Capacity Development and Foreign Aid from Japan*
Koichi Y. Takase,
School of Commerce, Waseda University, Tokyo 169-0080, Japan.
Email: ktakase@waseda.jp

Abstract: We investigate the trend and characteristics of foreign aid from Japan, and attempt to gain
academic and political implications by observing all the ODA flows from the past to the present. In
particular, structural expenditures classified according to the DAC (Development AssistanceCommittee), are rearranged into those with the degree of how closely related to capacity
development (CD) or capacity building. We analyze the bilateral flows of the grants, technicalassistance (TA) and concessional loans, and will cover all the expenditures from the major donor
institutions in Japan: JICA (Japan International Cooperation Agency) and JBIC (Japan Bank ofInternational Cooperation).
Keywords: Capacity Development, Concessional Loans, Foreign Aid, Grants, Japan, Technical
Assistance
1. INTRODUCTION
Even in this new century, the United Nations (UN) declared the Millennium Development
Goals as our common objective of human beings to fight the extreme poverty and hunger
widespread in the world. Despite of the substantial amounts and continuous efforts of foreign aid
by the international communities, there still exist not a small number of under-developed countries
and regions where people suffer from shortage of basic human needs and rights.
For more than three decades, Japan has been sending foreign aid to developing countries.
Japanese foreign aid started as war compensations to Asian countries, and became larger and larger
in accordance with its economy’s miraculous growth. In a couple of years toward the end of thelast century, Japan became a world’s largest donor country while other donors barely kept their
existing amounts affected by “Aid Fatigue.”

However, in recent years, Japan has been having a

hard time to increase its aid amount, owing to the huge amount of public debts and its stagnant
economic performances, so that its ranking of annual ODA size steadily went down to fifth in 2007.
In 2008 when G8 summit was held in Hokkaido (a Northern ireland of Japan), Japanese government
announced a new ODA policy to revive the total aid amount, in order to show its will to take its fairinternational responsibility. In particular, greater amount to Africa is promised partly because
Japan hosted the TCAT meeting in Yokohama in the same year.
Although Japan seems to care about the total amount of aid in future, it really did not makeclear other issues than the size except for an environment. For example, it is not sure which(African) countries will receive aid, or how Japanese aid will be spent in terms of sectors, projects
and programs. Whenever we revise or reconsider any future foreign aid policy, it is indispensable
to evaluate the past aid flows so that we can utilize as many lessons as possible. Efficiency of288foreign aid should be one of the most important themes to be discussed. Of course, each aid
institution in Japan carries out most project based evaluations, but this paper overlooks all the past
Japanese aid flows in much more aggregate way, such that we can achieve any time series finding
and political direction.
Since we want to study the efficiency of Japanese aid to develop recipient countries, we deal
with only bilateral flows not multilateral flows in this paper. ODA Datai used in this research
consists of three forms: grants, concessional loans, and technical assistance (TA).

Japanese

International Cooperation Agency (JICA) distributes the majority of grants and TA expenditures
while central government ministries and agencies control the rest. All the grants and loans, but TA
only by JICA are included in this data. Most loans are provided by Japan Bank of International
Cooperation (JBIC).

In fact, JBIC was born from a merger of two former independent aid

institutions: Overseas Economic Cooperation Fund (OECF) responsible for concessional loans, andExport and Import Bank of Japan in charge of other financial flows.

This September, JICA and

JBIC are forming a new JICA whose total ODA size could reach the second largest among all thebilateral and multilateral donor institutions. Hopefully, this study can provide the new institution
with any useful information for the international development and cooperation.
This paper analyzes the effects of Japanese ODA on Capacity Development (CD) in recipient
countries. CD originally is considered for the individual capacity to be enhanced as labor input.
In this sense, foreign aid for CD was the aid expenditures for education and TA. Nowadays,
capacities of a country and the government became important as targets of foreign aid for CD.
After the UNDP (1992) examined the effectiveness of its past TA, it concluded that capacity
develops by three dimensions: individual, institutional, and social levels. It recommended TA for
CD of country wide (policy and government) in order to carry out foreign aid projects. World Bankeconomists, Burnside and Dollar (2000) wrote a very famous paper to test the efficiency of aid on
the economic growth of recipients.

They adopted a policy variable to represent the capacity levelof a government of receiving foreign aid.

After their regression analysis based on a new panel dataof foreign aid, they concluded that growth rate becomes higher under a better political environment.
Even when their study was published as a working paper (1997), this message was powerful enoughto encourage a number of new foreign aid studies in the development field, as well as to influence
the real foreign aid policies of international institutions and donor countries.
CD is very difficult to be defined as Matsuoka et al (2008) explained. CD can belong tomany institutions, such as individuals, firms, and a government.

At the same time, coverage of CDvaries from households or villages to cities or a country. Moreover, appropriate CD would be
widely diversified according to the development level of each recipient country.
better start to reconsider all the aid flows from a scratch.

Thus, we had

This paper will define new variables offoreign aid for CD, reforming the traditional purposes of aid: i.e. structural aid expenditures by
DAC.

289

The structure of this paper after the introduction is as follows. In Section 2, basic model ofproduction is introduced, and foreign aid for CD is explained. Then, data and variables in thisresearch are briefly explained. In Section 3, foreign aid expenditures for CD are analyzed for the
total, grants, loans, and TA distributions. In Section 4, aid expenditures for CD to the recipientsclassified by different development stages are considered as a discussion. In Section 5, conclusions
and directions for future research are provided.

2. MODEL
2.1 Production of Recipient Economy
As a benchmark, we consider a closed economy receiving foreign aid.

Production isrepresented by meta-production function with labor and capital (Hayami and Ruttan 1970).
According to Lau and Yotopoulos (1989), meta-production function (F) is defined as a uniquely
standardized production function commonly operated in all the economies in the world at a certain
time. A single output (Y(t)) in period t is produced using two inputs: labor (L(t)) and capital stock(K(t)),Y * (t )  F ( L(t )*, K (t )*) (1)Asterisking on each variable to represent its efficiency equivalent unit, output amounts or each
input amounts can be compared among all the recipient economies. However, we can obtain only
measured units of them (Y(t), L(t) and K(t)) because we cannot directly observe the efficiency units.
According to Kim and Lau (1994), converting factors (AY(t), AL(t), AK(t)) make measured units into
efficiency ones as: Y*(t) = AY(t)Y(t), L*(t) = AL(t)L(t), and K*(t) = AK(t)K(t). A converting factor
for each variable changes to each country, with a different geographical location, climate, culture,
educational level, and above all, production technology.

Therefore, Y(t) can be given as:

Y (t )  AY (t ) 1 F ( AL (t ) L(t ), AK (t ) K (t )) (2)
An inverse of the converting factor of the output (AY(t)-1) can be interpreted as the Solow residual
parameter, which represents an overall technological capacity of the economy or Total Factor
Productivity (TFP). Also, an economy often experiences industrial transformations (from primarythrough secondary towards tertiary industries) especially when it grows from the low level ofproduction. So, we introduce these three industries into the macro production function above
where αi and βi are labor and capital shares of ith industry:

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3

Y (t )  AY (t ) 1  Fi ( AiL (t ) i L(t ), AiK (t )  i K (t )) (3)i33   1,    1
i

i

i

i

We assume production functions as Cobb-Douglass with an identical capital labor substitution
parameter in each industry (γi = γ > 0). Furthermore, since converting factors for labor and capitaltend to be closely related to the each economy’s development level, they assumed to be identical foreach industry (AiL(t) = AL(t), and AiK(t) = AL(t) for each i). Linearizing this equation by taking
natural log:3

ln Y (t )  ln AY (t ) 1   ln AL (t )  (1   ) ln AK (t )   ln L  ln   i  i K (t ) 


1

(4)

i

2.2 CD and Foreign Aid
Foreign aid affects the amounts of inputs and the levels of productivity or capacity in a recipient
economy.

Aid to maintain the amount of labor is often necessary for the individuals in the recipient

country just to survive by satisfying Basic Human Needs (BHN). Aid to increase capital stocks
should be industry or sector specific such that its target is primary (agricultural), secondary(manufacturing), or tertiary industry (commercial sector).

At the same time, aid to enhancecapacities is factor or institution specific such that its target is TFP (economy or government), labor(individuals), or capital stock (firms).
Based on the production function (Equation 4), we define following variables to represent
purposes of foreign aid in terms of CD and non CD. Aid purposes for CD of government (AY(t)-1),
CD of individuals (AL(t)), and CD of firms (AK(t)) are called as G, I, and F, respectively. Aid
purposes for non CD concerns not quality but quantity of labor and capital stock. An aid purpose
for labor quantity (L(t)) is called as B which maintains BHN of individuals. Aid purposes forcapital quantity (K(t)) are called as A which invests in the primary (agricultural) industry, M whichinvests in the secondary (manufacturing) industry, and C which invests in the tertiary (commercial)industry.
It is clear that optimal contents and conditions of foreign aid differ from recipient to recipient.
Generally speaking, ideal purposes of aid are closely related to the development level of each
recipient. For example, when an economy is in the lowest level of development, B is the mostdesirable since a large number of individuals seem to struggle for survival. As the economy evades
the worst situation, I and A become the most preferable in order to improve the food production.
Then, the economy begins to demand F, M and C for the development of the manufacturing andcommercial sectors.

Meanwhile, it starts to care about G for the improvement of political291

capability and governance. Of course, any of each input or factor should not be zero (otherwisenothing is produced), but the optimal mix of aid purposes should be determined according to thedevelopment stage of each recipient economy.
2.3 Data and Variables
Japanese ODA data in this research is constructed by the author’s project ii. This panel data ofbilateral aidiii covers the annual distribution of structural expenditures (aggregate and per capita) toeach recipient from 1964 to 2003. Structural uses of this data classified by DAC are as follows:
Social and Administrative Infrastructure (Education, Health, Water Supply, Sanitation and Sewerage,
General Environmental Protection, Culture and Recreation), Economic Infrastructure (Energy,
Transportation, Communication), Production (Agriculture, Fishery, and Forestry, Industry, Mining
and Construction, Trade and Tourism), Multi-Sector, General Program Assistance (Commodity Aid
and General Program Assistance, Sector Program, Non-Project Aid), Debt Relief, Food Aid,
Emergency Assistance, Support to Private Voluntary Organization, Administrative Costs to Donors,
and Unallocated/Unspecified. This data consists of Grants (1968-2003), loans (1968-2003), and TA(1988-2003) although TA are only JICA spending.
We reform these structural uses by DAC into those variables defined in the previous section,
whose grants and loans data covers from 1970 to 2003. Examining roles and contents of eachstructural spending, we arrived at a following reformation: G (General Environmental Protection,
Culture and Recreation, Commodity Aid and General Program Assistance, Sector Program,
Non-Project Aid), I (Education), F(Water Supply, Sanitation and Sewerage iv, Energy, Transportation,
Communication, Multi-Sector), B (Health, Food Aid, Emergency Assistance, Support to Private
Voluntary Organization), A (Agriculture, Fishery, and Forestry), M (Industry, Mining andConstruction),C (Trade and Tourism). Debt Relief and Unallocated/Unspecified are neglected inthis research, and so not included in the total aid expenditures. Debt Relief is for the loans ofprevious aid flows which were already counted as the other variables in the past.
Unallocated/Unspecified does not seem to make any substantial effect on a recipient economy.

3. CAPACITY DEVELOPMENT
3.1 Japanese Total ODA
We begin with the analysis of the Japanese total ODA spending v (1988-2003). Sum of grants,
loans, and TA kept the high mark of 8000 billion yen from 1988 to 1997, almost reached 10000 bn.
yen in 1991 and 1993, and passed 10000 in 1996 and 1997. However, it dumped to 6000 in 1998
and never recovered after (see Figure 1). Share of F (CD of firms) has been by far the highest from40 to 60% (see Figure 2). G (CD of Government) had been the second until 1997 with more or less
20%, but has been competing with A (Agriculture), B (BHN), I (CD of individuals) and G (CD ofgovernment) after 1997. M (Manufacturing) was close to 20% in 1988, but continued to decrease
to less than 2 % in 2003 with some ups and downs. On the contrary, I was close to 3 or 4 % in292

1988, but continued to increase to more than 10 % in 2003.
CD share (F+I+G) during this period has been constantly 40 to 60 % so that CD is a major
purpose of Japanese aid. Still, a unique characteristic of Japanese ODA is that F holds by far thelargest share. So, although Japanese ODA can be CD oriented, it really leans to CD of firms or
production infrastructure and technology. Therefore, an overall evaluation of Japanese ODA for
CD could be that its distribution is not appropriate for the recipients of the low level of development.
Of course, we should be careful on the above evaluation. First, since aid distribution sharesare fairly unstable in this short time period (16 years), we may not expect any reliable conclusion.
Also, if distribution shares of grants, loans and TA are greatly different from each other, the above
evaluation will be somehow weakened. Since total sum of Japanese ODA is enormous, not a small
amount will be distributed for BHN, individuals and agriculture if B,I, and A are major purposes ofgrants and/or TA. We will see this in the next section.
Besides, even if the above evaluation is perfectly true, Japanese attitude to stick to CD of firms
should not be overly blamed. As Takase (1995) showed in the study of structural aid distributions
among OECD countries, some countries have their own strength in a particular use of aid (France:
Social and Administrative Infrastructure, Japan: Economic Infrastructure, Switzerland: Production,and so on) while others distribute aid more or less in the equal manner (Canada, Germany,
Netherlands, New Zealand and Norway). This may suggest the existence of a Nash equilibrium
among donors. Since each donor has been observing other donors’ conducts for many years, eachbecame to know with each other. So, if Japan continued to concentrate on aid spending for CD offirms, other donors can free ride on it, and seek different purposes of aid suitable to their preference.
In this sense, Japan plays a fair and important role in the international aid distribution, carrying aheavier load on the CD of firms.
3.2. Grants, Concessional Loans and TA
Aid distribution of Japanese grants spending is analyzed (1970-2003). From more than 30 years oflong time series data of aid, we find a tremendous growth trend of the grants until 1997 when it
reached close to 2500 bn. yen, but a rapid downturn after, diminishing to almost 1600 in 2003 (seeFigure 3). Shares of grant distributions are quite unstable (see Figure 4). In the early 1970s, B(BHN) showed a dominant share mostly from 80 to 60%, reduced its share in the late 1980s and theearly 1990s, down to less than 20%, and recovered from the end of 1990s, reaching almost 30%
again.
A (Agriculture) rapidly increased its share passing through 30 to 40 %, attained a top shareposition mostly during 1980s, and lost its momentum quickly to less than 10% in 2003. F (CD offirms) has a growth trend from 15 to 40% except for a couple of worst years in the early 1970s. I(CD of individuals) sustains a steady share of 10 to 20% while G (CD of government) rapidly
increased its share to 20% in 1987, and has been holding its share. CD aid share (F+I+G) has beenclose to 60%, so that CD in Japanese grants is as important as in the total ODA. However, CD of293individuals and government becomes more important in grants than in the total because sum of I and
G are approximately 30%. Also, high shares of B and I especially in recent years might beinterpreted as Japan’s reaction against strong pressures from international institutions (such as UN,
World Bank and DAC).
Next, we analyze Japanese aid distribution of loans (1970-2003). Loans size shows moreunstable trend than the total and the grants (see Figure 5). Sum of loans had been increasing from1970 to 1987 with some ups and downs, finally reached almost 7000 bn. yen mark three times with
two sharp declines during 1988 and 1997, and sank from 3000 to 2000 after 1997. Patterns of share
distribution imply a very clear picture of Japanese loans (see Figure 6). First, they are reallyunstable with dominant three variables (M, F, and G). Second, except for a few years, F (CD offirms) shows a dominant share of 40 to 80%, and recently reached more than 90% in 2001 and 2003.
M (Manufacturing) and G (CD of government) fluctuate rapidly, with shares of less than 10% toalmost 50% year by year. Japanese concessional loans are extremely CD oriented or rather simply
for CD because CD aid share (F+I+G) passes well over 90%. Of course, we know that only CD offirms is intended by Japanese loans since F occupies a greater share than 80%. Thus, Japaneseloans aid could be not suitable for most LLDC or even some LDC countries.
Lastly, Japanese TA distribution is analyzed (1988-2003). TA had been steadily increasing
the total amount from 800 bn. yen in 1988 to 1400 in 1997, and kept this amount until 2001, and has
been diminishing it from 2002, down to less than 1200 in 2003 (see Figure 7). Contrary to grants
and loans, TA shows a relatively stable share distribution, and each variable occupies a fair share(see Figure 8). F (CD of firms) or A (Agriculture) holds the largest share of 20 to 30%, exchanging
a top position in some years. Both I (CD of individuals) and G (CD of government) hold more than
10 but less than 20%. M (Manufacturing) started to hold 20% but continuously reduced its share toless than 10%. Stable distribution should be stressed as a unique characteristic of Japanese TA,
compared with the grants and loans.
oriented.

CD aid (F+I+G) share is 50 to 60% so that Japanese TA is CD

Still, different from grants and loans, A and B (BHN) counts almost 40% in TA spending.

Thus, Japanese TA by JICA is suitable to the countries of low level of development.

4. DISSCUSSIONS
4.1 Development StageIn the early 1960’s, a famous paradigm of economic development was born of Rostow’s book,“Stages of Economic Growth” (1960). According to Bauer and Wilson (1962), Rostow argued thatan economy grows passing through distinctive stages, such as, traditional society, preconditions fortake-off, take off to modern society of high and mass consumption. His analysis was powerfulenough to impact all the economic policies of developed and developing countries. Thus, it isnatural that a recipient country needs different mixed CDs through foreign aid in accordance witheach development stage.

294

One way of categorizing recipient countries into multiple development stages is to follow theincome groups of aid recipients by DAC. Recipients are categorized by their income levels (percapita GNI) into Least Less Developed Countries (LLDC), Low Income Countries (LIC), Lower
Middle Income Countries (LMIC), Upper Middle Income Countries (UMIC), or Higher Income
Countries (HIC).

Still, this method inherits a serious weakness that categorization rules (i.e.

income limits separating each group) are redefined quite often. So, this paper suggests to apply thisidea into another simple method as a proxy. We observe and compare CD and non CD purposes offoreign aid to East Asia and Sub-Sahara Africa. There seem to be a clear development gap between
these two regions because a greater number of members in East Asia are MIC or HIC while mostmembers in Sub-Sahara Africa are LLDC or LIC.
Aid distributions of Japanese grants to East Asia and Sub-Sahara Africa are analyzed(1970-2003). Size of grants to both regions shows a similar trend: a clear growth pass toward theend of 1990’s, a relatively bumpy road still keeping high marks until 2000, and a rapid downturn
after 2000 (see Figure 9 and Figure 11). Speed of growth of grants to East Asia is faster, but thelevel to Sub-Sahara Africa became almost identical or even went ahead after the end of 1980’s.
This tells a preference of the Japanese government to send more grants to the recipients of low levelof development. However, shares of grants to both show a quite similar but unstable trend, which
could suggest no difference in terms of CD and non CD variables (see Figure 10 and Figure 12).

In

the early 1970s, B showed a dominant share, but F and I became competing a top share in 1980’s
and after. Still, there is a small difference that G also holds a large share in East Asia while B stillsustains a large share in Sub-Sahara Africa. This might be interpreted that Japan tends to determine
an appropriate CD and non CD grants, according to the development levels of recipients.
Next, we analyze Japanese loans to East Asia and Sub-Sahara Africa (1970-2003). Althoughsize of Loans to both regions shows an unstable trend with pretty rough bumps, there can be seen big
differences (see Figure 13 and Figure 15). Loans to East Asia show an upward trend throughout theyears while those to Sub–Sahara Africa show an upward trend until 1988 but turned downward after.
Moreover, size to East Asia is 5 to 10 times larger than to Sub-Sahara Africa in most years, and loans
to Sub-Sahara Africa shrinks to zero in a couple of years. Contrary to the grants, this can show apreference of the Japanese government to send more loans to the recipients of high level ofdevelopment. However, similarly to the grants case, shares of loans to both show a quite similar
but unstable trend (see Figure 14 and Figure 16). Since shares exhibit an almost identical feature
between both regions (F, I, and G are major variables), Japan tends to choose the CD and non CD
loans, irrespective of development levels of recipients.

Therefore, we should conclude that Japanconsiders development levels more seriously when it determines the modalities of aid (grants orloans) than the purposes of aid (CD or non CD).
4.2 Sector Development
As we have argued, stages of development are often represented by the transformation of primary to295

tirthirly industries. In particular, economic growth of a typical recipient is measured by a pattern ofshifting share of capital stock (βi) in Equation 4. A newly born economy holds high β1 (low β2 andβ3), and β2 becomes higher (β1 and β3 becomes lower) as it grows. Finally, a fully developed
economy attains high β3 (low β1 and/or β2).
Thus, we can characterize capital aid to each recipient by forward, simultaneous, andbackward types. Defining βi^ as share of industry i in the capital aid, these three types to a recipientof LLDC are shown as follows: a simultaneous type as β1^ ≅ β1, a forward type as β1^ < β1 (β2^ > β2
and/or β3^ > β3), and a backward type as β1^ > β1 (β2^ < β2 and/or β3^ < β3). In the same way, capitalaid to a recipient of LMIC is simultaneous as β2^ ≅ β2, forward as β2^ < β2 (β3^ > β3), or backward as
β1^ > β1 and/or β2^ > β2 (β3^ < β3). We may be allowed to conclude that capital aid of simultaneous
type (or sometimes forward type) is appropriate to each recipient.
In this paper, shares of A, M and C in capital grantsvi to East Asia and Sub-Sahara Africa arecompared, thanks to a large development gap between both regions (1970-2003). A similar andstable trend for both regions is found that an approximately 90% share is held by A althoughremaining shares are held by C in East Asia and by M in Sub-Sahara Africa (see Figure 17 andFigure 18). Since an almost identical trend is observed for both regions, Japan may not consider
development levels of recipients when it determine the mix of sector shares in capital grants.
5. CONCLUTIONSThis paper analyzed Japanese foreign aid distribution of the total sum, the grants, the loans, and TA.
Structural aid expenditures are redefined in term of CD or non CD, based on a macro production
function of a recipient country. Three variables of aid spending for CD are supposed to enhance
CD for individuals, firms, and government. Four variables for non CD are supposed to increase thequantity of labor, and of capital stocks installed in three sectors: Agriculture, Manufacturing, andCommerce. In general, Japanese ODA spending is found to be CD oriented, in particular, CD offirms, which is a dominant purpose of aid in loans. CDs of individuals and government become
major purposes of aid in grants, and BHN is added in TA. Therefore, from the view of thedevelopment level of recipients, three modalities of aid show a clear difference.

Loans are for

middle or high income countries, and TA s are for low income countries while grants are somehow
in the middle of them.
JICA managing a greater half of grants and TA, and JBIC distributing most concessional loans,are going to merge into a new JICA, which can be exaggeratedly understood like a merger of UN
and the World Bank. Of course, aggregating internal financial and administrative structures into
one must be a tremendous challenge, but the gap between two institutions on the past ODA flows
would be real obstacles.

It is true that differences among loans, grants and TAs are obvious, butdifferences of aid purposes between both institutions could be essential.

We hope that thisambitious challenge will be successful for peoples of Japan and recipient countries.
An immediate step from this paper should apply income groups (such as LLDC, LIC, and296MIC) into this research. Regional analysis other than East Asia and Sub-Sahara Africa (South Asia,
South America and so on) will be interesting also.

Then, empirical studies based on this panel dataof CD are strongly demanded, after deriving econometric models of foreign aid on CD for each
recipient.

REFERENCES
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Burnside C. and Dollar D. (2000), Aid, Policies and Growth, American Economic Review, Vol. 90,
847-868
Burnside C. and Dollar D. (1997), Aid, Policies and Growth, Policy Research Working Paper,
No.1777, Policy Research Department, World Bank
Hayami, Y. and Ruttan V. W. (1970), Agricultural Productivity Differences among Countries,
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Kim, J. and Lau, L. J. (1994), The Sources of Economic Growth of the East Asian Newly
Industrialized Countries, Journal of the Japanese and International Economics, No. 8, 235-271
Lau, L. J. and Yotopoulos, P. A. (1989), The Meta-Production Function Approach to Technological
Change in World Agriculture, Journal of Development Economics, No. 31, 241-269
Matsuoka S., Murakami K., Aoyama N., Takahashi Y., and Tanaka K. (2008), Capacity Development
and Social Capacity Assessment (SCA), Japanese Journal of Evaluation Studies Vol. 8, No. 2,
3-23OECD, Development Co-operation: Efforts and Policies of the Members of the DAC, Annual Reportby the Chairman of the DAC
OECD, Geographical Distribution of Financial Flows to Developing Countries
Rostow, W. W. (1960), The Stages of Economic Growth, Cambridge University Press
UNDP(2002), Capacity for Development: New Solutions to Old Problems
UNDP(2002), Developing Capacity through Technical Cooperation: Country Experiences
Takase, Y. K. (1995), Motives of Donors and Uses of Foreign Aid: An Observation of Data, No. 31,
Graduate School of Commerce, Waseda University, 1995, 137-163

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FIGURES
Figure 1. Japanese ODA T otal (sum)
12000

10000

C
M
A
B
F
I
G

8000

6000

4000

2000

0
1988

1989

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1991

1992

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2003

Figure 2. Japanese ODA T otal (share)
100%

C
M
A
B
F
I
G

80%

60%

40%

20%

0%
1988

1989

1990

1991

1992

1993

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1996

1997

1998

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2001

2002

2003

Figure 3. Japanese ODA Grants (sum)
2500

2000

C
M
A
B
F
I
G

1500

1000

500

298

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2001

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1999

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0

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82

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19
70

Figure 4. Japanese ODA Grants (share)

100%

80%

60%

40%

20%

C
M
A
B
F
I
G

0%

Figure 5. Japanese ODA Loans (sum)

8000

7000

6000

5000

4000

3000

2000

C
M
A
B
F
I
G

1000

0

Figure 6. Japanese ODA Loans (share)

100%

80%

60%

40%

20%

C
M
A
B
F
I
G

0%

Figure 7. Japanese ODA T A (sum)

1600
1400

C
M
A
B
F
I
G

1200
1000
800
600
400
200
0
1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Figure 8. Japanese ODA T A (share)

100%

C
M
A
B
F
I
G

80%

60%

40%

20%

0%
1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Figure 9. Japanese Grants to East Asia (sum)
700
600

C
M
A
B
F
I
G

500
400
300
200
100

300

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1976

1975

1974

1973

1972

1971

1970

0

Figure 10. Japanese Grants to East Asia (share)
100%
90%
80%

C
M
A
B
F
I
G

70%
60%
50%
40%
30%
20%
10%

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1976

1975

1974

1973

1972

1971

1970

0%

Figure 11. Japanese Grants to Sub Sahara Africa (sum)
900
800
700

C
M
A
B
F
I
G

600
500
400
300
200
100
0
1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Figure 12. Japanese Grants to Sub Sahara Africa (share)
100%

80%

C
M
A
B
F
I
G

60%

40%

20%

0%
1970

1972

1974

1976

1978

1980

1982

1984

1986

301

1988

1990

1992

1994

1996

1998

2000

2002

Figure 13. Japanese Loans to East Asia (sum)
7000
6000

C
M
A
B
F
I
G

5000

4000
3000
2000
1000
0
1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Figure 14. Japanese Loans to East Asia (share)
100%

C
M
A
B
F
I
G

80%

60%

40%

20%

0%
1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

Figure 15. Japanese Loans to Sub Sahara Africa (sum)
1000
900
800

C
M
A
B
F
I
G

700
600
500
400
300
200
100

302

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1976

1975

1974

1973

1972

1971

1970

0

303

20
04

20
02

20
00

19
98

19
96

19
94

19
92

19
90

19
88

19
86

19
84

19
82

19
80

19
78

19
76

19
74

19
72

19
70

20
02

20
00

19
98

19
96

19
94

19
92

19
90

19
88

19
86

19
84

19
82

19
80

19
78

19
76

19
74

19
72

19
70
80%
70%
60%

50%
40%
30%

60%

40%

20%

0%
2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

1979

1978

1977

1976

1975

1974

1973

1972

1971

1970

Figure 16. Japanese Loans to Sub Sahara Africa (share)

100%

90%

80%

70%

60%

50%

40%

30%

20%

C
M
A
B
F
I
G

10%

0%

Figure 17. Japanese Capital Grants to East Asia (share)

100%
90%

C
M
A

20%
10%
0%

Figure 18. Japanese Capital Grants to Sub Sahara Africa (share)

100%

80%

C
M
A

*

This is a conference paper for the seminar on “Capacity Development and Institutional Change inInternational Development Cooperation” in July 2008. The author would like to thank Yusuke
Asaka and Kyoko Sumi for their excellent RA jobs. Comments by Yoichiro Kimata are greatly
acknowledged. Data of Japanese structural ODA in this research was constructed by the author’s
project which was made possible by the financial support from JSPS Grant-in-Aid for Scientific
Research (15530194).
i
Figures in this data set are commitment base except for the emergency aid though those of
dispursement are ideal in order to represent real aid distributions. Still, reliability of this research
will not be greatly affected since Japanese commitments are almost identical to dispursements.
ii

Main data sources of grants and loans are white papers by METI (Ministry of Economy, Trade andIndustry) and MOFA (Ministry of Foreign Affairs). Also, we directly asked some unpublishedinformation to JBIC and JICA. Recently, most original data became available through web pages(JBIC Homepage: http://www.jbic.go.jp/ and JICA Homepage: http://www.jica.go.jp/).
iii

Geographical regions of recipient countries used in this research are those of the while paper by

METI, which originated from the World Bank. Total of 167 recipients are as follows: East Asia
(Indonesia, Vietnam, Cambodia, North Korea, Singapore, Thailand, South Korea, Taiwan, China,
Philippine, Burney, Hong Kong, Macau, Malaysia, Mongolia, Laos), South Asia (Afghanistan, India,
Sri Lanka, Nepal, Pakistan, Bangladesh, Bhutan, Burma, Maldives), Central Asia (Azerbaijan,
Armenia, Uzbekistan, Kazakhstan, Kyrgyz, Georgia, Tajikistan, Turkmenistan), Middle East (UAE,
Yemen, Israel, Iraq, Iran, Oman, Qatar, Kuwait, Saudi Arabia, Jordan, Syria, Bahrain, Lebanon),North Sahara Africa (Algeria, Egypt, Tunisia, Morocco, Libya), Sub-Sahara Africa (Angola, Uganda,
Ethiopia, Eritrea, Ghana, Gabon, Cape Verde, Cameroon, Gambia, Guinea, Guinea-Bissau, Kenya,
Comoros, Congo Rep., Congo Dem. Rep., Sao tome & Principe, Zambia, Sierra Leone, Djibouti,
Zimbabwe, Sudan, Swaziland, Seychelles, Equatorial Guinea, Senegal, Cote d’Ivoire, Somalia,
Tanzania, Chad, Central Africa, Togo, Nigeria, Namibia, Niger, Burkina Faso, Burundi, Benin,
Botswana, Madagascar, Malawi, Mali, South Africa, Mauritius, Mauritania, Mozambique, Liberia,
Rwanda, Lesotho), Central America (Anguilla, Antigua & Barbuda, El Salvador, Cuba, Guatemala,Grenada, Cayman Islands, Costa Rica, Jamaica, St. Vincent & Grenadines, St. Kitts & Nevis, St.
Lucia, Dominican Republic, Dominica, Trinidad & Tobago, Nicaragua, Haiti, Panama, Bahamas,
Bermuda, Barbados, Puerto Rico, Belize, Honduras, Mexico), South America (Argentina, Venezuela,
Uruguay, Ecuador, Guyana, Colombia, Suriname, Chile, Paraguay, Brazil, Peru, Bolivia), Oceania(Vanuatu, Kiribati, Cook Islands, Solomon Islands, Tuvalu, Tonga, Nauru, Western Samoa, New
Caledonia, Papua New Guinea, Palau, Fiji, Polynesia, Marshall Islands, Micronesia), Europe(Albania, Ukraine, Greece, Cyprus, Slovenia, Czech, Turkey, Hungary, Bulgaria, Bosnia andHerzegovina, Poland, Portugal, Marta, Moldova, Latvia, Romania, Yugoslavia). Pacific Islands in
Oceania having been controlled by US no longer exist as a country after their independences.
iv

We decided to include Water Supply, Sanitation and Sewerage in F (CD of Firms) not in B (BHN).

This is because we found that most projects classified in this purpose are large scaled, investing304infrastructures for dams and irrigation facilities, after we checked the details of Japanese ODA.
Nevertheless, we must admit that it might be too rough for any single sub sector (i.e. Water Supply,
Sanitation and Sewerage) not to belong to multiple variables (i.e. F and B) in this research. One
possible solution is to pile up the data from each project base or even more specified expenses.
Another is to pretest causalities between each CD variable (I, F, or G) and sub-sector expenses byinventing econometric models. Both would be legitimate but difficult extensions from this study.
v

Per capita distribution of total Japanese ODA (1988-2003), grants (1970-2003), loans (1970-2003)

and TA (1988-2003) is also analyzed in this research.
population of each recipient country.
Indicators by the World Bank.

Here, per capita means division by theMain source of population data is the World Development

Since most results are similar to the total, we decided to skip theresults of this case in this paper.
vi

Shares of A, M, and C of capital loans (1970-2003) are also analyzed in this research. Since only

16 years of capital loans are given to Sub-Sahara Africa, we decided to skip the results of this case inthis paper.

305