Japan’s Industrial Policy Dialogue with Ethiopian
Prime Ministers and Industrial Officials:
Impacts and Limits

Kenichi Ohno & Izumi Ohno
GRIPS Development Forum
March 2023

Japan’s Policy Dialogue: Overview

Japan’s Policy
Dialogue:
A Selected List

Country

PhasesKey members from Japan

RemarkArgentina

1985-1987
1994-1996(folllw up)

Saburo Okita (former foreign minister, IDCJ);
Hirohisa Kohama (IDCJ), Akio Hosono, Kotaro
Horisaka (professors); JICA

Agriculture & livestock farming, industry, transport, export promotion(Okita Report). Follow-up phase studied measures to strengthen
economic ties with Japan/East Asia.

Vietnam

1995-1996
1996-1998
1998-1999
1999-2001

Shigeru Ishikawa, Yonosuke Hara (professors);
JICA

Large-scale joint study on macroeconomy, industry (with in-depth
studies of selected sectors), agriculture, enterprise reform, andfinancial crisis management (Ishikawa Project).

Paraguay

1998-2000

Kagehide Kaku (DIR), Hidesuke Kotajima (DIR);
Akio Hosono (professor); JICA

Economic develoment, competitiveness, and export promotion(including clusters and agro-industry chain).

Thailand1999

Shiro Mizutani (former MITI official); JICA

Study on SME promotion policy (Mizutani Plan)

Indonesia

2000

Shujiro Urata (professor); JICA

Policy recommendations for SME promotion

Myanmar1999-2002

Konosuke Odaka (professor); JICA

Agriculture, rural development, industry, trade, finacne, ICT, etc.

Mongolia

1998-2001

Hiroshi Ueno and Hideo Hashimoto (ex-WorldBank economists and professors)

Study on economic transition and development

Indonesia

2002-2004

Takashi Shiraishi, Shinji Asanuma, Shujiro Urata Macroeconomic management, financial sector reform, SME promotion,(professors); JICA
private investment promoton, democratization, decentralization,
human resource development

Laos2000-2005

Yonosuke Hara (professor); JICA

Vietnam

2003-present Keidanren, Japanese embassy, JICA, JETRO, JBIC Bilateral joint initiative to improve business environment with actionplans and 2-year monitoring cycles

Ethiopia

2009-2011 Kenichi Ohno, Izumi Ohno (GRIPS professors);
2012-2016 Japanese embassy, JICA
2017-present

Policy methods and organizations, kaizen, export promotion, champion
products, FDI policy and support, SME support, productivity,
automotive assembly, inviting Japanese FDI, etc.

Myanmar2012-2015

Konosuke Odaka, Shigeru Matsushima,
Toshihiro Kudo (professors); METI, JICA

Supporting economic reform program covering finance, trade,investment, SMEs, agriculture, rural development.

Laos2019-2020

Toshiro Nishizawa, Terukazu Suruga, Takuji
Kinkyo, Kazue Demachi, Fumiharu Mieno(professors), MOF, JICA

Joint policy research and dialogue for fiscal stabilization, fiscal & debt
management, resource export, balance of payments, financial systemdevelopment.

Macroeconomy, finance, state enterprises, FDI, poverty reduction.

References
For comparative analysis of Japan’s policy dialogue with Argentina, Vietnam, Thailand &Ethiopia, see(1) I. Ohno, K. Amatsu & A. Hosono, eds. (2022), Policy Learning for Industrial
Development and the Role of Development Cooperation, Volume 1, JICA Ogata
Sadako Research Institute for Peace and Development.
(2) K. Ohno, A. Hosono, K. Amatsu & M. Yamada (2023), “Bilateral Policy Dialogue:
Japanese Cooperation for Enhancing Industrial Policy Capacity,” Ch.5 in I. Ohno, K. Jin,
K. Amatsu & J. Mori, eds. Introducing Foreign Models for Development: JapaneseExperience and Cooperation in the Age of New Technology, Springer (forthcoming).
Japan-Ethiopia Industrial Policy Dialogue is explained in(3) Kenichi Ohno and Izumi Ohno (2019), “A Japanese Perspective on Ethiopia’s
Transformation,” chapter 47, F. Cheru, C. Cramer and A. Oqubay (eds.) The Oxford
Handbook of the Ethiopian Economy, Oxford University Press.
(4) Kenichi Ohno and Izumi Ohno (2022), “Ethiopia-Japan Industrial Policy Dialogue:
Learning Eastern Methods through Intensive Discussions and Concrete Cooperation,”chapter 8 of (1) above.

Features of Japan’s Industrial Cooperation
Incl. Industrial Policy Dialogue
1. National customization
Policy must fit the reality of each nation. Because each nation is different, locallysuited policy must be created after studying foreign benchmark practices.

2. Pragmatic real-sector approachLong-term vision and sector-by-sector support are critical. We care about productdesign, quality, logistics, marketing, and other practical issues. Rapid liberalizationand integration without fostering competitiveness is unwise.

3. Gemba orientation
Japanese officials and experts prefer hands-on support at gemba (factories, farms,etc.) instead of producing theories, frameworks or English reports.

4. Creation of wise government
Policy quality is not given but can be learned and improved. Japan wants to help
create a wise government, not a small and detached one.

Policy Dialogue Modality
Japan conducts policy dialogue with developing countries only if a top national
leader requests it. We do not promote it worldwide.
• To be useful, our dialogue is continuous, interactive and flexible regarding topics,
members, duration, frequency, etc.
• We talk to as many stakeholders as possible from national leaders to ministers, key
officials, technical experts, firms, business associations, universities, researchers,
development partners, etc.
• Ground data (firm- and sector- level) must be collected before designing a policy
because each country is different.
• Benchmark countries must be selected carefully (not just Japan but othercountries). Study tours to third countries are organized for this purpose.
• We follow up the dialogue with JICA’s concrete cooperation projects and (ifpossible) Japanese business actions (trade and investment).
•

Ethiopia-Japan Industrial Policy Dialogue
Three Phases, 2008-2023

Ethiopia-Japan Industrial Policy Dialogue(Three Phases, 2008-2023)
 In July 2008, PM Meles requested Japanese cooperation in kaizen and policy

dialogue. Both projects began officially in 2009.
 We had 8 dialogue sessions with PM Meles and 12 sessions with PM Hailemariam,each lasting 1.5 to 2 hours. But we had no direct contact with PM Abiy.
 We were asked to be frank and honest. The two PMs were also direct and raised
many questions and requests.
 Minister-level discussions (High Level Forums) were held regularly. Additional
workshops and meetings were arranged with ministries, high officials, institutes,
firms, universities, development partners, local authorities, etc.
 Discussions were often followed up by new policies and cooperation by both sides.
Talk did not just remain talk but led to concrete actions.

With PM Meles

With PM
Hailemariam

High Level Forums(ministerial level)

Phases1&2

Lecture at
Civil Service
University

At MOFED(now MOF)

Automotive
Seminar at MOI

Mr. Asnake, directorof Kaizen ExcellenceCenterPhase 3
MOF State
Minister Eyob

MOI Minister Melaku

With Former
President Mulatu

Planning andDevelopment
Minister FitsumTimeline: Policy Dialogue and JICA Projects
Preparatory
phase
2008

Phase 120092010

Phase 2
2011

2012

2013

2014

PM MelesIndustrial
policydialogue■■■ ■ ■ ■

■  ■

■ ■

Kaizen Phase 1(30 pilot companies)

Metal survey

2015

2016

2017

2018

2019

PM Hailemariam

African Task
Forcemeeting Jul.
Events2008
Official
TICAD IV
launchJun. 2009

JICA’sindustrial
cooperation

Phase 3

■



■

■

■ ■

TICAD V

■

 

2021

2022

2023

PM Abiy

■ 

■







COVID

TICAD 7

TICAD VI

PM AbevisitsEthiopia

TICAD 8

Note: black boxes are policy sessions with prime
minister and blank boxes are other policy sessions.

Kaizen Phase 2（Institution & human resource)Champion products

2020

Branding &promotion

Kaizen Phase 3

Kaizen Phase 4(Advanced level)(Management added)

Champion product creation (Highland Leather)

FDI attraction & industrial park management

Business Development Services (BDS)Dialogue Methodology: Assisting “Translative Adaptation”
Careful collection of foreign models Assist construction of Ethiopia’s own model
1. Discover and agree on a critical policy issue for Ethiopia.
2. In view of Ethiopia’s reality and our knowledge of developing countries, selecta few appropriate benchmark countries (especially from Asia and Africa).
3. Based on our knowledge or a new third-country study, offer relevant policy
information of benchmark countries to Ethiopia.
4. Discussion—what Ethiopia should learn from foreign models, and how to
combine and modify them to create a model suitable for Ethiopia.
5. Make a policy action to realize the model (with Japanese support if necessary).
This is an ideal sequence but reality may proceed otherwise. Japan should be aguide and supporter from the sideline.

Some Highlights
Phase 1 (2008-2011)—Mutual learning about East Asian policy methods andEthiopia’s policy orientation; kaizen cooperation started; metal industry survey;
advice on next five-year plan (GTP I).

Phase 2 (2012-2016)—Introduction and deliberation of concrete projects:
champion export product (Highland Leather), one-stop investor service, SME
handholding support, industrial park management, FDI attraction, automotive
assembly; advice on GTP II.

Phase 3 (2017-2023)—PSI-GRIPS Joint research on productivity and FDI policy;
commenting on Homegrown ERA & 10-year plan, supporting interested Japanesefirms and FDI; policy study on automotive assembly, apparel, etc.
On average, four missions were dispatched annually to Ethiopia (substituted by online
works during COVID time). Besides these, 16 third-country missions were organized to
Asia and Africa on various policy issues. A study visit to Japan for MIDI officials was also
arranged to learn Japanese SME support, metal, machinery & automotive sectors.

Statements of Prime Ministers in the Dialogue
PM Meles (in power 1991-2012)• Ethiopia aims at (i) promotion of value creators and elimination of rent

seekers; (ii) political support from small farmers; and (iii) Agricultural
Development Led Industrialization (industrialization based on strong
agriculture-industry linkage).
• Firms should be given both carrots and sticks. To promote leather export, I
introduced rules and restrictions for domestic processing, but also assist
producers with technical, training, matching, institutional and ODA support.

PM Hailemariam (in power 2012-2018)• Just learning 5S for cost reduction is not enough. Kaizen is not a convenient

tool but a philosophy. Our support institutions must understand this. I
always talk about it in media. Kaizen is an important national agenda andwe can overcome difficulties.

PM Hailemariam (cont.)• I am requesting JETRO Office to be established in Ethiopia. I believe JETRO will

persuade Japanese firms to come to Ethiopia. When they come, they will be rolemodels for our companies [In response, JETRO Addis Ababa was established inJuly 2016].

PM Abiy (in power 2018- )• We did not meet PM Abiy. His interests and governing style are different from the previous

two PMs.
• We discussed policies with his Macroeconomic Team (Amb. Girma, Dr. Mamo, Dr. Eyob, Dr.
Fitsum…) and key officials of MOI and other ministries and commissions.
• COVID and Northern Conflict prevented travel and direct contact for two years (early 2020early 2022). Work continued online.
• Frequent government restructuring with accelerating speed made it difficult to perform
policy dialogue effectively.

Highlights of Phase 3

Three-part Structure of Phase 3
Policy Dialogue Became One Component of JICA’s Industrial Promotion Project (since 2017)
1: Industrial Policy Dialogue (C/P: PM Office + EDRI, MOI) Policy Dialogue for promoting implementation and monitoring of GTP II and Ten Year Plan Research and surveys for industrial policy design (e.g. study on productivity, FDI policy)
 Study and trial support of Champion Companies
 Linkage with other component of the program Inputs on automotive policy, garment industry promotion, etc.

2: Investment Promotion andIndustrial Park Development

3: Export Promotion throughChampion Product Approach Improvement of investment promotion
 Improvement of OSS for investors
 Regulation and supervision of IPs
 Improvement of business climate
 Improvement of planning, development,
promotion, operation, maintenance of IPs.
 Improvement of facilitation and aftercare
service (incl. linkage) to investors at IPs

 Promotion of export of Champion Product Study and analysis of competitiveness ofpotential champion products
 Improvement of brand management ofEthiopian Highland Leather
 Analysis and tackling of bottlenecks for tradepromotion(C/P: EIC + IPDC)(C/P: MOT, LIDI and ELIA)

Note: The names of C/P institutions are those at the time of R/D signing between FDRE & JICA on July 5, 2016.

1. Policy Discussion
 Direct dialogue with PM Hailemariam at PMO (until Nov. 2017) and letter

exchange (March & Aug. 2017)
 Since 2018, discussion with the Macroeconomic Team (Amb. Girma, Dr. Mamo, Dr.
Eyob, Dr. Fitsum, EIC Commissioner Abebe & Lelise, and others).
 Policy forums to discuss priority policy agenda with the participation of Ministers
and State Ministers (instead of previous HLFs):• High Level Forum (HLF): 2 sessions (Feb. & Nov. 2017) co-hosted by EDRI & JICA
with the participation of MOI Minister, State Ministers, and others• Development Policy Forum (DPF): 4 sessions (Feb. & Aug. 2019, Feb. 2020, Jan.
2022 (online)) co-hosted by PSI & GRIPS with the participation of PDC
Commissioner Fitsum, and others.
• Industry-specific seminars at MOI/MOTI (1 textile & garment, 3 automotive)• Discussions with industry-related institutes (EKI, MIDI, ETIDI, etc.)• Open Workshop on Policy Inconsistencies at the request of MOI Minister

High Level Forum (co-hosted by EDRI & JICA)
Topics presented by the Japanese side

Topics presented by the Ethiopian side

HLF #1Feb. 2017(1)Japan’s industrial cooperation for GDP II(2)Asian experience of high growth & income
polarization /equalization(1)Anti-export bias & effects of export incentives(2)Youth Revolving Fund
(3)Impact of urban job application assistance

HLF#2
Nov. 2017(1)Productivity in Ethiopia & Sri Lanka(2)Productivity issues in Vietnam (by VN expert)(1)Productivity of garment & metal sectors(2)Mini review of productivity studies & data

Development Policy Forum(co-hosted by PSI & GRIPS, supported by JICA)
Objective

Topics presented by the Japanese & Ethiopian sides

DPF #1Feb. 2019

Ethiopia Productivity Interim Report(1)Introduction, Concepts and Importance of Productivity,
Ethiopia's Productivity in International Comparison (PSI)(2)Preliminary Analysis of Firm and Worker Survey (PSI)

DPF#2
Aug. 2019

Ethiopia Productivity Report(final validation with stakeholders)(1)Policy Measures to Enhance Productivity (GRIPS)(2)Labor productivity: data analysis (PSI)(3)Summary of field survey on apparel industry (PSI)

DPF (cont.)
Objective

Topics presented by the Japanese & Ethiopian sides

DPF#3
Launch of the Ethiopia
Feb. 2020 Productivity Report(1)Ethiopia Productivity Report (GRIPS)(2)Ethiopia Productivity Report: Ten uncovered facts (PSI & GRIPS)

DPF#4
Launch of the Ethiopia FDI
Jan. 2022 Policy Report (online
webinar)(1)Ethiopia FDI Policy Report 2022: Main Findings andRecommendations (GRIPS)(2)Dynamics of FDI in Ethiopia: Bridging the Balance of Payments Gap
and Enhancing the Role of FDI in Technology and Knowledge Transfer(PSI)(3)Pursuit of Product Quality and Ethical Correctness in Developing theGarment Industry (GRIPS)(4)Ethiopia in the Industry 4.0 and Post-Pandemic Age (JICA)

DPF#5
Dec.
2022

(1)Policy Inconsistences in Ethiopian Manufacturing Industry Growth(PSI)(2)Resolving Policy Trade-offs and Inconsistences: Ethiopia’s
Mechanisms and Asian Experiences (GRIPS)

Policy Trade-off andInconsistences (open policy
workshop hosted by MOI)

2. Advice on Industrial Plans and Strategies
The dialogue team offered advice and comments on various policy documents:• Hawassa Industrial Park: Impression from a Japanese perspective, submitted
to Minister Arkebe & EIC (Feb. 2017).
• Ideas for Stimulating the Ethiopian Economy, submitted to PSRC Director
Ahmed (Sept. 2018).
• Preliminary assessments on Homegrown Economic Reform Agenda, submitted
and discussed jointly with PMO, MOF, EIC, and separately with PDC (Oct. 2019).
• Comments on 10-year Perspective Development Plan 2021-2030, submitted to
PDC, PMO, EIC (June 2020).
• Comments on MOTI’s 10-year Perspective Development Plan 2021-2030,
submitted to MOTI (Aug. 2021) .
• A series of automotive industry promotion analyses and proposals, submitted
to MOTI/ MOI, EIC & PMO (Feb. 2018, Mar., Nov. & Dec. 2020, Sep. 2022).
• Policy Trade-off and Inconsistency Workshop in support of Ethiopia Tamirt
Movement at the request of MOI Minister Melaku (Dec. 2022).

Assessments on Homegrown Economic Reform Agenda
The policy matrix presented at a
joint meeting with Dr. Mamo
(PMO), Dr. Eyob (MOF) and Mr.
Abebe (EIC) as well as at a
separate meeting with Dr.
Fitsum (PDC) in October 2019

Automotive Policy Discussions
 Since 2018, the policy dialogue team has conducted automotive discussions with

MOTI/MOI & EIC. Japanese automakers were interviewed, MIDI officials wereinvited to Japan, four seminars were held at MOTI/MOI, Kenya and Myanmar werevisited, and a series of policy proposals were submitted.
 Four impediments to Japanese SKD were identified: (i) F/C shortage, (ii) used cars[already solved], (iii) lack of incentive for domestic assembly, and (iv) small demand.
 Isuzu already assembles trucks in collaboration with Kaki (local firm) but volume
remains tiny due to the lack of foreign currency, proper incentive, etc.
 We also discussed regularly with Germans which showed interest in Ethiopia, but
their automotive interest evaporated by 2022.
At Moenco

At EICWorkshop on Policy Inconsistencies(Organized by MOI in cooperation with PSI, JICA & GRIPS) MOI has drafted new Manufacturing Industry Policy replacing the old strategy of2002 (final draft presented to Cabinet in Dec. 2022).
 To effectively implement the new Industrial Policy and the Ten-year Plan, National
Manufacturing Industry Movement (Ethiopia Tamirt) was launched by PM Abiy in
May 2022. MOI Minister Melaku oversees implementation.
 Minister Melaku considers inter-ministerial
Ethiopia Tamirt Movement Structure
policy inconsistencies as one of the causes ofstagnant manufacturing.
 At his request, we and MOI organized an open
workshop and shared Asian experiences incoping with policy inconsistencies (Dec. 2022).
Representatives of ministries, private sector &development partners attended.
Source: MOI, “Manufacturing Industry Movement Plan: Concept Note,” April 2022.

3. Joint Policy Research with PSI
Ethiopia Productivity Report (Jan. 2020)- First comprehensive productivity analysis of Ethiopia using standard
statistical methods, international comparison and firm surveys- Labor issues and sources of weaknesses are explored- Received wide media coverage; World Bank and MCC invited leadauthor to Washington DC to present the report (Feb. 2020)

Ethiopia FDI Policy Report (Jan. 2022)- Ethiopia’s FDI policy and performance are reviewed- FDI’s impacts on balance-of-payments and technology transfer are
studied with international experiences- Garment performance is compared among Ethiopia, Vietnam and
Bangladesh- A companion FDI policy paper was also released (GDF, Oct. 2021)

Finding: Heavy Investment as a Driver of Labor Productivity
Contribution shares of capital intensity and TFP to Ethiopia’s labor productivity, 2000-2014 (%)
Note: Labor productivity = capital intensity + TFP
100%
80%
60%
40%
20%
0%

Capital intensity

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

-20%

TFP

Source: Authors’ calculation based on PDC data, World Bank’s WDI and the Penn Tables.

Recently, the driver of labor productivity has shifted from TFP growth to capital deepening. That is, true efficiency
improvement slowed while heavy investment in infrastructure and other physical assets raises labor productivity(more machines and buildings per worker). This is alarming for Ethiopia. Part of the inefficiency maybe explained bygovernment inefficiency. As Ethiopia is still at its early stage of development, capital investment may still continue.

Finding: Risk of Premature De-industrialization as Rural
Labor Migrates to Services
Decomposition of labor productivity growth by shift-share method (2004-2016)
Sources of labor productivity growth (%) Contribution share to labor productivity (%)
Agriculture

Industry

Service

Agriculture

Industry

Service

Within effect

46.31

12.14

21.05

58.25

15.28

26.48

Shift Effect

-8.03

5.89

28.82

-30.0822.08

108.00Interaction Effect

-7.21

6.56

16.16

-46.4742.28

104.18Source: Authors’ computation from PDC data and World Bank’s WDI.

•••

Structural transformation is not visible (unlike East Asia) despite continued high growth and government’s longsupport for manufacturing.
Agricultural labor moves mostly to services, and only modestly to industry. Within industry, labor is largely
moving to construction rather than manufacturing.
Ethiopia’s internal labor migration not only is small, but does not follow the standard pattern of agriculture to
manufacturing (and only later to services). This is a sign of “premature de-industrialization” which many middle
income economies face.

4. Visiting Benchmark Countries for Policy Lessons
 In Phase 3, we organized four research missions to third countries (with theparticipation of PSI researcher):• Sri Lanka (Oct. 2017): apparel industry, EPZ, industry-supporting
institutions• Kenya (Aug. 2018): automotive industry, industry associations• Djibouti (Feb. 2019): logistics, port facilities• Myanmar (Nov. 2019): automotive & apparel industries, investment
promotion & SEZ
The findings were shared with Ethiopian policymakers at HLF & DPF
sessions and in writing.
 A study visit to Japan was organized for four officials of MOTI’s Metal
Industry Development Institute (MIDI) to study Japan’s SME policy andsituations of metal, machinery and automotive sectors (June 2018).

5. Assisting Japanese Firms Interested in Ethiopia
 We believe improving policy to attract and support concrete businessprojects (FDI, buyers, JV, etc.) is more effective than policy reforms designedby government and academicians alone.
 Our team supports Japanese firms (large and small in various sectors)
seriously or potentially interested in Ethiopia. Automotive and apparel firms
were supported in Phase 3.
 We provide policy information, suggest government contacts, organize
workshops for government and Japanese firms, and propose policies toattract and retain Japanese FDI.
 Related seminars and discussions were held at MOTI/MOI (next slide).
 However, the attraction of Japanese FDI has not been successful so far.

Seminars for Linking Japanese Firms with Ethiopian Government• Textile and Garment Seminar in collaboration with Itochu Corp. (Japan’s
leading garment trader) co-organized by MOI, JICA, GRIPS and UNIDO at MOI(Aug. 2018): on global garment business and how Japan can come to Ethiopia• Automotive Industry Seminar, co-organized by MOTI, JICA, GRIPS and UNIDO
at MOTI (Feb. 2019): “The Prospects of Japanese Automotive Assembly in
Ethiopia: Policy Issues and Concrete Problems”• Automotive Industry Seminar, co-organized by MOTI, JICA and GRIPS at
MOTI (Feb. 2020): “Myanmar’s automotive policy and lessons for Ethiopia”• Automotive Industry Seminar, organized by MOI with presentations by
GRIPS and JICA at MOI (Sep. 2022): Also inviting Japanese and local
automotive firm representatives: “Ethiopian Automotive Policyin the African Automotive Market”• Linkage Policy Seminar, co-organized by MOI, JICA and GRIPS at MOI (Dec.
2022): “FDI-Local Firm Linkage Development: East Asian Experiences and
Suggestions for Ethiopia”

Issues, Achievements and Challenges

1. Difficulty of Policy Dialogue and the Need for Selectivity
 Policy dialogue requires conditions which are difficult to satisfy:- Serious interest and commitment by top leader (PM or President)- Bureaucrats with proper mindset and capacity (above minimal level)- A country without political or macroeconomic crisis
 Few developing countries satisfy these conditions. Policy dialogue can’t
be conducted widely with all developing countries.
 The Japanese side must also fulfill certain conditions:- Serious preparation and long-term engagement- Speed and flexibility to discuss most relevant topics at any time
- The host country is politically and/or economically important for Japan The Japanese embassy and JICA should engage in dialogue withgovernment whenever possible. If the top leader shows serious interest,
formal policy dialogue should be organized quickly.

(Cont.) Even after dialogue is started, success is not guaranteed. It is often
disrupted by:- Frequent changes of top leaders, ministers or officials- Macroeconomic problems – inflation, negative growth, debt crisis, etc.
- Social, political or even military instability
Ethiopia had all these.
 Even if a developing country makes great effort, it may fail in theirlearning for various reasons. It may not be able to overcome a middle
income trap (or poverty trap).
 However, when successfully done, policy dialogue can bring great benefits
to both the developing country and Japan:- Host country: effective policies, with Japanese support for execution- Japan: cooperation projects that align top leader’s concern- Bilateral partnership beyond industrial policy

2. Building Confidence and Trust Building confidence and trust at all levels, from top leader to groundofficials, experts and researchers, is crucial for policy dialogue. Whensolid human relations are established, they will become long-lasting
assets. Without them, dialogue becomes superficial and mechanical.
 Japanese officials, experts and consultants must possess the right attitude.
They should work for the welfare of the host country and its people with
passion, dedication and patience. This will be noticed by the other side.
 Long-term presence and engagement are essential. Japaneseambassadors and JICA officials rotate too quickly (2-3 years). They should
stay longer or repeated times.
 Devoted academicians can engage longer – e.g., Prof. Shigeru Ishikawa(Vietnam), Prof. Yonosuke Hara (Laos), Professor Shoji Shiba (India), GDF(Ethiopia).

3. Linking Talk with Industrial Cooperation Projects
 A very important feature of Ethiopia-Japan Industrial Policy Dialogue wasthe close link between policy discussion and JICA’s subsequent industrial
cooperation projects. Talk does not end as such but leads in many cases
to concrete projects that assist the execution of policies just discussed.
 In Ethiopia, follow-up projects included kaizen (Phases 1, 2, & 3), metalindustry survey (Phase 1), export champion products and branding(Phases 2 & 3), FDI attraction and industrial park management (Phases 2& 3), and BDS support (Phase 3). The JETRO Addis Ababa office wasestablished in July 2016 at the strong request of Prime Minister
Hailemariam.
 Japan’s policy dialogue in Argentina (1985-87), Vietnam (1995-2001) and
Thailand (1999) also spawned many related JICA projects. JICA is usuallyalert and eager to create projects consistent with policy dialogue.
 This linkage encourages both parties to seriously engage in policy
dialogue.

4. Country Ownership versus Well-thought Advice
 Respecting the policy ownership of host government seems obligatory fordevelopment partners. However, this principle is not easy to implement
because the host government is not always right.
 Our advice, though imperfect, is backed by many observations andstudies in a large number of developing countries. We stand by themwhether or not they are immediately accepted.
 The question is how to inspire and guide national leaders and officials toabandon unrealistic ideas and choose better goals and methods without
offending or discouraging them. Their learning process must generate asense of pride and achievement rather than inferiority and humiliation.
 Good policy dialogue must observe diplomatic protocol and courtesy. Yet
it must speak out (in a polite way) when ideas presented by thecounterpart are contrary to global practice or industrial common sense.

5. Commonalities and Unique Factors
 In international comparison, the common objection is that “each country
is different and the time has also changed, so this foreign model is notapplicable to our country.” But the statement is superficial.
 The important thing is for the policy designer to clearly recognize what iscommon and what is unique in each case. If this is done, a valid starting
point is established for formulating policies suitable for the home country.
 Late 19c Japan and post-WW2 Taiwan and Korea may seem too remote
for today’s latecomer country. But dedicated technocrats, engineering
education, skilled labor, competitive firms, public-private partnershipwhich they promoted—mostly successfully—are not outdated. These arenecessary elements for any latecomer country at any time.
 We recommend translative adaptation (select and modify foreign models
to create your own model) as the basic development strategy. This is also
what we advised to Vietnam, Thailand, Ethiopia, etc.

6. Evaluating Policy Dialogue
 Development projects are expected to produce “visible results” within a
few years. If the technique and methods are standard and predictable,
such requirement is reasonable. But policy dialogue is quite opposite ofstandard projects.
 As stated earlier, policy dialogue must be sensitive and flexible. Successdepends on many factors beyond control. Sustainable growth andstronger relations are slow to emerge and difficult to quantify.
 Policy dialogue should not be evaluated by the number of letters, reports,
workshops, books, lectures, visits and other activities which are merely
instruments to achieve the ultimate goals.
 Ethiopia-Japan Industrial Policy Dialogue faced many difficulties but also
produced some achievements. It was neither brilliant success nor
complete failure. This is what we expect from any (good) policy dialogue.

7. General Questions about Modality When the government of a developing country is not perfect, and whendonor resource is limited, what is the best way to conduct policy
dialogue?
 If the government is weak, should we work with private-sector
organizations such as business associations, NPOs and even individual
firms? (Maybe work with both, in separate projects)
 How to cope with frequent changes of government and the resulting lossof institutional memory and policy interests?
 Reports, workshops and study tours about good practices are not enoughto produce good policies. How much deeper should we go to help thegovernment construct policies effectively—from mere knowledge toconcrete action?