Sustainability Global Economy World Politics Africa Middle East Business

Eastern and Western Ideas for African Growth:Diversity and Complementarity in Development Aid
By Izumi Ohno & Kenichi Ohno

The West and the East approach economic development
differently. The Europeans and Americans stress free
and fair business climate, promoting private activities
generally without picking winners, and improving governance. East Asia is more interested in achieving concrete results rather than formal correctness, prioritisinga small number of sectors for industrialisation, and eventual graduation from aid.
In their latest book, Eastern and Western Ideas for African
Growth: Diversity and Complementarity in Development
Aid, Izumi and Kenichi Ohno explore the apparent differences between East and West and discover that theirapproaches are in reality complementary, and that cooperation between the two can lead to faster growth andeconomic transformation.

F

ollowing a decade of poverty reduction drive with a
special focus on health care and primary education,
the growth agenda has returned to the centre of global
development debates. While poverty reduction strategies in thelate 1990s to the early 2000s targeted social sectors, recent years

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have seen renewed interest in growth promotion. Concerns arerising with private sector development, infrastructure, technology transfer and agricultural and industrial transformation inboth developing countries and the international communitythat supports them. New analytical tools such as Growth
Diagnostics by Harvard professors1 and Doing Business surveys
by the World Bank group2 have been introduced. Many
growth strategies are proposed, including The Growth Reportby the Commission on Growth and Development3 and the
New Structural Economics approach by former World Bank
chief economist Justin Lin4. Donor support for infrastructure development, which declined sharply in the late 1990s,
has revived, and talk of public-private partnership has become fashionable.
It is now commonly recognised that economic growth isessential for sustainable poverty reduction. Successful East
Asian economies have all adopted growth-oriented development strategies of one kind or another. Japan’s aid policy
strongly reflects its own historical experience as a successful
latecomer country; for long it has stressed the importanceof sustaining growth, attaining self-reliance and overcoming aid dependency. For Japan and other like-minded East
Asian donors, regained global balance between growth andpoverty reduction, with more emphasis on the former, ishighly welcome. The global debate should now shift from an
unproductive choice between growth and poverty reduction
to learning a pragmatic method by which country-specificgrowth strategies are formulated and implemented.

The global debate should now shift
from an unproductive choice between
growth and poverty reduction to learning a pragmatic method.

How does the East differ from the West?
There are notable differences among donors and theirapproaches to aid and development. East Asia, including
Japan, is interested in tangible results through concrete projects rather than formal correctness in general theories andframeworks. It is sensitive to local politics and historical contexts, and knows the futility of a one-size-fits-all approach.
It prioritises a small number of sectors for industrialisation,
and accepts aid as a means for ultimately graduating from it.
By contrast, Western donors usually recommend good governance and an early adoption of policies and institutions

that copy international best practices.
Both the Doing Business Indicators andthe Worldwide Governance Indicators
extract desirable attributes of growthfriendly governments from the West andevaluate and rank developing countries
by them. While Growth Diagnostics
that look for a small number of binding
constraints to growth is an important
departure from the long and globallycommon to-do list approach of the
Washington Consensus institutions, it isstill couched on the Western tradition.
Its logic tree tries to find a country’s
weaknesses in relation to international
norms and thus solutions are proposedwith little heed to political feasibility or
administrative capacity of the country
in question.
The East Asian approach is characterised by real-sector pragmatism, goal
orientation, and a pursuit of uniquestrengths for each country. The problem
of weak policy capability is acknowledged, but that does not lead to thecounsel of minimalist government. Capability must be built up through handson effort and struggle—building a large
industrial zone with deep seaports,
raising car production to 1 million units
per year, producing a certain number of
ICT engineers, etc.—rather than trying
to improve governance scores generallywith no specific objectives. In our bookthis is called “dynamic capacity development”, whereby private skills andpolicy capability are acquired by solving
concrete problems step by step toward
pre-set goals. This can help developing
country governments to practice selectivity and concentration, execute andmonitor key projects well, and gain confidence and pride through gradual accumulation of small successes.

Minding rules versus players
Yanagihara distinguishes the “framework approach” practiced by Western aid

donors from the “ingredients approach”
of the Japanese government in its development aid strategy5. The former emphasises the rules of the game by which
private actors and policy makers playwhile leaving the outcome of the game
to individual matches and players. Great
attention is paid to the functioning ofmarkets, justification of official intervention, budget and public investment
frameworks, people’s empowerment andparticipation, monitoring mechanisms,

East Asia have been exposed to a heavy
dose of Washington Consensus formulas to the extent that they cannot thinkdevelopment in any other way. Some ofthem have heard of East Asian miracles
but few know exactly how the East hascaught up economically with the West.
Our book does not deny the importanceof rules and frameworks, but warns
against only minding them without
training individual players and hiring
good coaches.

East Asia is interested in tangible results through concrete
projects rather than formal correctness in general theories
and frameworks. It is sensitive to local politics and historicalcontexts, and knows the futility of a one-size-fits-all approach.
administrative efficiency and accountability, and the like. Aid harmonisationand general budget support are naturallyborn out of this tradition.
In contrast, the latter approachtakes deep interest in how individual
players are playing in the field and theoutcome of each game. It examines
technology, labour cost and quality,
demand trends, product mixes, industrial structure, marketing and logistic efficiency, and the like, in theconcrete context of targeted sectors
and regions. Matching crop species
with particular soil, training factory
workers for kaizen (Japanese-stylequality and productivity improvement) and efficient layout of capital
equipment are among things that areseriously discussed. Similarly, technical specification of roads and bridges,
the lot size and the scope of one-stop
investor services in an industrial park,and other details which are normallyleft to consultants and contractors in
the West are the proper concern ofJapanese aid officials.
Many latecomer countries outside

Setting goals to be uniqueand strong
In high performing economies in East
Asia, industrial policy has usually taken
a goal-targeting form. A national leader
first proclaims a long-term vision thatpoints to a direction without giving
details (“Move from hardware tosoft power,” “Learn from Japan and
Korea,” “Be an automotive hub ofSoutheast Asia with high-quality partexport,” etc.) To realise this vision, an
appropriate government organisation
is designated to draft an ambitious but(with good effort) attainable strategy
and execute it with concrete actionplans. Working backwards from broad
goals to phased strategies and annual
plans and budgeting, making necessary
adjustments and accumulating experience and confidence along the way, hasbeen the hallmark of East Asian development planning.
Japan in the 1960s had the goal of
doubling income within the decadeas well as competing effectively with
Western multinationals as trade barriers were lifted under the GATTTechnical specification of roads and bridges, the lot size and the scope of one-stop investor services in an industrial park, and other details which are normally left to consultants
and contractors in the West are the proper concern of Japanese aid officials.

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Kennedy Round commitments. The
Ministry of International Trade andIndustry (MITI) together with theJapan Development Bank coordinatedand assisted private efforts in improving productivity. Taiwan in the 1980s
launched high-tech industry promotion to replace the heavy industry
drive of the past. Priority areas wereselected, a science and technology
park was created in Hsinchu, FDI
marketing was conducted, and policy
measures were introduced to support
R&D and finance eligible companies. The top priority of Malaysia at
present is to overcome an upper-middle income trap into which it seems

to have fallen and become a fully
developed economy by 2020. A comprehensive strategy, consisting of the
Economic Transformation Programme
and the Government Transformation
Programme, was launched in 2010 witha large number of initiatives, targetedareas and indicators. Results are regularly monitored by the Performance
Management and Delivery Unit andthe Independent Evaluation Board.
Instead of assessing developing countries by global standards
or nudging them to become averageachievers in all areas, the East Asian
approach is to identify the future potential unique to each country. Limited

Japan’s Policy Dialogue with Developing Countries

Country

PeriodHead/key players

Argentina

1985-1987
1994-1996

Saburo Okita (former
foreign minister)Comprehensive study on agriculture and livestock
farming, industry, transport and export promotion

Thailand1999

Shiro Mizutani(former MITI official)

Study on the master plan for SME promotion policy

Vietnam

1995-2001

Shigeru Ishikawa(professor)

Large-scale joint study on macroeconomy, industry,
agriculture, enterprise reform, crisis management, etc.

Vietnam

2003-current Japanese embassy,
JICA, JETRO, JBIC

Indonesia

2000

Shujiro Urata(professor)

Policy recommendation for SME promotion

Indonesia

2002-2004

Takashi Shiraishi andShinji Asanuma(professors)

Policy support for macroeconomic management,
financial sector reform, SME promotion, private
investment promotion, democratisation, decentralisation and human resource development

Laos2000-2005

Yonosuke Hara
(professor)

Study on macroeconomy, finance, state enterprise, FDI and poverty reduction, etc.

Myanmar1999-2002

Konosuke Odaka(professor)

Study on agriculture, rural development, industry,
trade, finance, ITC, etc.

Mongolia

1998-2001

Hiroshi Ueno and Hideo
Study on the support for economic transiHashimoto (World Banktion and development
economists and professors)

Vietnam

2008-2010

Japanese embassy, JICA,
JETRO, businesses,
GRIPS/VDF

Produce supporting industry development
action plan for joint implementation

Ethiopia

2009-

GRIPS Development
Forum and JICA

Kaizen, basic metals & engineering, productivity movement, policy procedure & organisation,
export promotion, etc.

Vietnam2011-

Japanese embassy, JICA,
JETRO, METI, GRIPS/VDF

Select and intensively promote a small numberof industrial sectors; draft and implement detailed action plans

Purpose and content

Bilateral joint initiative to improve businessenvironment and strengthen competitivenessthrough 2-year cycle of action plans

Source: authors’ research.
Abbreviations: MITI (Ministry of International Trade and Industry), SME (small and medium enterprises), JICA (Japan
International Cooperation Agency), JETRO (Japan External Trade Organization), JBIC (Japan Bank for International
Cooperation), GRIPS (National Graduate Institute for Policy Studies).
Note: This table lists policy dialogues that are large-scale or worthy of special attention. Besides these, Japan offers
policy advice through dispatching advisors to heads of state or ministers, expert dispatches, drafting reports on development strategy, training courses and site visits, conferences and seminars, etc. in various scale and duration.

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resources are poured into this arearather than scattered across many
unrelated programs. Rwanda aims
to become a top IT country in Africa
and El Salvador wants to solidify its
position as a logistic hub of Central
America—in air, land and sea transport. Though they are not located in
East Asia, their policy orientation is
Eastern. The development strategy of aland-locked country should be entirely
different from that of a country withexcellent seaports. Once unique potential for each country is identified, policy
effort must be directed to removing barriers to attain that potential.

Policy dialogue for latecomers
If an African country—or a latecomer
country in any other region—wishes tolearn the nitty-gritty of Eastern policy
making, where can it find a textbook
and an instructor? As a starter, we recommend bilateral policy dialogue, aflexible consultative mechanism Japan
employs routinely in East Asia andelsewhere. Since the Eastern approach
denies common answers, it cannot
deliver a pre-determined fix applicable to all. The lesson must be learned
interactively. What it can offer is asuggestion for methodology—the way
a solution should be constructed foreach country.
The policy dialogue we advocate is
an intellectual cooperation between adeveloping country and an advanced
country, held regularly over a few toseveral years with an open and evolving agenda. It is a private tutoring forpolicy learners with no pre-determined
formula—everything is up to the needsof the client. This certainly differs fromnormal technical assistance with narrowly prescribed terms of reference. It
is also unlike seminars and tours organised by an industrialised country to publicise (brag about) its past achievements.
Japan’s policy dialogue cites concrete
cases from all around the world, not justJapanese experiences, which are usually
too hard to digest for beginners.
Starting with Argentina, Japan has
conducted policy dialogue with many

The policy dialogue we advocate is an intellectual cooperation between a developing country and an advanced country, held regularly over a few to several years with an open andevolving agenda. It is a private tutoring for policy learners with no pre-determined formula.
developing countries in various modalities regarding purpose, scale, participants, duration, and frequency (seetable on the left). It usually starts with anational leader of a developing country
requesting Japan to discuss development
strategy generally or teach and transfer
the experiences of East Asian development. In countries such as Vietnam,
Indonesia and Laos, the Japanese government has mobilised a large numberof academics, businesses, and aid consultants to identify key issues, study
them, and offer policy advice. A similar
policy dialogue is about to start in
Myanmar.
While East Asia and Sub-SaharanAfrica are different, and issues and solutions may differ considerably between
the two regions, the method of organising policy dialogue as discussed above
should be valid for any latecomers.
Admittedly, Japan has a far smaller presence in investment and ODA in SubSaharan Africa in comparison with East
Asia, where its economic ties and aid
efforts are concentrated. For this reason,
Japan’s growth assistance initiative in
Sub-Saharan Africa should start with amanageable size and initially target only
one or two countries that are willing
and able to learn. In the chosen country,
Japan should become a lead donor in
growth policy and work closely withother stakeholders such as domestic andforeign businesses, academics, NGOs,
and bilateral and multilateral donors.
Western donors and internationalorganisations also conduct “policy dialogue,” but their topics tend to be lessindustrial and more towards macroeconomic, legal, social or governanceaspects. When industrial issues aretaken up, they are usually cross-sectoral
problems such as ICT, globalisation,
green growth, and enterprise reform
rather than sector-specific targeting orplanning. Japan’s policy dialogue isJuly - August 2013

unique in the sense that it aims directly
at strengthening the state’s role andcapacity in industrialisation rather
than reducing the scope of government
intervention. Korea also offers largescale policy cooperation to developing
countries called the Knowledge Sharing
Program, but its approach is far broader
and more standardised than Japanese.

Ethiopia-Japan industrial policy
dialogue
The Ethiopia-Japan industrial policy
dialogue is an endeavour to transfer the
East Asian approach to Africa. The dialogue was requested in 2008 by Prime
Minister Meles Zenawi after he read areport which was the previously unpublished version of the book this article
is based on. Mr. Meles was particularlyinterested in the chapter on Japan’skaizen project in Tunisia. Unlike the
EU project which helped Tunisianfirms to acquire ISO certification, theJapanese team visited 28 model firms
regularly to provide concrete and practical advice on the factory floor andtransferred diagnostic skills to Tunisianofficials. In fact, this is the standard

assistance were closely linked with substantive feedbacks.
After several months of preparation,
the first phase (2009-2011) of EthiopiaJapan industrial policy dialogue waslaunched. It was jointly managed by
JICA and GRIPS while the two-year
kaizen project was executed in parallelby a team of Japanese consultants. The
JICA-GRIPS team visited Ethiopia every
three months to have intensive discussions at three levels including (i) the prime
minister, (ii) ministers, state ministers anda senior advisor to the PM (“High Level
Forums”), and (iii) policy makers, practitioners and international partners on the
ground. The agenda evolved from developmental politics, Agricultural Development Led Industrialisation (Ethiopia’s
key vision), Eastern methods of policy
formulation and documentation, theconcept of kaizen and its applicability
to Ethiopia, the next five-year plan, basic
metal and engineering industries, casestudies from Singapore, Taiwan, Korea,
Malaysia, Thailand, Indonesia, Burkina
Faso, Botswana, etc. Discussion wasalways frank, action-oriented and withmutual respect.

Japanese team visited 28 model firms regularly to provide
practical advice on the factory floor and transferreddiagnostic skills to Tunisian officials. This is the standard
procedure for kaizen assistance that Japan offers.
procedure for kaizen assistance thatJapan offers to any country. Mr.
Meles asked the Japan International
Cooperation Agency (JICA) to replicate kaizen assistance in Ethiopia andthe National Graduate Institute for
Policy Studies (GRIPS) to engage inbilateral policy dialogue. One important aspect of this cooperation was thatpolicy dialogue and concrete industrial

At the request of the Ethiopian
government, the twin projects wereextended to the second phase (20122015). As of mid 2013, industrial policy
dialogue is focusing on strategic export
promotion, FDI marketing and planning organisation under new Prime
Minister Hailemariam Desalegn. It
now features targeted learning from
Malaysia and producing concrete

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Ethiopia stands out from other countries in Africa for its desire to learn from the East,strong policy ownership, and unwavering resolve toward agricultural and industrial development. It rejects Neo-classical Liberalism, donor-driven development agenda.
results. Meanwhile, the second phase ofkaizen aims at training Ethiopian kaizen
experts and strengthening the Ethiopia
Kaizen Institute, a national organisation
established in 2011.
Because policy dialogue is a complex
and delicate cooperation, partners
must be chosen with care. We visiteda number of “donors’ darling” countries in Africa for a potential dialogue
partner, and ended up with Ethiopia
which was willing to learn and had
already done some learning previously.
This fact was crucial apart from therequest from the PM.

the side line, the Eastern tutor may beable to help Ethiopia attain that goal.

A final remark
We recognise that the views mentioned
above are by no means the monopolyof East Asian officials and experts.
Nor do we claim that every Japaneseadvisor practices good Eastern methods.
However, as a general tendency, theseviews permeate more strongly in the
East than in the West, which currently
sets the global development agenda.
In international conferences, it is notuncommon to see Korean and Chinese

The best results will be obtained when the functionalframework approach of the West is combined with the
Eastern approach that promotes hands-on experience andthe uniqueness of each country.
Ethiopia stands out from other countries in Africa for its desire to learn fromthe East, strong policy ownership, andunwavering resolve toward agriculturaland industrial development. It rejects
Neo-classical Liberalism, donor-driven
development agenda, and academic
research without practicality. Divisionof labour among donors is orderedby the Ethiopian government, not bydonors through aid harmonisation. It
is amazing to see such a poor and aiddependent country as Ethiopia exercise so much policy independence, andwe applaud it. From the East Asian
perspective, no country can start on arobust growth path unless it has national
pride, self-discipline and upward mobility. However, these spiritual conditions
are necessary but not sufficient fordevelopment. The only thing Ethiopia
seems to lack at present is the deep
knowledge and experience in industrial
policy making which must be acquiredwith patience and determination. From

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participants proposing proactive andskilful government to work with theprivate sector, while Westerners often
express doubts about such state activism. However, the number of Western
officials and researchers that support
Eastern policies, entirely or partially,is on the rise. Our book is a collectionof articles written by such Western“converts” as well as typical Eastern
researchers and African development
officials.
The difference between the two perspectives is a fundamental one rooted inmethodology and philosophy. However,
we must insist that the two are complements rather than substitutes. The best
results will be obtained when the functional framework approach of the Westis combined with the Eastern approachthat promotes hands-on experienceand the uniqueness of each country.
Abstract thinking must be supported bypragmatic action. For most latecomer
countries outside East Asia, this means

learning the Eastern way more andcorrecting the dominance of the Western way.

About the Authors
Izumi Ohno is Professor at the National
Graduate Institute for Policy Studies(GRIPS) in Tokyo. She specializes ininternational development policy andJapan’s ODA policy. Prior to joining
GRIPS (in 2002), she worked at the
Japan
International
Cooperation
Agency (JICA), the World Bank,and the Japan Bank for International
Cooperation (JBIC). She holds MPA
from WWS of Princeton University.
Kenichi Ohno is Professor at GRIPS,
specializing in development economics and industrial development. He has
advised Vietnam for 18 years and currently conducts regular policy dialogue
with the Ethiopian government. He
holds Ph.D in Economics from Stanford
University and was economist at theInternational Monetary Fund (IMF)from 1987 to 1991.

References

1. R. Hausmann, D. Rodrik and A. Velasco,“Growth Diagnostics,” John F. Kennedy Schoolof Government, Harvard University (2005).
2. The World Bank and the International
Finance Corporation (IFC) have publishedannual Doing Business reports since 2004
and tracked regulatory reforms aimed at
improving the ease of doing business in eachmember country.
3. International Bank for Reconstruction andDevelopment and Commission on Growthand Development, The Growth Report:
Strategies for Sustained Growth and Inclusive
Development, Washington, D.C.: IBRD/The
World Bank on behalf of the Commission
on Growth and Development (2008).
4. Justin Y. Lin, New Structural Economics:
A Framework for Rethinking Development andPolicy, World Bank (2012).
5. T. Yanagihara, “Development and Dynamic Efficiency: ‘Framework Approach’versus ‘Ingredients Approach,’ ” in K. Ohno
& I. Ohno, eds., Japanese Views on Economic
Development: Diverse Paths to the Market,
London: Routledge (1998).