2007-E-8

CAPACITY DEVELOPMENT AND SOCIAL CAPACITYASSESSMENT (SCA)
Shunji Matsuoka, Professor,
Graduate School of Asia-Pacific Studies, Waseda University
1-21-1, Nishi-waseda, Shinjuku-ku, Tokyo, 169-0051, Japan
Email: smatsu@waseda.jp
Kazuma Murakami, Mitsubishi UFJ Research & Consulting Co.Ltd.
Naoto Aoyama, COE Researcher at Hiroshima University (as of 2006)
Yoshi Takahashi, Associate Professor,
Graduate School for International Development and Cooperation,
Hiroshima University
Katsuya Tanaka, Assistant Professor,
Graduate School for International Development and Cooperation,
Hiroshima University
March 2008

Presented at the 1st International Symposium on “Asian Cooperation, Integration and
Human Resources” for Waseda University Global COE Program: Global Institute for
Asia Regional Institute (GIARI), Tokyo, January 17-18, 2008.

CAPACITY DEVELOPMENT AND SOCIALCAPACITY ASSESSMENT (SCA)
Shunji Matsuoka, Professor
Graduate School of Asia-Pacific Studies, Waseda University
1-21-1 Nishi-Waseda, Shinjuku-ku, Tokyo, 169-0051, Japan
Email: smatsu@waseda.jp
Kazuma Murakami, Mitsubishi UFJ Research & Consulting Co. Ltd.
Naoto Aoyama, COE Researcher at Hiroshima University (as of 2006)
Yoshi Takahashi, Associate Professor, Graduate School for International
Development and Cooperation, Hiroshima University
Katsuya Tanaka, Assistant Professor, Graduate School for International
Development and Cooperation, Hiroshima University

Abstract: This paper presents the basic design of the Social Capacity Assessment(SCA) studies in the case of environmental management. Firstly, it is defined basic
concepts of SCA. In this model, the Social Capacity for Environmental Management(SCEM) is defined as the capacity to manage environmental problems in a social systemcomposed of three actors, i.e., government, firms, and citizens and theirinterrelationships. The Social Environmental Management System (SEMS) is defined asinteractions between the SCEM and institutions. According to these definitions,interactions between the SEMS, socio-economic condition, environmental quality andexternal factors shape a total system. Secondly, based on these concepts, we build theanalytical methods of the SCA. The SCA is made up of the following five steps, (1)Actor-Factor Analysis, (2) Indicator Development, (3) Institutional Analysis, (4) Path
Analysis, and (5) Development Stage Analysis. Finally, based on analytical methods
provided above, the aid program for social capacity development is designed in order toachieve the aid effectiveness.

1. Introduction
During the 1990s, it became apparent that the Replacement Approach, i.e., theone-sided transfer of knowledge and technology from advanced countries to developing
countries was insufficient to deal with the issues of international development assistance.
Moreover, a recent study conducted using the Capacity Development Approach1

(Fukuda-Parr et al. 2002) revealed that the self-efforts of the developing countries arenecessary to improve their social capacity and enable them to achieve sustainable
development performance. Although there has been some progress in the stakeholder
and the institutional analyses (see Morgan and Taschereau, 1996; Lopes and Theisohn,2003), there still exists a need to further intensify the research and development on
Capacity Assessment.
In 2003, the Graduate School for International Development and Cooperation(IDEC) at Hiroshima University launched the 21st century Center of Excellence (COE)program, “Social Capacity Development for Environmental Management andInternational Cooperation” (Principal Researcher from July 2003 to March 2007 wasProfessor Shunji Matsuoka. In April 2007, he transferred to a professor at Waseda
University.). The COE program is a five-year research project granted by the Japanese
Government. It proposes a conceptual development model and indicators of Social
Capacity for Environmental Management based on an environmental policy research,from technological and socio-economic perspectives. The purpose of this program is todesign policy proposals for international cooperation and to achieve aid effectiveness inthe field of environmental management. Final objective of this research is to encourage
developing countries to evaluate and enhance their own social capacity forenvironmental management.
In 2004, this COE program in cooperation with several government agencies
established the Japan Committee on Social Capacity Development (JCSCD). The
objective of the JCSCD is to innovate Capacity Development frame work, based on theexperience of East Asian Countries. The committee consists of Hiroshima University,
the Japan International Cooperation Agency (JICA), the Japan Bank for International
Cooperation (JBIC), the Institute of Developing Economies, the Japan External Trade
Organization (IDE-JETRO), and the National Institute for Environmental Studies(NIES).
Since the launch of this COE program, the Social Capacity Assessment (SCA)
model has been proposed in order to enable developing countries to achieve sustainable
development. The research on the SCA has progressed on the following threeconsecutive levels: (1) the definition of concepts, (2) the establishment of the formal
models, and (3) the development of the indicators (Matsuoka and Kuchiki 2003,
Matsuoka, 2004, Matsuoka et al. 2004, Matsuoka 2007). In November 2005, during our
joint seminar with the representatives from the World Bank in Washington D.C., aproductive discussion regarding the design of our SCA was made. Based on theoutcomes of our discussions during the joint seminar, we launched a pilot program in2006. The pilot program applied the SCA methodology to Indonesian water quality
environmental management case and Mongolian combating desertification case.
This research paper summarizes the studies carried out under this COE programin order to develop our SCA. The paper is divided into five sections. Section 2
introduces the concept and analytical methods of the SCA. Section 3 provides a detailed
description of the following analytical methods: 1 Actor-Factor Analysis; 2. Indicator
Development; 3. Institutional Analysis; 4. Path Analysis; and 5. Development Stage
Analysis. Section 4 discusses the program design for social capacity development basedon the analytical approaches described in section 3. Finally, section 5 presents thesummaries and conclusions of our analysis.

22. Social Capacity Assessment (SCA)
Determining the target capacity level and obtaining information about thesystem factors of capacity development, i.e., socio-economic factors, environmental
quality, and external factors, are the initial problems faced during the assessment ofsocial capacity. Since the SCA has to be applied by the developing countries, it should
be inexpensive, simple, and based on scientific research. Moreover, the development of
the self-assessment ability of a developing country must also be considered, in order toenable the country to assess its own social capacity.
The Social Capacity for Environmental Management (SCEM) is defined as thecapacity to manage environmental problems in a social system composed of three social
actors, i.e., government, firms, and citizens and their interrelationships (see Figure 1).
The Social Environmental Management System (SEMS) is defined as the system ofinteraction between the SCEM and institutions (see Figure 2).
Figure 2 also shows the interrelationships between the SEMS, the socioeconomic condition, the environmental quality, and the external factors in the total
system. The SEMS of a country is constrained by the existing socio-economic
conditions and the condition of the environmental quality. Furthermore, here weobserve the inter-prescribing relations between environmental quality and socioeconomic conditions (See, e.g., Matsuoka and Kuchiki 2003 and Matsuoka et al. 2004).
As evident in figure 3, the SCA is designed to analyze the interactions between
the SEMS, the socio-economic condition, and the environmental quality of a total
system. Apart from this, it is also designed to analyze the social capacity of each actor
and the interactions between all the social actors. Thus, the SCA reveals the current
social capacity and the development path of a particular region and/or a country. The
SCA includes the following five steps: 1. Actor-Factor Analysis, 2. Indicator
Development, 3. Institutional Analysis, 4. Path Analysis, and 5. Developing Stage
Analysis. The next section provides a brief introduction to these steps.

Figure 1 Social capacity forenvironmental management
Source: Matsuoka and Kuchiki (2003)

Figure 2 Social environmental management
in total system
Source: Matsuoka (2005)

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Figure 3 SCEM and Social Capacity Assessment
Source: Matsuoka (2005)

2.1. Actor-Factor Analysis
The actor analysis evaluates the social capacity at a given time period, by
analyzing the capacity of social actors (i.e., government, firms, and citizens) and theirinterrelations. This analysis also provides information regarding “critical minimum or
benchmarks”, that is, the capacity level each social actor has to satisfy that the social
system functions. The factor analysis, on the other hand, focuses on the factors of social
capacity, i.e., policies and measures, human and organizational resources, andknowledge and technology. It provides information on the existing condition of eachfactor and its critical minimum.
2.2. Indicator Development
This develops the indicators that carry summary information regarding theSocial Capacity for Environmental Management. Based on the actor-factor analysis, twodifferent statistical approaches are proposed.
2.3. Institutional Analysis
The institutional analysis investigates the institutions that form the basis ofsocial capacity. The analysis deals with formal institutions (e.g., legal system) as well as
informal institutions, and their interactions. The results of the institutional analysis
reveal information regarding the reformation of current institutions for the developmentof social capacity.
2.4. Path Analysis
Based on the targets set by prior analyses, the path analysis concentrates on thedevelopment path of social capacity in order to achieve the targets. The path analysis
also investigates the development path of the social capacity level, the socio-economic

4

background, and the environmental performance. Thus, based on the relationshipbetween the social actors and its development path, the path analysis provides therespective capacities of the social actors.
2.5. Development Stage Analysis
Based on a three-stage development of social capacity, i.e., system-making,system-working, and self-management, the development stage analysis reveals
information regarding the current development stage, the next development target, andthe approach to achieve the target (along with the path analysis). Thus, the development
stage analysis can also be considered as a strategy for providing aid assistance.
Through the five steps analysis mentioned above, the SCA enables us tomeasure the current capacity level, the development path, the current state ofdevelopment, and the institutions necessary to improve the capacity for environmental
management. The next section presents a detailed explanation of each analysis.
3. Social Capacity Assessment Approach
3.1. Actor-Factor Analysis
The actor-factor analysis reveals the level of social capacity by combining theresults of both the actors and factors approaches. This provides us with a concrete
estimation of the social capacity. The results obtained by the actor-factor analysis
enable us to design suitable programs for international development assistance.
In order to appropriately conduct the actor-factor analysis, we propose an actorfactor matrix (see Table 1) of 3 actors and 3 factors, i.e., a 3×3 matrix. The data used toconstruct this matrix is obtained from statistical tables and through the interview andsurvey of each social actor. The cells of this matrix indicate the level of social capacity
attained by each social actor. Table 1 displays the information regarding the programs
and projects designed to compensate for the capacity gap, i.e., the difference between
the actual social capacity and the critical minimum of social capacity established foreach social actor’s contribution to the designated factors.
Table 1 Actor-Factor Analysis: The Actor-Factor Matrix

5The critical minimum that is obtained for each factor and is assumed to yield
good results in terms of the environmental performance is distributed among the actors
proportional to the roles they perform in their respective societies. However, this
distribution is not always fixed, and changes in the initial situation might inducechanges in the distribution of the critical minimum. These changes depend on
institutions such as a political system and the relationship between the actors, historicalpath dependency, and the characteristics of the environmental problem. Moreover, thetime required for the transition to the next development stage might also induce changes
in the distribution of critical minimum among the social actors. (For details, see section
3.5).
For the purpose of our analysis, we assume the government (G), firms (F) andcitizens (C) as the social actors. However, it is also possible to consider a collection ofscientists and media as the fourth social actor (Zhang et al. 2004). Furthermore, we
define the SCEM as the environmental management capacity stipulated by the capacity
levels of the social actors and the correlation between them. Table 2 shows theclassification of actors that are targeted for assessment. Among previous researches thathave contributed to our understanding of the factors of environmental management
capacity, the joint work by the UNEP and WHO, which focused on the air quality
management capacities in cities, is worth a mention (UNEP/WHO 1996). The abovementioned study assumes that the capacity for air quality management comprises four
elements (see Figure 4). However, the targets in this study were limited to the capacityof the government and the local administration for managing the air quality. Thus, we
focus on extending this parameter of analysis by including the capacities of firms andcitizens. Table 3 shows an example of the results of an assessment using the actor-factor
analysis for air quality management in China. Considering the capacity of thegovernment in China, we find that the critical minimum for the capacity for air quality
management had been achieved during the mid 1990s.

Table 2 Classification of Actors in the Actor-Factor Analysis

6Figure 4 Air quality management capacities
Source: UNDP/WHO (1996)

Table 3

Actor-Factor Analysis: Air Quality Management in China

3.2. Indicator Development
We develop two SCEM indicators using the following different statistical
approaches: (1) Frontier/Tobit approach and (2) Factor Analysis approach. This section
describes the methodology and the empirical applications of both these approaches.
3.2.1. Frontier/Tobit ApproachThis approach is based on the Total System conceptual framework. In thisframework, the SCEM as well as socio-economic conditions are included as a single

7

component influencing the environmental performance (see Figure 2). Our analyticalframework is as follows: First, the directional distance function estimates the emissionbased environmental efficiency as environmental performance (of air quality). The
Tobit model is then applied and the estimated environmental efficiency is used to
identify the SCEM variables affecting the efficiency scores. Finally, the SCEM
indicator is calculated as the weighted average of the SCEM variables.
We begin our analysis with the measurement of the environmental efficiency.
Figure 5 illustrates the relationship between production (y) and the corresponding SO2
emissions (b). Suppose that the current level of production of a firm i is y, while theobserved SO2 emission level is b. However, if this firm incorporates and operates withthe best practice technology, then the SO2 emission can be reduced to b* with the output
remaining constant. The production frontier line indicates the efficient (i.e., minimum
feasible) SO2 emission at the given output. We define environmental efficiency as the
distance between observed and efficient levels of SO2 (b, b*); the smaller the distancethe greater is the efficiency. In this study, the environmental efficiency is empiricallyestimated by using the directional distance function (Fare et al. 1994).
Once the environmental efficiency is estimated, the next step is to evaluate therole of the SCEM using the Tobit model. In this study, the Tobit model selects one
SCEM variable for each of the three actors, The identified variables are used toconstruct the indicator for the SCEM. This is defined as follows:

(

~
~
~
S it = ω g Git + ω f Fit + ω c C it

)

(1)

~
~ ~
where S it is the level of SCEM for province i in year t. Git , Fit , C it represent theenvironmental management capacities of the government, the firms, and the citizens,
respectively. ω g , ω f , and ω c represent their weights. These are adjusted such thatω g + ω f + ω c = 1 . Thus, our indicator proves to be a convenient measure because it
always ranges between 0 and 1.

Figure 5 Production frontier and environmental efficiency
Source: Tanaka and Watanabe (2005)

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An empirical application of this framework is conducted by using the provincelevel data of China’s manufacturing industry from the period 1994–2002. Using the
Tobit model, we identify the total number of monitoring stations as the government’s
capacity and the ratio of SO2 reduction as the firms’ capacity. However, due to limited
data, we are unable to include the citizens’ capacity as a part of our model. Thus, the
SCEM in this application refers only to the capacities of the government and the firms.
Figure 6 depicts the SCEM and the normalized SO2 emissions in China’s
manufacturing sector for the period 1994–2002. The figure indicates a significant
increase of nearly 40% in the SCEM - from 0.25 in 1994 to 0.35 in 2002 - during theestimation period. In addition, the SO2 emission is shown to be fairly responsive to the
SCEM. Figure 7 illustrates the environmental management capacities for thegovernment and the firms during the same estimation period. The firms’ capacity (SO2
reduction rate) increased from 0.19 in 1994 to 0.42 in 2002 - an increase of more than
120%. On the other hand the government’s capacity (total number of monitoring
stations) development rate improved by a mere 8%, i.e., from 0.31 in 1994 to 0.34 in
2002. Thus, the SCEM development in this period is largely due to an improvement in
the firms’ capacity, while the contribution by the government is rather limited.
In this section, we developed the indicator for the SCEM using the
Frontier/Tobit approach. We observed a rapid increase in the SCEM in China for theperiod 1994–2002. Moreover, the results indicated a significant contribution of thefirms in the development of the SCEM, while suggesting a limited contribution of thegovernment. However, in order to provide future suggestions and recommendations, afurther interpretation of these results is required. Finally, this approach can be extended
to conduct an international comparison using international panel data. In future studies,
we will use the same approach to analyze the SCEM development in Asian countries.
3.2.2. Factor analysis approach
Factor analysis is a statistical analysis technique that is used to uncover thelatent relationships between many observed variables. This approach allows numerous
correlated variables of air quality management policy to be summarized by fewer

Figure 6 SCEM indicator and SO2
emission in China’s manufacturing
SectorFigure 7 Actor-specific environmental
management capacity
Source: Tanaka and Watanabe (2005)

Source: Tanaka and Watanabe (2005)

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Table 4 Factor Loading and Contribution of Factor Loading (1) (Kitakyushu-city)

Source: Murakami and Matsuoka (2005)

Table 5 Factor Loading and Contribution of Factor Loading (2) (Osaka-city)

Source: Murakami and Matsuoka (2005)

dimensions, i.e., factors. In the context of this research, the factors are interpreted as theelements of capacity for air quality management that contribute to the environmental
performance. Murakami and Matsuoka (2005) estimate the factors of government
capacity for air quality management in Kitakyushu and Osaka cities by using the factor
analysis. In this study, the capacity for air quality management is assumed to be equal to
the factor scores and to the contribution of factor loadings that are estimated by using
the data on air quality management policies in Kitakyushu and Osaka cities from 1970
to 2000. Tables 4 and 5 show the results of factor analysis for each city. The screen test
for factor analysis reveals four elements of capacity in each city. The four elements arefurther arranged into three factors, i.e., Policy & Measure, Human & Organization, andKnowledge & Technology (see Table 6).
By using the factor scores and the contribution of factor loadings, we estimate
the weighted average for all the four elements. This is assumed to be an indicator of thecapacity for air quality management in each city. The contribution of factor loadings isassumed to be the weights for capacity elements. The average weights of the factors of
capacity of the two cities are as follows: Knowledge & Technology is 7.5%, Human &Organization is 47.3%, and Policy & Measure is 31.8%.

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Table 6 Correlation of the Three Actors and Critical Minimum

Note: The State of Correlation of the Three Actors has an effect on the Critical
Minimum Level.

Figure 8 Trend of government capacity
for air quality management(Kitakyushu- city in Japan)

Figure 9 Trend of government capacity
for air quality management (Osakacity in Japan)

Source: Murakami and Matsuoka (2005)

Source: Murakami and Matsuoka (2005)

Figures 8 and 9 show the change in the government’s capacity for air quality
management from 1970 to 2000. It can be observed that the rapid improvement ingovernment capacity in the early 1970s resulted in a dramatic reduction in the SO2
concentration. Additionally, the effects of each indicator of capacity on the SO2
concentration are estimated by a simple regression analysis.
3.3. Institutional Analysis

The institutional analysis of the SCA investigates a group of institutions (see,e.g., Aoki and Okuno, 1996) that constrain social actors’ activities and capacities. It also
regulates the current capacity level and affects the future formulations of social capacity.
Therefore, this study will focus on the role of the individual institutions and the groupof institutions as well as the processes of transitions among them. For this purpose, wewill classify the institutions into two categories: principal institutions and secondary

11

institutions, and then, we will classify each category into two subcategories, i.e., formal
and informal institutions.
The method of classifying an institution as a principal or a secondary institution
is based on analyzing them according to the level of their incentive or disincentive, i.e.,
the upper levels are principal institutions, and the lower levels are secondary institutions.
Further, in order to classify the institutions into the subcategories, i.e., formal andinformal institutions, this study follows North’s study (1990) and defines formal
institutions as public formalized rules, such as state laws, and informal institutions as
unspoken rules, such as social norms and customs that influence the behavior of social
actors.
While investigating informal institutions, we pay close attention to the changes
in the relationships between the social actors. Figure 10 indicates the basic concepts foranalyzing the informal institutions. Based on these concepts, we identify three types ofrelationships between the social actors: one-side (or direct) relationships, mutual
relationships, and multilateral relationships (partnership). As shown in table 6, eachrelationship has an effect on the critical minimum capacity of each actor. Thus, the next
step is to analyze the impact of each relationship between the actors on their criticalminimum capacities.
In order to conduct this analysis, we introduce a case study wherein we haveanalyzed the institutional changes in Ube City. Ube City, often referred to as the “Ube
Model” or the “Ube System” (Nose, 1996), is a model Japanese city that has succeededin effectively managing the problem of air pollution. The most important characteristicof the Ube model is that the decision-making process is not solely dependent on
government regulations; rather, it is a joint exercise carried out by a committee
comprising representatives from industry, government, educational system, and general
population. It is therefore believed that the spirit of the Ube model can be replicated byformally institutionalizing the informal institutions, however, keeping in mind, thespecific culture and customs of a city (see Table 7).

Figure 10 The Benchmarks for the social actor’s relationship12

Table 7 The Benchmarks for The Social Actor’s Relationships

Table 8 Environmental Policy and the Characteristics in Ube City

Source. Matsuoka et al. (2004)

Table 8 indicates the environmental policies and their characteristics in Ube City.
Figure 11 shows the relationship between institutional changes (formal and informal)
and the SCEM of Ube City, while figure 12 shows the systemic change and theformulation of SCEM in Ube City. Thus, we observe that as compared with the policy
for dust pollution, the measures for controlling SO2 in Ube City were delayed until theenactment of the pollution control agreement in 1970. According to this investigation,
we conclude that (1) the knowledge and technology were not sufficient to control SO2
pollution in Ube City, and (2) the characteristics of the Ube Model. Thus, these
conclusions highlight the following:(1) The institutions needed for controlling pollution differ on a case by casebasis and depend on the type of pollution;(2) The efficiency of the performance of the institutions is closely related to the
SCEM in the region.

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Therefore, in order to achieve a higher capacity level for a country, it isimportant to analyze the nature of the existing institutions, i.e., whether they are
principal/secondary and formal/informal. Moreover, it is also important to ascertain
whether the actors’ capacities of environmental management satisfy the efficientperformance requirement of the institution.
3.4. Path Analysis

The path analysis clarifies the information and the conditions that are
prerequisites for setting a rational capacity level target. Moreover, an analysis of thepath (strategy or program) adopted for the current social capacity level helps in
identifying the ideal path toward achieving the set target.
As discussed in the previous section, social capacity is developed through theinteractions between the actors and the institutions. In a broader sense, we can consider
the capacity level as defined by the interrelationship among the capacity level, thesocio-economic levels and the performance levels (environmental quality). First, thepath analysis deals with the development process of the total system, which consists ofthree components.

Figure11 Institutional change and social capacity environmental management
Source: Matsuoka et al. (2004)

Figure 12 Social capacity for environmental management in Ube City
Source: Matsuoka et al. (2004)

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Figure 13 Transition of SCEM, socio-economic conditions, and environmental
performance: The case of SO2 in Japan
Source: Ministry of Environment, Japan (2005)

Figure 14 Path analysis

Figure 13 informs us about the indicators pertain to SO2 in Japan. We adopted
the SO2 general monitoring stations as the capacity level, per capita GDP as the socioeconomic level, and the performance level as the average monitoring data at thestations; although, due to limited information, this data was compiled after the peak of
the observed SO2 value. According to the figure, we observe that until the mid 1980s all
the three components improved (capacity and socio-economic level increased, while theperformance level decreased). However, post the 1980s the socio-economic level
continued to improve, while the capacity level remained almost constant and theperformance level stabilized at a low level. Based on this information, it can be said that
until the mid 1980s the system operated efficiently resulting in an improvement in theenvironmental performance. However, since then the system continues to operate at anecessary minimum capacity, irrespective of any improvement in the socio-economic
level.
By conducting a thorough analysis of the cases of different countries and theirenvironmental issues, we can identify the characteristics responsible for the
improvement of the environmental performance in each case. For example, figure 14
clearly demonstrates the differences between the cases wherein the adopted path15

changes from SCEM-led to socio-economic conditions-led and vice versa. Moreover,such a path analysis enables us to identify the course that we must adopt for improving
environmental performance in the future.
Thus far, we have focused on the change in the level of the three components ofthe total system. However, in order to understand the development process of thesystem, it is necessary to bear in mind that these changes do not occur independently;
rather, they undergo a transition in the context of the interrelationship between the threecomponents. Honda et al. (2004) analyzed the relationship between these threecomponents for 47 prefectures in Japan. From among these analyses related to several
environmental issues, let us present the case of SO2. The analysis is carried out using
the Granger Causality Test and is based on the data for the period ranging from 1982 to
2000. Figure 15 confirms the existence of interrelationships between the threecomponents for 23 out of 47 prefectures. In order to complete the path analysis, we needto verify the hypothesis that the change would occur from a state of weak or partial
interrelationship at an early stage to that of a strong interrelationship with an interactive
impact on all the three components (we do not exclude the possibility of plural paths toachieve the target). Thus, we shall now investigate the methodology and pursue theseanalyses.
In addition, the development processes of the capacities of social actors and theirrelationships also form a part of the path analysis’ targets. In this case, we assume acertain level of substitutability among the actors; for instance, part of the government’s
role can be borne by a firm or a citizen. Future efficient capacity development paths aredifferent for cases with different paths, such as government-led and citizen-led; however,they have the same level of social capacity as a whole. Regarding aid policy, this
proposition implies that there should be cases wherein firms or citizens would not relyon the government to government approach and would be the direct beneficiaries of theaid.

Figure 15 Interrelationship between SCEM, socio-economic conditions, andenvironmental performance
Source: Honda et al. (2004)

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3.5. Development Stage Analysis

The development stage analysis that is conducted on the basis of the actor/factor
analysis, the indicator development, the institutional analysis, and the path analysis,
aims at specifying the development stage based on the benchmarks and then presenting
the development process and the direction for further development. The analyticalresults highlight certain preconditions that clarify appropriate quantity, quality, andtiming of input in order to enable development and aid policies to be implemented asprograms.
Matsuoka and Kuchiki (2003), bearing in mind industrial pollution, assumed thefollowing three development stages for the SEMS: system-making stage, systemworking stage, and self-management stage. Table 9 indicates the stages and thebenchmarks of SEMS.

Table 9 The Stages and Benchmarks of Social Environmental Management System

Source: Matsuoka and Kuchiki (2003)

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The system-making stage focuses on the development of the fundamental
functions of the SEMS. Since this stage particularly focuses on the capacity
development in the government sector, the benchmarks in this stage should be thedevelopment of the environmental law (basic law and acts for specific pollution control
mechanisms), environmental administration, and environmental information. With
regard to the environmental information benchmark, it is important to arrange the databy networking, understanding the environmental status, and then presenting the policy
measures. Thus, we use not only the number of monitoring stations but also the firstpublication of the State of the Environment and the like as specific evaluation indicators.
In the system-working stage, the system actually starts functioning to improvethe environmental quality. This occurs in response to the improvement of the basic
environmental administrative institutions. As the pollution trend changes—fromincreasing to decreasing—a turning point of the so-called environmental Kuznets curve
is observed. With reference to this, we focus upon the results of the implementation of
government regulation (reduction of pollution by firms) and the consequent change to adecrease in pollution levels. In order to evaluate the achievement of pollution reduction
measures, the standard achievement ratio of SOx—a typical industrial pollutant—will
be observed as the indicator. If the achievement ratio for all the monitoring stations in
the country is higher than 90%, then it is considered to be an indication of the end ofSOx pollution. In developed countries, the Command and Control (CAC) has played asignificant role in pollution reduction at the system-working stage. The CAC requires
the government to utilize its administrative capacity in order to understand the state ofpollution, set regulation standards, and ensure that those responsible for pollution arecomplying with the regulations. It is observed that as compared to the governments ofdeveloped countries, the governments of developing countries lack this administrative
capacity and are therefore ineffective in implementing the CAC. However, pollution
reduction can be realized efficiently by effectively introducing the market based
instruments (MBIs) for environmental regulation and utilizing the market mechanism(Matsuoka, 2000).
The self-management stage is the stage wherein the system develops in asustainable manner through the strong interrelations between the government, firms,
and citizens, and a comprehensive environmental policy is enforced. At this stage, firms
and citizens voluntarily adopt and participate in initiatives for environmental
management. For instance, firms voluntarily upgrade their facilities in order to obtain
the ISO 14000 certification as an in-house environmental management program, and inorder to increase the efficiency of environmental management, they adopt
environmental accounting. Moreover, they highlight their environmental management
achievements in order to court consumer appreciation and thus gain a competitive
advantage in the market. With regard to international cooperation, at this stage, adeveloping country becomes less dependent on donor's assistance and utilizes its own
financial and human resources.
As a country experiences the development of SEMS, the roles and relationshipsof the three actors also evolve. The government sector plays an important role inmanaging and coordinating issues at the system-making and system-working stages;
however, at the self-management stage, its responsibility evolves to supporting the firms
and the citizens by designing a framework for comprehensive environmental
management.

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Figure 16

Development stages of SCEM: The case of China

Source: Japan Society for International Development (2004)

Figure 17

Social capacity development in trade: Malaysian case

Source: Hiroshima University - Mitsubishi Research Institute Inc. Joint Venture (2005)

Figure 16 shows the development of SCEM with the stages and benchmarks
mentioned above (China's case). Considering economic indicators or passage of time as
the horizontal principal and SCEM index (a group of indicators) as the vertical principal,
it can be presumed that, by and large, China adopted the capacity development processthat is shown in the figure. After the enactment of the Environmental Protection Law as
the starting point of system-making, China entered a full-scale system-working stage
during the 9th Five Year Plan (1996–2000). The 10th Five Year Plan (2001–2005)
further accelerated this process. It is expected that China will be able to lay thefoundation for initiating the self-management stage between the period of the Beijing
Olympic Games in 2008 and the Shanghai Expo in 2010.
In terms of relationship between the three actors, the SEMS in China haschanged drastically. As shown in figure 16, the government had exclusively performed
all the functions and roles at the system-making stage. However, during the systemworking stage, although the government continued to institute vigorous steps, the firms

19did render some important tangible contributions to curtail pollution. In addition, therelationships between the actors, particularly between the government and the firms
grew stronger. Based on this, we can expect that during the self-management stage, amore balanced relationship, entailing the promotion of environmental industry and selfsustained growth of an environment-oriented market will be developed.
Moreover, we have also begun to apply the development stage analysis beyond
the field of environmental management. Figure 17 describes the development stage
analysis of social capacity development for trade (particularly export promotion) in
Malaysia. The research is conducted for the JICA evaluation project (Thematic
Evaluation: Economic Partnership). We observe that it is possible to conduct theanalysis based on a similar format of benchmarks and stage setting; nevertheless, thetrade capacity has its peculiar characteristics, such as the limited role of citizens and thevulnerability of performance level to external conditions.
This section introduced and discussed the basic designs of specific analyticalmethods that form the components of the SCA. The methodology enabled developing
countries themselves to understand the current state of pollution and the problem ofsocial capacity. Adopting the analytical method mentioned here as a precondition, thefinal section deals with the following question: How to transform development and aid
policies into effective programs for attaining the capacity level that developing
countries regard as their target.
4. Designing the Program for Social capacity development

This section describes the program design for social capacity development.
Based on the SCA framework, we develop the program approach to identify the target
level of capacity, and to provide specific strategies to achieve the target. The program
presents an overall package consisting of: (1) the relationship between social actors, (2)the input resources—their quantity and timing, and (3) the institutional changes.
The program approach differs from the conventional stand-alone projects inmany respects. This approach considers the following: (a) wide and systematic
approach; (b) recognition of mutual dependence of society, economy, and culture; (c)long-term project implementation; (d) the harmonization of system development and its
process; (e) focus on the capacity of the recipient countries; and (f) cost reduction by
avoiding redundant aid projects (Bolger, 2000). Table 10 shows a detailed comparison
between stand-alone projects and the program for social capacity development.
Sector-wide approaches (SWAPs) for social capacity development can beclassified as one of the approaches of the program. The SWAPs are primarily carriedout in basic education and healthcare sectors in the African countries. Jones and Lawson(2000) characterizes the SWAPs as follows: (i) the harmonization of policies between
the donor and recipient countries (policy alignment), (ii) efficiency improvement ininternal and external resource allocations, (iii) developing partnerships with local
stakeholders, and (iv) emphasis on ownership. This characterization, however, isinsufficient. We define the program as a program involving three actors (government,
firms, and citizens) and three factors (policy and measure, human and organizations,and knowledge and technology). Thus, our social capacity development approach
always takes the form of the program.

20

Table 10 Programs and Stand-alone Projects

Source: Lavergne and Alba (2003)

Figure 18 SCA and Program Design

The program design begins with social capacity assessment based on the actorfactor matrix presented in figure 18. When analyzing the pollution problem, the matrix
is used to evaluate: (1) the current capacity for pollution abatement, (2) the criticalminimum capacity during the system-working stage, and (3) the gap between current
and critical minimum capacities.
It should be noted that we assume that capacities are substitutable between theactors, but not between the factors, i.e., the capacities are complements between thefactors. For instance, suppose that the critical minimums for policy and measure, humanand organizations, and knowledge and technology are 30, 50, and 10, respectively. Then,the critical minimum of policy and measure (30) can either be accepted solely by thegovernment or it can also be accepted by the government and the firms jointly. Any

21

combination of actors is possible in order to achieve the critical minimum; however,this is not true in the case of factors. Thus, the “Substitutability of actors” and“complementarities of factors” are equally important in our framework. The capacity
gaps identified through the actor-factor matrix are expected to be filled by the projects.
These projects are the ones based on the program (referred to as program-based
projects) and are different from the conventional stand-alone projects.
Entry and exit points of the program and the projects can be determined throughthe development stage analysis of social capacity. Figure 19 illustrates the brown issue
example. The figure shows the following institutional milestones during the systemmaking stage: (1) enacting environmental law, (2) the establishment of environmental
administration, and (3) environmental information disclosure. Technical aids, such as
the environmental center, are commonly provided by the JICA and can be effective inthe latter half of the system-making stage (i.e., developing the system of environmental
information disclosure).
In the system-working stage, it is important to focus on environmental businessplanning, resource allocation and organizational development, and research anddevelopment pertaining to pollution reduction. In addition to these, the pollution control
management certification system, compliance with regulations, and financial assistancefor developing environmental technologies are also important. Aid programs/projects
can generally reach their exit point when the level of pollution decreases as per thetarget. In this stage, the environmental cooperation is horizontal, such as technology
exchange, research exchange, and civil exchange. At the same time, the environmental
policy measures take the form of economic instruments and self-regulation. Once this isachieved, the recipient countries will gradually move toward the self-management stage.
5. Conclusions

Based on the basic design of the SCA studies conducted under the current 21st
COE program, this paper provides the definition of the SCEM as a total system andspecific analytical methods, which are the components of the SCA, and the program
design. Further, the case studies and the details of the following analytical methods arealso provided: (1) Actor-Factor Analysis, (2) Indicator Development, (3) Institutional
Analysis, (4) Path Analysis, and (5) Development Stage Analysis.

Figure 19 Entry, Exit Point, and the Development Stages

22Hereafter, in order to design programs for achieving sustainable development inEast Asia, we intend to continue studies on the SCA in East Asia and also intend todevelop the models of the SCA.
Acknowledgement

This paper is supported by the 21st Century Center of Excellence (COE) Program at
Graduate School for International Development and Cooperation, Hiroshima University.
The paper presented at the Joint World Bank Institute and Japan Committee Seminar is
published in COE Discussion Paper Series Vol. 2005-4 (in English) and Vol. 2005-5 (inJapanese).
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GIARI Working Paper Vol. 2007-E-8,
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