Japanese and East AsianDevelopment Experienceand Africa

Cashew nut seller in Mozambique

Copper Belt in Zambia

Garment workers in Ethiopia

Kenichi Ohno
National Graduate Institute for Policy Studies (GRIPS)
November 2011

Learning from East Asia
 It is NOT copying some specific policies adopted

in some East Asian country to Africa.
 Learning mindset and methodology--by studying
a large number of international best policy
practices (and failures), each country should
build capacity to design and implement policies
which are pragmatic and suitable for local needs.
 The Eastern approach should be complementary
to the Western approach—MDGs, PSD, businessclimate, good governance, aid harmonization

Japanese Approach to Development
GDF, Proposal for a New African Growth Support Initiative, Aug.2008.
 Target orientation—striving for concrete vision,

targets, roadmaps, and actions instead ofgeneral capability improvements.
 Field (gemba) orientation—working on factory
floor or crop field to solve concrete problems.
 Joint work—transferring skills and knowledge todeveloping countries by working together (OJT);
no parallel mechanisms.
 Dynamic capacity development—emphasis onpolicy learning and expectation of graduationfrom aid.

Entry Points for Japan’s Industrial
Cooperation in Africa (and Elsewhere)
GDF, Proposal for a New African Growth Support Initiative, Aug.2008.

Japan, a small investor and donor in Africa, butwith East Asian experience, can offer the following:
1.
2.
3.

4.

For a country with reasonable visions and plans,
standard policy tools can be provided.
Policy dialogue for making and strengthening
visions and strategies.
Comprehensive regional development with core
infrastructure with additional measures such as
education & training, agricultural & industrial
promotion, planning capability, industrial parks,marketing, etc.
Creating enabling environment for Japanese
investment under the principle of open accessand non-exclusivity.

(1) Mobilizing Standard Aid Tools toSupport Existing Development Vision
 Industrial policy menu is fairly common. But

selectivity and adjustment are needed to adapt
to unique conditions of each country.
 Japan has many industrial aid tools which arewidely practiced in East Asia.
Kaizen (quality and productivity improvement) Shindan (SME management consultant system) Engineering universities and colleges
 TVET-industry linkage
 Industrial estates & strategic FDI marketing SME assistance package
 Integrated export promotion (Korea)
 Strategic creation of new industry through industrygovernment-university cooperation
 Comprehensive regional development with core
infrastructureEast Asia’s Standard Policy Menu for Enhancing
Industrial Human Resource and Enterprise Capability
Objective(1) Legal and policy framework(2) Industrial human resource(education and training)(3) Enterprise capability(management and technology)

Policy measure
Provision of necessary laws and regulations
Designation or creation of lead ministry/agency for priority policy
Inter-ministerial coordination mechanism
Effective public-private partnership (PPP)
Policy structure consisting of vision, roadmap and action plan
Monitoring and evaluation mechanism
National standards for quality, safety, skills, environment, etc.
Framework for technology transfer and intellectual property rights
Industrial statistics and database
Strategic mobilization of international cooperation
Technology and engineering universities and institutes
Polytechnics and industrial collegesTechnical support in specialized skills for engineers
Technical and vocational training for new and/or current workers
Subsidies and incentives for worker training
Skill certification, competition, and awards
Introduction of kaizen or productivity tools (5S, QC circles, elimination of muri and muda,suggestion box, just-in-time system, etc.)
Benchmarking, business process re-engineering, and other management tools
Management or technical advisory service (by visiting consultants, short-term)Enterprise diagnostic and advisory system (institutionalized shindan or technical extension
services)
Short-term courses and tours for enterpreneurs and managers
Quality standards and certification, testing services and centers
Awards and recognition for business excellence, productivity, competitivenessSubsidies & incentives for upgrading management, technology, marketing, ITC(4) Finance(5) FDI attraction(6) Marketing and businesslinkage(7) Innovation

Development financial institutions
Subsidized commercial bank loans for targeted firms (two-step loans)Special loans and grants for priority products and activities
Credit guarantee system
Equipment leasing
Enterprise credit information system
Linking loans with enterprise diagnostic and advisory system (see (3) above)
Clear announcement of preferred investors, sectors, regions, etc.
Effective investor information package and website
Investment promotion seminars, missions and offices abroad
Provision of high-quality infrastructure services (power, transport, land, water, waste waterand solid waste treatment, etc)
One-stop investor support service (both before and after investment)
Development and management of industrial estates including EPZs, SEZs and special
zones for priority sectors, high-tech firms, etc.
Rental factories for local and/or foreign SMEs
Support for labor recruitment, matching, houseing, commuting, healthcare, etc.
Negotiation and provision of special incentives for attracting targeted anchor firms
Support for domestic and export market development
Trade fairs and reverse trade fairs
Enterprise database (SMEs, supporting industries, sectoral)
Incentives and subsidies for FDI-local firm linkage and technology transfer
Official promotion/intermediation of subcontracting
Establishment and strengthening of industry/business associations and local firm networks
Business start-up support
Support for R&D, branding, patenting
Business incubation centers
Venture capital market
Innovation clusters among industry, research institutes and government
Incentives/subsidies for designated activities and products(2) Japan’s Policy Dialogue withDeveloping Countries
If the developmental vision is weak or if the nation wants tolearn Eastern way, Japan can engage in policy dialogue for
improving policies & building mutual trust & understanding: Argentina – Okita Mission, 1985-87; follow-up 1994-96
 Vietnam – Ishikawa Project, 1995-2001
 Thailand – Mizutani Report for upgrading SMEs andsupporting industries, 1999
 Indonesia – Continuous Government-Business Policy
Dialogue; Urata Report for SMEs, 2000; Prof. Shiraishi &Asanuma for financial crises, 2002-04
 Mongolia – Ueno, Hashimoto, 1998-2001
 Myanmar – Prof. Odaka, 1999- (resuming soon)
 Laos – Prof. Hara for overall dev. strategy, 2000-05
 Ethiopia – GRIPS-JICA, 2009-11, for kaizen & policy
methods

GRIPS-JICA Industrial Policy Dialogue
and Industrial Support Projects (2009-2011)
IPD conference
Official launch
July 2008 Preparation June 2009

Industrial policy dialogue

Black square ■ indicates policy dialogue session in Addis
Ababa with (i) prime minister, (ii) concerned ministers
and state ministers, and (iii) operational levels.

May 2011InterimReportFinalReport

Kaizen pilot project (30 firms)

Industrial support
projects

Institutionalizationof kaizen(To be continued)

Basic metal &engineering study(With ECBP)Main Topics of Industrial Policy
Dialogue with Ethiopia
 Democratic Developmentalism (DD) andAgricultural Development Led Industrialization(ADLI), with PM.
 Policy formulation and implementation
mechanism from East Asian perspective.
 Structure of master plans and action plans fromEast Asian perspective.
 Advice on the next five-year plan (Growth andTransformation Plan).
 Concept, practice and institutionalization ofkaizen (productivity improvement)—global
practice and Ethiopian context.
 Basic metal and engineering industries—localsurvey and review of international experience.

At the Prime Minister’s OfficeHigh Level Forum (minister & state minister level)
Meeting with ministry officials

Kaizen
Kaizen means “improvement” in Japanese. It is practiced
widely in Japan as well as in other countries (Europe, US,Southeast Asia, India, Latin America, Africa...) It is continuous effort and teamwork at production site,
without investing in new machines or hiring consultants.
 Basic tools for kaizen beginners are:
 “5S” (Sort, Straighten, Shine, Systematize, Standardize) Quality control circles (QCC)
 Japanese experts can coach individual companies throughlectures and regular visits.
 Most companies improve productivity, sometimes greatly,
after 3-6 months regardless of size, sector or nationality.
But internalization requires long-term company-wide effortand mindset change.
(3) Japanese Assistance for Regional
Development around Core Infrastructure Greater Mekong – East-West and North-SouthCorridors for development of Indochina Region
 Thailand - Eastern Seaboard: industrial cities
around port infrastructure Indonesia – Brantas River Basin Development
 Vietnam - Highway No.5 and FDI attraction
 Cambodia - Port, industrial park, FDI attraction
 El Salvador - La Union Port and comprehensive
regional development Mozambique (planned) – Nacala Port andCorridor for regional development

HondurasRoad(US aid)

Bridge(Japanese aid)

(Japanese aid)

Pacific OceanRegional development(Japanese aid)Components of Japan’s ODA in El Salvador
Source: Akio Hosono (Directorof JICA Research Institute)

KEY INFRASTRUCTURE- Construction of La Union Port- Rebuilding an old bridge (Honduras border)- Digital map technology for efficient planning- Urban development planning for La Union CitySocial & Human RD- MEGATEC La Union(training center)- Primary schools & math- Clean water- Rural electrification- Solid waste control

Support forProductive Sectors

Eastern RegionDevelopment- SME promotion- Aquaculture- Small-scale agriculture- Reservoirs & irrigation- Small-scale livestock- La Union Port
- Plan Puebla Panama- CAFTA & other FTAs
- Cent. Amer. integration- M/P for Eastern Region

Indonesia: Brantas River Basin Development:
Regional development around hydropower andirrigation(Source: JBIC)

(Map source: JBIC)- Mozambique is JICA’s target country inAfrica for regional development approach:
Nacala Corridor, Nacala city planning,agriculture (with Brazil), productive sector
support, road maintenance(Map source: World Bank)- World Bank is proposing a new policy mechanism for implementing
Mozambique’s multiple corridors development.

Some Related Research at
GRIPS Development Forum
Learning to Industrialize: From Given Growth to Policyaided Value Creation (Routledge, coming soon).
East Asian Industrial Policy Handbook (project in progress).
Comparative research on industrial policy making in
Singapore, Korea, and Taiwan (2010-2011).
“Japanese Approach to Growth Support in Developing
Countries: International Comparison and Case Studies”(JICA, Mar.2010; English translation in progress).
“Backgrounds, Policy Measures and Outcomes forDevelopment of Supporting Industries in ASEAN:
Malaysia and Thailand in comparison with Vietnam”(JICA, Feb.2010).
Proposal for a New African Growth Support Initiative,(Aug.2008, prepared for TICAD IV).