begins with Prime Minister Gordon Brown’s message, reiterating the government’s
commitment to keeping promises even in a downturn, i.e., increasing the ODA budget tocontribute to the achievements of the MDGs. To this end, the 2009 White Paper emphasizes
interdependence between developing countries and the British public and argues thatdevelopment cooperation is not only the moral imperative of poverty reduction, but also apartnership to pursue a common interest. The key themes of the 2009 White Paper are: (i)growth (especially, resilient and inclusive growth, and greener growth); (ii) climate changes;(iii) and peace building; and (iv) active engagement in the international system. While these
themes are not new for DFID, the White Paper stresses that the recent changes in the
global economic and social environment require stepped-up efforts for international
development.
The role of the newly created IGC in growth research: Based on our meetings withDFID and the IGC management team and researchers (located at the LSE hub), we havelearned that the IGC research activities are organized into three components: (i)country-driven research and policy engagement; (ii) basic research (cross-cutting issues;
not country-specific); and (iii) global networking on growth. The three are interconnected,
and they aim at providing developing countries demand-led policy advice based on frontier

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research. Regarding (i), both DFID and IGC researchers stated that their methodology will
not be limited to the “growth diagnostics” approach (HRV model) and that they intend toseek world-best knowledge. In Africa, the IGC is preparing their research activities in
Tanzania, Ethiopia, and Ghana and will start working in 9 countries by April 2010 (andeventually 15 countries, primarily in Sub-Saharan Africa and South Asia).
East Asian perspective as a key element of Japan-UK partnership: In the future, DFID
plans to focus its bilateral cooperation on Sub-Saharan Africa and South Asia. Therefore, it
is quite likely that DFID’s overall research (conducted by the newly created Research &Evidence Division, under the Policy & Research Directorate) and the IGC research activities
will be guided by this general direction. At the same time, many African countries haveshown strong interest in the East Asian development experiences, which attained sharedand sustainable growth. Given potentially high demand for the East Asian experience andJapan’s deep involvement in this region, Japan should be actively involved in making
intellectual contribution to African growth support, incorporating the East Asian perspectives.
Such intellectual support will be complementary to the UK’s ongoing efforts.
4.

Way Forward—Implications for Japan’s Development Cooperation and GDF’s

Research Activities
We were very much encouraged by great interest expressed by both German and British
researchers, policymakers and practitioners in the JICA-GRIPS project on industrial policy
support in Ethiopia, as well as the concept of our report on Diversity and Complementarity in
Development Aid. Certainly, it is not possible for us to follow up all the activities byourselves; but we would like to explore a possibility of continued collaboration with German
and UK partners in (some of) the following areas, in consultation with interested parties inJapan.
Industrial development strategy and private sector development in Ethiopia(collaboration with Germany agencies and the IGC): Under the ongoing JICA/GRIPS
project on industrial policy support in Ethiopia, we would like to pursue possible
collaboration with Germany—especially with GTZ which coordinates 9 German agencies asa focal agency for the Engineering Capacity Building Program (ECBP)—e.g., byincorporating the German perspectives of the current industrial development strategy, basedon their ECBP work, promoting mutual learning of respective instruments of industrial
support (e.g., comparing benchmarking or business re-engineering with Japanesemanagement tools such as kaizen).
We would also like to examine a possibility of collaborating with the IGC in the area ofindustrial development. The forthcoming Africa Growth conference (to be co-hosted by the
IGC, AfDB and AERC) in Addis Ababa on November 10-11, 2009, may serve as an useful
opportunity for JICA/GRIPS team to interact with the IGC’s Ethiopia country team and10

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researchers interested in African growths. We will consult with JICA and IGC a possibility ofour participation in this conference.
Mutual learning from respective research activities (collaboration with the GDI, theIGC, and DFID’s research team): It appears that there exists ample ground for mutual
learning among German, British, and Japanese researchers. The three countries haverespective views on how the market economy works and how the government and external
partners could support industrial development in less developed countries. GDI researchers
are actively engaged in research and advice on industrial policy, and also interested in the
topic of developmental states. Given some commonalities observed in the development
cooperation by Germany and Japan, we consider it meaningful to further promote mutual
understanding of respective development thinking and approaches to industrial
development, and (if appropriate) jointly disseminate their thinking and approaches to theinternational aid community.
Since the UK will decrease its direct engagement in East Asia over the coming years, wewould like to complement this move in order to respond to demands of many developing
countries (including Sub-Saharan Africa) which are interested in East Asian development
experiences. Through our work in Vietnam and Ethiopia, our team is building a knowledge
base of East Asian experiences in industrial development. We are happy to make theinformation and literature on East Asian industrial development experiences available to theinterested parties, such as developing countries, as well as the IGC and the DFID’s researchteam.
Contributions to sharpening of Japan’s PPP approach and criteria: Since the late
1990s, both Germany and the UK have accumulated their experiences in working withprivate sector to enhance development impacts of core business activities in developing
countries. As mentioned in the section 1, Germany and the UK have different approaches
and criteria in formulating and implementing PPP projects. Japan (including both thegovernment and the new JICA) is currently examining a possibility of introducing PPP
arrangements with ODA funding. We consider that the deeper analysis of their experiences
and approaches will be very useful for Japan to establish its own policy and criteria for PPP.
Especially, we believe that the German experiences can be highly relevant to the Japanesecontext, in such aspects as mechanisms for involving various agencies, debates on target
companies, how to strike balance among hands-on approach (e.g., joint project formulation
with interested companies, working with lead companies), transaction costs, and processtransparency, etc.
Revisiting aid effectiveness debates, by incorporating perspectives of industrial
development and private sector development (possibly with German partners):
Subject to JICA’s interest, we would like to explore possible partnership with German
policymakers and practitioners, and researchers in highlighting issues that are insufficiently

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captured in the Paris Declaration and the Accra Agenda for Action (such as ownershipbased on policy multiplicity, the need for capacity development to enable partner countries
to make “informed choice”, re-balancing between the policy content and procedural
harmonization, complementarity between budget support and project-based, hands-on
approach to aid delivery). These issues are particularly relevant for industrial development
and private sector development, where budget support may not be a main instrument(different from the social sectors where budget accounts for large share) and closeinteraction with the private sector in various sectors and levels is necessary. We believe thatthe current aid effectiveness debates are too narrow and should be made more flexible inorder to enhance development impacts as a whole. One possibility might be to compile ajoint Japan-Germany report (as a follow up of the Japan-UK Report), which synthesizes theGerman and Japanese approaches to industrial development and discusses how these
could complement the current framework and procedural-heavy discussions on aid
effectiveness debates.
[END]

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