New Approaches to Development
and Changing Sector Issues

The Foundation for Advanced Studies on International Development(FASID) was established in April 1990. FASID and its affiliate,
International Development Research Institute (IDRI), conduct research,facilitate interaction among researchers and practitioners, and offer training programs to development specialists. These activities are aimed for
improvement in the quality of development programs and policies.

Copyright © 2005 by FASID
Published in 2005 in Japan by the Foundation for Advanced Studies on
International Development, 1-6-17 Kudan-minami, Chiyoda-ku, Tokyo
102-0074, Japane-mail : pub@fasid.or.jp
URL : http://www.fasid.or.jp

Foreword
Naonobu Minato
Acting Director, International Development Research Institute,Foundation for Advanced Studies on International Development
The Foundation for Advanced Studies on International Development(FASID) is conducting a research project on trends and issues in international
development assistance that was commissioned by the Ministry of Foreign
Affairs in 2002. An integral part of this project is that study groups comprisedof experts from concerned government ministries and agencies and academia
discuss current issues related to development assistance. Information fromthese meetings and other activities is disseminated on the web or as a publication.
The series Trends in Development Assistance is one such product. This
volume, New Approaches to Development and Changing Sector Issues, analyzes trends in world ODA with a focus on aid approaches and sector issues,
while the last volume, Global ODA Since the Monterrey Conference, provides
an in-depth analysis of current activities of major actors in international development assistance. We suggest that this volume be read in conjunction withthe preceding volume. This volume focuses on three main issues in development assistance — Poverty Reduction Strategy Papers (PRSP), Millennium
Development Goals (MDGs), and evaluation of development assistance.
Furthermore, it explains trends in six major fields — education, health care,environment, water, governance, and peacebuilding.
I would like to express my gratitude to contributors to this volume —Associate Professor Masaki Kondo of the International Christian University;
Professor Izumi Ohno of the National Graduate Institute for Policy Studies(GRIPS); Research Fellow Yumi Niiya of GRIPS; Research Associate
Suzanne Akiyama of the Development Strategy Research Program at GRIPS;
Associate Professor Yasuyuki Sawada of Tokyo University; Associate
Professor Kazuo Kuroda of Waseda University; Research Assistant Takako
Yuki of Tokyo University; Evaluation Officer Koichiro Ishimori of the Japan
Bank for International Cooperation (JBIC); and Deputy Director Takako
Toda at the U.S. office of the Japan International Cooperation Agency(JICA). Each brings valuable insights from academic studies and hands-on
practice.
The topics in this book and trends in the field are constantly changing,thus, FASID intends to publish significant changes in various ways, including
at our website, http://www.fasid.or.jp/dakis/. I hope this book will be of help
to academic researchers, practitioners, and students in the international development community as they look for trends in the field of development assistance.

New Approaches to Development
and Changing Sector Issues
Foreword
List of Tables, Figures and Boxes
Abbreviations and Acronyms
Chapters
1 Overview ............................................................................................ 1
2 Global Changes in Development AssistanceDiversifying PRSPs — Examples from Vietnam and Tanzania ...... 9Millennium Development Goals .................................................. 34
Recent Developments in Aid Evaluation....................................... 60
3 Aid Trends by Sector
Educational Development............................................................. 74
International Assistance in the Health Care Sector...................... 118
Trends in Environmental Aid Policies ........................................ 155
Water-Related Issues and International Development ................ 189
Defining and Promoting Governance ........................................ 212
Peacebuilding Before and After 2002 ......................................... 241

List of Tables, Figures and Boxes
TablesTable 2-1 An international comparison of Poverty Reduction Strategy
Papers ................................................................................... 19
Table 3-1 Effect of school-level educational inputs on student academic
performance. Summary of existing research .......................... 79
Table 3-2 Average number of years of education and educational rate of
return, by region ................................................................... 80
Table 3-3 International conferences on international cooperation in the
education sector and formation of Japanese policies and strategies in the 1990s ................................................................... 85
Table 3-4 Development assistance in the health and population sectors
from major bilateral donors (average of 1997-99) ............... 133
Table 3-5 HIV/AIDS patients in 2002 (million)................................. 140
Table 3-6 Bilateral donor funding for HIV/AIDS (1998) ................... 143
Table 3-7 Corporations and governments participating in the Prototype
Carbon Fund ...................................................................... 164
Table 3-8 Corporations and governments participating in theCommunity Development Carbon Fund............................ 166
Table 3-9 Corporations and governments participating in the BioCarbon
Fund................................................................................... 166
Table 3-10 GEF funding by thematic area, 1991 to 2003..................... 168
Table 3-11 GEF funding by geographical area, 1991 to 2003 ............... 168
Table 3-12 Japan’s aid to the environment sector, 1996 to 2002 (billion
yen) .................................................................................... 177
Table 3-13 Implementation status of the EcoISD for FY 2002 ............. 179
Table 3-14 Number of Water Supply and Sanitation projects implemented
by major donors.................................................................. 197
Table 3-15 Major donor aid for Water Supply and Sanitation projects(US$ million) ..................................................................... 198
Table 3-16 Number of Agricultural Water Resources projects implemented
by major donors, 1990-2000 .............................................. 201
Table 3-17 Major donor aid for Agricultural Water Resources projects(US$ million) ..................................................................... 201
Table 3-18 Global water-related investment needs, 1995 and 2025 (US$billion)................................................................................ 202

Table 3-19 Composition of global water-related investments, 1995 and2025 (US$ billion).............................................................. 202
Table 3-20 Framework for World Bank analytic and advisory
activities.............................................................................. 219
FiguresFig. 2-1

Poverty Reduction Strategy Papers used in two different
ways...................................................................................... 14
Fig. 2-2 Growth of Gross Domestic Product in Vietnam, 1986 to
2002 ..................................................................................... 22
Fig. 2-3 Decline of poverty ratio in Vietnam, 1993 to 2002............... 22
Fig. 2-4 Priorities in the Tanzanian PRSP and MTEF budget
allocation .............................................................................. 26
Fig. 2-5 PRSP and the budget allocation process-comparing Vietnam
and Tanzania ........................................................................ 28
Fig. 3-1 Primary and secondary education enrollment ratio in El
Salvador ................................................................................ 76
Fig. 3-2 Relationship between education and income by region ......... 76
Fig. 3-3 Education production function............................................. 78
Fig .3-4 Baumol triangle-relationship between real GDP per worker in1960 and long-term economic growth rate ........................... 81
Fig. 3-5 The Carbon Fund............................................................... 164
Fig. 3-6 Capacity 2015 .................................................................... 170
Fig. 3-7 Change in number of Water Supply and Sanitation projects,
1973-1980.......................................................................... 194
Fig. 3-8 Change in number of Water Supply and Sanitation projects,
1981-1990.......................................................................... 195
Fig. 3-9 Change in number of Water Supply and Sanitation projects,
1991-2000.......................................................................... 196
Fig. 3-10 Change in number of Agricultural Water Resources projects,
1973-1979.......................................................................... 199
Fig. 3-11 Changes in number of Agricultural Water Resources projects,
1980-1989.......................................................................... 199
Fig. 3-12 Change in number of Agricultural Water Resources projects,
1990-2000.......................................................................... 200

BoxesBox.2-1

Comprehensive Poverty Reduction and Growth Strategy(CPRGS) .............................................................................. 21
Box.3-1 Food for Educational Program (FFE) in Bangladesh ............. 78
Box 3-2 Main targets set by the World Conference on Education for
All..........................................................................................84
Box 3-3 Main goals of the World Bank’s Priority and Strategy for
Education (1995).................................................................. 89
Box 3-4 Goals and Strategies of Dakar Framework for Action............ 91
Box 3-5 Main points of the report of the G8 Education Task Force at
the Kananaskis Summit ........................................................ 92
Box 3-6 Proposals by JICA’s Aid Study Committee on Development
and Education .................................................................... 100
Box 3-7 JICA’s Study on Educational Assistance.............................. 100
Box 3-8 Summary of the Basic Education for Growth Initiative(BEGIN) ............................................................................ 102
Box 3-9 Summary of the Second Committee for International
Cooperation in Education, the Ministry of Education, Culture,
Sports, Science and Technology.......................................... 103
Box 3-10 Japan’s assistance to Afghanistan and ODA ........................ 246

Abbreviations and Acronyms
ADB
ADEA
APEC
ARI
ASEAN
BEGIN
BHN
CAS
CBHC
CCA
CDC
CDD
CDF
CGIAR
CIC

Asian Development Bank
Association for Development of Education in Africa
Asia-Pacific Economic Cooperation
Acute Respiratory Infection
Association of Southeast Asian Nations
Basic Education for Growth Initiative
Basic Human Needs
Country Assistance Strategy
Community-Based Health Care
Common Country Assessment
Centers for Disease Control and Prevention
Control of Diarrheal Diseases
Comprehensive Development Framework
Consultative Group on International Agricultural Reform
Center for the Study of International Cooperation in Education(Japan)CPRGSComprehensive Poverty Reduction and Growth Strategy(Vietnam)
DAC
Development Assistance Committee
DFID
Department for International Development (The United
Kingdom)
EDUCO
Community-managed schools in El Salvador
EFA
Education for All
EPI
Expanded Program on Immunization
EU
European Union
FAO
Food and Agriculture Organization
FfD
Financing for Development
FFE
Food for Education (Bangladesh)
GAD
Gender and Development
GDP
Gross Domestic Product
GHF
Global Health FundGII
Global Issues Initiative on Population and AIDSGNI
Gross National Income
GNP
Gross National Product
GOBI
Growth curve, ORT, Breastfeeding, Immunization
GOBI-FFF GOBI Food supplements, Family planning, Female education

GPA
GTZ
HFA
HIPCs
HNP
IBRD
ICT
IDA
IDTs
IEC
IMF
JICA
JOCV
LSMS
MAP
MCH
MDGRs
MDGs
MEXT
MMV
MPI
MTEF
NFE
NGOs
NHDR
NIDI
NPES
ODA
ODA
OECD
ORT
PEAP
PER
PHC
PIP
PRSP
RBM

Global Program on AIDS
Deutsche Gesellschaft für Technische Zusammenarbeit
Health for All
Heavily Indebted Poor Countries
Health, Nutrition and Population
International Bank for Reconstruction and Development
Information and Communication Technology
International Development Association
International Development Targets
Information, Education and Communication
International Monetary FundJapan International Cooperation Agency
Japan Overseas Cooperation Volunteers
Living Standard Measurement Studies
Multi-country HIV/AIDS Program
Maternal Health Care
Millennium Development Goals Reports
Millennium Development Goals
Ministry of Education, Culture, Sports, Science and Technology(Japan)Medicines for Malaria Venture
Ministry of Planning and Investment (Vietnam)
Medium-Term Expenditure Framework
Non-Formal Education
Non-Governmental Organizations
National Human Development Report
Netherlands Interdisciplinary Demographic InstituteNational Poverty Eradication Strategy (Tanzania)
Official Development AssistanceOverseas Development Administration
Organization for Economic Cooperation and Development
Oral Rehydration Therapy
Poverty Eradication Action Plan (Tanzania)
Public Expenditure Review
Primary Health Care
Public Investment Program
Poverty Reduction Strategy Paper
Roll Back Malaria

RES
SIDA
STD
TAS
TDR
TICAD
UNAIDSUNDG
UNDP
UNESCOUNFPA
UNGEI
UNICEFUNIDO
UNIFEM
UNOPS
USAID
WBESS
WBI
WFP
WHO
WID
WSSD
WTO
YESAS

Regional Education Strategy
Swedish International Development Agency
Sexually Transmitted Diseases
Tanzanian Assistance Strategy
Special Program for Research and Training in Tropical Diseases
Tokyo International Conference for African Development
United Nations Program on HIV/AIDS
United Nations Development Group
United Nations Development Programme
United Nations Educational, Scientific and Cultural
Organization
United Nations Population Fund
United Nations Girls Education Initiative
United Nations Children’s Fund
United Nations Industrial Development Organization
United Nations Development Fund for Women
United Nations Office for Project Service
United States Agency for International Development
World Bank Education Sector Strategy
World Bank InstituteWorld Food Programme
World Health Organization
Women in Development
World Summit on Sustainable Development
World Trade Organization
Yemen Education Sector Assistance Strategy

Overview

1
Overview
Takamasa Akiyama
Masanori Kondo
Recent years have seen major changes in approaches to development assistance. With international events such as the end of the Cold War, terrorist
attacks, and an unyielding number of poor people, many donors are increasing their aid. Central issues for discussion today are wide-ranging — fromthe relationship between reducing poverty and growing an economy to aid
effectiveness, donor coordination, fiscal assistance, policy coherence, andultimately, the relationship between poverty and world peace.
While other donors have increased their aid budgets, a prolonged recession has forced Japan to reduce its development assistance. A significant
increase seems unlikely in the near future. If Japan is to improve the qualityof its aid and maintain a sufficient presence in the international community
under such constraints, it is essential to understand new approaches todevelopment and changes in sector issues in the aid community.
Many Japanese organizations and researchers have studied trends ininternational development assistance. These studies have been published in
the ODA White Paper of the Ministry of Foreign Affairs, as well as in publications and websites of the Japan International Cooperation Agency(JICA), Japan Bank for International Cooperation (JBIC), and universities,
including the National Graduate Institute for Policy Studies (GRIPS). A
joint research project with the World Bank was published as The East Asian
Miracle (World Bank, 1993). More recently, Japan’s role in introducing theconcept of ‘human security’ and its intellectual contributions to the policy
1formation of the Vietnamese government have been well received.
Akiyama is a senior advisor to the International Development Research Institute, FASID, and visiting professor at the National Graduate Institute for Policy Studies. Kondo is an assistant professor at theInternational Christian University.
1. For example, the Study on the Economic Development Policy in the Transition toward a MarketOriented Economy in the Socialist Republic of Viet Nam (commonly known as the Ishikawa Project).

1

CHAPTER 1

Despite these past efforts, Japan’s in-depth studies to make assistancemore effective and efficient have been rather limited. Another problem isthat many Japanese aid practitioners are too busy to follow new approaches
and exploit up-to-date information and expert knowledge. In view of these
problems, the next two chapters of this volume addresses important issues
in key sectors.

Chapter 2
Poverty Reduction Strategy Papers (PRSPs)

DIVERSIFYING PRSPS —EXAMPLES FROM VIETNAM AND TANZANIAIZUMI OHNO AND YUMIKO NIIYAThe World Bank has launched a policy of preparing Country Assistance
Strategies for IDA-eligible countries based on their PRSPs, strengthening
the link between access to IDA funds and poverty reduction efforts in developing countries. The Bank requires heavily indebted poor countries (HIPCs)
to first prepare a PRSP before they can qualify for debt relief, making the2
preparation of a PRSP the highest priority for these countries. Goals of the
PRSP process are: (i) to have the recipient country prepare a development
strategy paper with the priority on poverty reduction; and (ii) to coordinate
aid activities among donors based on the strategy paper. As of January
2003, 53 countries had completed a PRSP or an Interim PRSP (I-PRSP).
Some criticisms have been lodged against the PRSP. For example, Japanhas pointed out that the PRSP attaches too much importance to poverty
reduction and neglects economic growth. The United Nations Conference
on Trade and Development (UNCTAD) contends that it is inappropriate formany African countries to position poverty reduction as the most importanteconomic and social policy. Partly due to these criticisms, since the World
Summit on Sustainable Development (WSSD) in September 2002, the international development aid community is shifting to emphasize economic
growth, trade, and investment. The proponents of PRSP also began to tout
‘pro-poor growth’. A paper presented at the 2002 World Bank annual meeting acknowledged that early PRSPs lacked sufficient analyses on ‘sourcesof growth’ and growth promotion measures and announced that the Bank
3will conduct various studies on pro-poor growth.
2. Details of the political and theoretical background of this strategy are described in Ishikawa (2001).
3. IMF and IDA (2002)2

Overview

Millennium Development Goals (MDGs)

MILLENNIUM DEVELOPMENT GOALSSUZANNE AKIYAMAThe MDGs have become the central issue of development assistance inrecent years. Adopted at the United Nations Millennium Summit in
September 2000, the MDGs have had a tremendous impact on the international development community. Discussions in major international conferences on development focus on these goals and international organizations
and donor countries are increasing activities that are geared toward achieving them. The goals address seven development issues — extreme poverty
and hunger, primary education, gender equality, child mortality, maternal
health, HIV/AIDS and other diseases, and the environment. Each goal
includes a set of quantifiable targets as well as indicators against which tomeasure progress. An eighth goal, develop a global partnership for develop4
ment, is treated somewhat differently.
The target year for achievement of the MDGs is 2015. The United
Nations and the World Bank have published estimates that indicate theexisting amount of development aid is not sufficient to realize the goals bythat time and that Official Development Assistance (ODA) must be
increased by US$ 50 billion, in other words, doubled. The U.S. and theEuropean Union (EU) announced plans to increase their ODA at theMonterrey Conference held in March 2002.
There are various constraints that work against achievement of the
MDGs — technical constraints because the MDGs are numerical,. operational constraints because they are time bound, and financial constraints
because initial cost assumptions may prove false and some eligibility
requirements are being imposed. There are many obstacles to overcome.
While the target year is about 10 years in the future, several organizations
have already voiced their pessimism about the prospect of achieving thegoals.
Recent discussions on MDGs are very much focused on Sub-Sahara
Africa. Notably, the British government has indicated that is the duty ofinternational community to achieve the MDGs in Africa.

4. The goal is elaborated as “Develop further an open, rule-based, predictable, non-discriminatory trading
and financial system (Includes a commitment to good governance, development, and poverty reduction— both nationally and internationally”). (World Bank website)

3

CHAPTER 1

Evaluation

RECENT DEVELOPMENTS AID IN AID EVALUATIONNAONOBU MINATO
Evaluation is a topic that has been discussed more frequently in recent
years. One of the important trends in development aid is an emphasis on
results. This trend is especially pronounced in the United States under the
Bush administration, and is also growing in international organizations. In
terms of aid modalities, Sector Wide Approaches (SWAps) and fiscal assistance are gaining popularity. With these movements, the subject of aid evaluation is also changing — there is now demand for measuring not only project impact, but also effects on a sector or a country as a whole (program
evaluation). As seen in the technical constraints to the MDGs, definitions,standards, methods, and lack of data and statistical methodologies are seen
by some as problems. Joint evaluations and coordination are promisingdevelopments, and Japan is contributing in both areas.

Chapter 3
Education

EDUCATIONAL DEVELOPMENTYASUYUKI SAWADA, KAZUO KURODA, AND TAKAKO YUKI
Education is considered to be one of the most important areas for development aid from three perspectives — economic research, trends in international development aid, and Japan’s activities in the education sector. The
visibility of the education sector has been very high in the past few years.
For those involved in foreign aid, knowledge of this sector is very important
not only because education is the second goal of the MDGs, but also theimportance of education is recognized anew by the ‘endogenous growth theory’ in the field of development economics.
Challenges for Japanese educational assistance include expansion andimprovements in terms of scale, quality, and policy; promotion of academic
research on educational development and educational cooperation within
the country; accumulation and use of knowledge and information; institution-building, including further human resource development; and reforming existing educational assistance schemes.

4Overview

Health Care

INTERNATIONAL ASSISTANCE IN THE HEALTH CARE SECTOR
MASANORI KONDO
Three of the eight MDGs are related to health care — it is now recognized
as a sector that is essential to achieving the MDGs. Behind this change wasa paradigm shift toward human-centric development beginning in the 1990s
and the AIDS epidemic in developing countries. Whether it is malaria or
HIV/AIDS, the numbers are increasing instead of decreasing in sub-SaharanAfrica and other regions, but in contrast, the amount of aid money is still
limited and has not reached the required level.
There has been a shift away from the ‘vertical’ approach that tackles
individual illnesses to a sector-wide or ‘horizontal’ approach that includes
Primary Health Care (PHC). More recently, in addition to these vertical andhorizontal approaches, donors are paying attention to sector reform. Policy
coordination among donors, establishing ownership by governments ofdeveloping countries, and capacity building are becoming more important
than ever. Another important factor is coordination between the public sector represented by developing countries governments and the private sector
represented by pharmaceutical companies in industrialized countries.
Environment

TRENDS IN ENVIRONMENTAL AID POLICIESJUNKO OHARA
The relationship between development and the environment was highlighted
by a report published by the Club of Rome in 1972, but it was not until Our
5
Common Future was published in 1987 by the World Commission on
Environment and Development (the Brundtland Commission) that the issue
gained prominence. According to the report, development that neglects theenvironment is not sustainable. It had a tremendous impact on the international development community.
Partly due to the impact of the Brundtland Commission report, theGlobal Environment Facility (GEF) was established in 1991, and the UN
Conference on Environment and Development (UNCED; commonly known
as the Rio Summit) was held the following year in Rio de Janeiro, Brazil. In
this conference, Agenda 21, a comprehensive and long-term action plan for
the environment, was adopted. This action plan has effectively governed
5. World Commission on Environment and Development (1987)5

CHAPTER 1

environment-related development assistance to this day.
Many other international meetings have addressed environmental issues
and sustainability. Japan and other major international organizations anddonors are aggressively providing assistance in the area of environment, but
it is difficult to mainstream environmental issues in development strategies,
partly because many developing countries and the United States do not recognize the critical importance of environmental issues.
Water

WATER-RELATED ISSUES AND INTERNATIONAL DEVELOPMENT
KOICHIRO ISHIMORI
Water is an important issue for development in poorer countries. Needlessto say, humans cannot survive without water, but it is also essential toadvance agriculture, industries, and health care. The problem of too muchwater — floods — has been overshadowed by the problem of too little
water. Floods are responsible for one-third of the economic losses and morethan one-half of the fatalities caused by natural disasters in the world, andcause especially severe problems in the Asian monsoon region.
Bilateral donors, international organizations, and NGOs have undertaken
many aid projects and activities related to water and achieved significant
results. More than 2.4 billion people gained access to safe water during the past
20 years, but about 1.2 billion people have yet to secure safe water, and thenumber is expected to increase to about 2.7 billion by 2025. According to theWorld Water Vision prepared in 2000, the investment needed for water was
US$ 70 to 80 billion in 1995, but will grow to US$ 180 billion by 2025, of
which US$ 75 billion is estimated to be needed for water supplies and sanitation alone. The importance of water-related issues will only grow in the future.
Governance

DEFINING AND PROMOTING GOVERNANCE
MASANORI KONDO
Governance has become central in recent discussions about development
aid. The definition of governance is not set in stone. Different donors havedifferent definitions or emphasize different factors. In general, political governance includes various elements of democracy such as separation of powers, free elections, rule of law, freedom of the media, and respect for humanrights. Economic governance includes fiscal balance, government spending
and tax revenues, tariff rates, performance of public enterprises, decentral6

Overviewization, administrative efficiency, transparency, and degree of corruption.
Reasons for the recent emphasis on governance are many. Major aid agencies and donors including the UNDP, USAID, the Department forInternational Development (DFID) of the United Kingdom, and the World
Bank, which had not intervened in political areas before, are now deeply
involved in the issue of governance. The most significant impact has been
selective assistance extended to countries with good governance. In terms ofgovernance policies, these organizations place particular emphasis on improving fiscal administration, eliminating corruption, and supporting democratization. More recently, some attempts have been made in fiscal assistancethrough structural adjustment lending designed to improve governance and indevising indicators to measure the level of governance across countries.
Peacebuilding

PEACEBUILDING BEFORE AND AFTER 2002
TAKAO TODA
The Cold War ended in the 1990s, but conflicts occur frequently between
and within developing countries, and since the mid-1990s, the international
aid community has recognized critical issues — how to put post-conflictcountries on a smooth path to recovery and development and how to prevent
conflict and promote development so that these countries will not fall backinto the vicious cycle of conflict and poverty.
In 1999, the Japanese government announced its policies on conflict prevention, conflict-induced refugees, and post-conflict recovery in theMedium-Term Policy on Official Development Assistance, but concrete
efforts have only just begun. To build peace, we should not only provide
economic assistance but also integrate efforts on various fronts such as themilitary, politics, society, and culture. How to advance mutual cooperationand coordination between different areas remains a challenge for the future.
Issues of peacebuilding are becoming more important than ever in international organizations. Partly due to its establishing agreement, the WorldBank has been reluctant to intervene in countries with political problems. In
light of recent trends, however, the Bank is thinking about considering theperspective of conflict and peace in all development aid activities (main6
streaming). UNDP has a comparative advantage in this area and is actively
6. In a recent paper, Collier insists that assistance to conflict-affected countries is more effective when provided several years after the conflict rather than immediately.

7

CHAPTER 1

involved in peacebuilding through demining and other activities.
For Japan to provide peacebuilding assistance smoothly, the current system of aid implementation needs some major changes. Specifically, JBIC
will need to be able to provide grant assistance like the World Bank in thearea of peacebuilding. However, the know-how of peacebuilding is concentrated in the Ministry of Foreign Affairs and JICA while financing knowhow is within JBIC. This mismatch of expertise needs to be resolved.
Moreover, both JBIC and JICA effectively function as branches of government, and it is essential to think more seriously about coordination between
them.

References
Collier, Paul et al. 2003. Breaking the Conflict Trap: Civil War andDevelopment Policy. World Bank Policy Research Report.
IMF and IDA. 2002. Poverty Reduction Strategy Papers — Progress in
Implementation. Washington, DC: World Bank.
Ishikawa, Shigeru. 2002. Hinkon-sakugen ka Seicho-sokushin ka:
Kokusaiteki na Enjyoseisaku no Minaoshi to Tojoukoku [Growth
Promotion versus Poverty Reduction? Rethinking of Aid Policy andImplications for Developing Countries]. Nihon Gakushiin Kiyou. Vol.
56, No. 2. Japan Academy.
Meadows, Donella H., D.L. Meadows, J. Randers, and W. W. Behrens.
1972. The Limit to Growth. Universe Books.
OECD/DAC. 1997. The 1997 DAC guidelines on Conflict, Peace andDevelopment Cooperation on the Threshold of the 21st Century.
OECD.
______. 1996. Shaping the 21st Century: the Contribution for Development
Cooperation. OECD.
World Commission on Environment and Development. 1987. Our Common
Future. Oxford and New York: Oxford University Press.
World Bank. 2001. Making Sustainable Commitments: An Environment
Strategy for the World Bank. Washington, DC: World Bank.

8

Diversifying PRSPs

2
Global Changes in
Development AssistanceDiversifying PRSPs— Examples from Vietnam and Tanzania
Izumi Ohno
Yumiko Niiya
As the international community accelerates its efforts to reduce poverty indeveloping countries, the United Nations Millennium Development Goals(MDGs) and the World Bank-supported Poverty Reduction Strategy Papers(PRSPs) are exerting great influence on the development strategies of poor
countries. Writing policies and institution-building efforts must be tailored
to individual countries because the causes of poverty and socioeconomics
are so diverse. The variations of, and appropriate matching between, alternative strategies and individual countries have not been sufficiently discussed. As poverty reduction enters the implementation stage, we need tostrengthen intellectual input to effectively translate lofty global targets into
realistic and concrete actions at the country level.
In this paper, we propose to classify poor countries by: (i) relationshipwith the international financial system; (ii) presence or absence of a national
development strategy and its quality; and (iii) causes of poverty. We will
discuss how these differences should be reflected in the creation and implementation of PRSPs, and call for greater flexibility in its contents, modality,and procedures based on considerations of its relationship to existing develOhno is a development forum professor at the National Graduate Institute for Policy Studies (GRIPS). Niiya
is a researcher for the same forum.
This paper is based on a paper presented by Ohno at the World Summit on Sustainable Development in
Johannesburg in 2002. This version has been expanded with information obtained during fieldwork in
Tanzania and elsewhere. The original paper (and its summary in Japanese) can be seen at
http://www.grips.ac.jp/forum/

9CHAPTER 2

opment plans and the realities of poverty.
We also present the Vietnamese PRSP to suggest that this example,
driven by strong country ownership and aspirations for rapid growth, can bea model for a growth-oriented PRSPs. This document was inspired by thecountry’s unique geography and history, especially the surrounding Asian
dynamism. Its development strategies — based on growth aspirations —should be fully examined not only in East Asia, but in other regions of theworld as well.
And finally, we will discuss the example of Tanzania, a sub-Saharancountry with an advanced PRSP. From a perspective of mainstreaming
growth aspirations, we will examine how to use the lessons learned from
Vietnam and what should be considered in the future.

Global Development Trends and PRSPs
What is a PRSP?

The Poverty Reduction Strategy Paper (PRSP), a concept launched by theWorld Bank, is a three-year roadmap for the social and economic development of a poor country, produced under strong national ownership andbroad partnership among various stakeholders. When the initiative waslaunched in 1999, it was intended as a tool to ensure that certain Heavily
Indebted Poor Countries (HIPCs) would use the funds freed up through the
Enhanced HIPC Initiative for poverty reduction. Later, all recipients ofInternational Development Association (IDA) credits were asked to preparea PRSP.
The World Bank recently adopted a policy to strengthen the links
between PRSPs and Country Assistance Strategies (CAS), linking poverty
reduction efforts with access to IDA funding. The Bank is urging poor
countries to use the PRSP as the main tool for development budgeting, prioritizing different sectors and projects, and selecting and evaluating individual projects. The Bank is also urging other donors to adopt the PRSP as thevehicle for aid partnerships. As an assistance framework that involves all
stakeholders, PRSPs are now exerting great influence on the development
strategies of poor countries.
There are 80 countries eligible for IDA lending, of which 76 currently
receive IDA support (financial and/or non-financial). As of July 2004, morethan 70 countries are engaged in the PRSP process, including those in theinitial stages. Among them, 40 countries (of which 20 are in Africa) havecompleted full PRSPs and subsequent joint staff assessments by the10Diversifying PRSPs

International Monetary Fund (IMF) and the World Bank (World Bank,
2004a). Forty-nine countries have prepared interim PRSPs, with Africancountries accounting for more than half. Vietnam became the first East
Asian country to complete a full PRSP in May 2002. The Boards of the IMF
1and IDA reviewed it in mid-2002.
To assess the PRSP experience two years after its introduction, the IMF
and the World Bank undertook a comprehensive review in early 2002. The
final report was presented to the WB/IMF Joint Development Committee in
April 2002. As part of this review, the Bank convened a comprehensive
review meeting in Washington, D.C. in January 2002 and invited various
development partners, including developing-country governments, donorcountry governments and agencies, think-tanks, and NGOs. The reportstressed a broad consensus among development partners on the validity of
the PRSP approach and recommended that the World Bank and the IMF
maintain the approach as a basic strategy. At the same time, the report
reviewed the lessons learned and recognized the need for a flexible
approach that considers the unique circumstances of each country(IDA/IMF, 2002a).
PRSPs and MDGs

Following the UN Millennium Summit in September 2000, the UN General
Assembly adopted the UN Millennium Development Goals (MDGs) in
September 2001. As an international commitment for poverty reduction,
MDGs call for concrete social achievements, including halving the ratio ofpeople in extreme poverty by 2015. After September 11, 2001, the povertyterrorism nexus was rediscovered and the international community hardened
its resolve to address poverty. In the ongoing global enthusiasm over
MDGs, the UN International Conference on Financing for Development inMarch 2002 adopted the Monterrey Consensus, recommending further aid
increases to achieve MDGs, debt reduction, and partnerships between
developing and developed countries to promote trade and investments tobenefit poor countries.
MDGs were established as the primary development goals, while PRSPs
were established as the procedural framework to prepare strategies. World
1. The Cambodian government also prepared a full PRSP in December 2002 which was reviewed by theboards of the IMF and IDA in February 2003 (the second PRSP in East Asia following Vietnam). In
Asia (excluding Central Asia), Sri Lanka, Mongolia, Nepal, and Pakistan have also prepared full PRSPs
that have been approved by the boards of the IMF and IDA.

11

CHAPTER 2

Bank economists estimate that an additional US$ 40-70 billion is required
annually to achieve MDGs (Devarajan et al., 2002).
Japan and PRSPs

Introduction of PRSPs is evidence of a shift in the structural adjustment
policies that were promoted by the Bank and IMF beginning in the 1980s,
and prompted discussions about their significance, validity, and room for
improvement.2 While most Japanese aid officials and experts endorse thebasic principles of PRSPs, including national ownership and aid partnership, they are concerned about its uniform approach, shortage of strategic
content, and an increased burden on the budgetary and human resources ofboth donors and recipients. While the advocates of PRSPs readily admit the
crucial links between economic growth and poverty reduction at a generallevel, they tend to focus exclusively on pro-poor measures (e.g., education,
health, environment, gender, rural infrastructure, etc.) in actual implementation. Serious discussions on the generation of economic growth are desperately lacking.
Shigeru Ishikawa, professor emeritus at Hitotsubashi University and aleading figure in Japanese development economics, regards PRSPs as “theWorld Bank’s new aid policy which essentially shifts the goal from ‘growthpromotion’ to ‘poverty reduction.’ ” He further notes that it is “a highly
deficient proposal when viewed as a system of action plans to be properly
supported by fiscal resources.” Ishikawa recognizes that current PRSPs tend
to emphasize pro-poor measures too much, and argues that for poverty
reduction efforts to be truly effective, it is necessary to deeply analyze thecauses of poverty in each developing country and design an appropriate mixof: (i) measures directly targeting the poor, and (ii) support for broad-based
3
growth that encourages economic growth of a country as a whole.
2. The main interests of aid agencies, researchers, and NGOs include the participatory process of a PRSP,
how to deal with developing countries involved in or emerging from conflicts, the necessity for prioritizing public actions, managing public expenditures, integration of the PRSP into other policymaking
processes, donor coordination and harmonizing assistance from different donors, the balance between‘speed’ and ‘quality’ of PRSP preparations in HIPC countries, and monitoring and evaluation methodologies. For general information on PRSP, see PovertyNet of the World Bank(http://www.worldbank.org/poverty/strategies/ubdex.htm) and the DFID-ODI’s PRSP Monitoring and
Synthesis Project (http://www.prspsynthesis.org/). Some practioners, however, believe, that introductionof PRSPs does not represent a shift in structural adjustment policies (underlying economic polices are
the same), but supplements them with an emphasis on social sectors and participatory development(Cling et al., 2002; UNCTAD, 2002b). In Japan, various groups and researchers are studying the issues
surrounding PRSPs, including the Japanese contribution study group administered by JICA’s Institutefor International Cooperation, which is led by Prof. Yanagihara of Takushoku University.

12Diversifying PRSPs

Poor Countries and Appropriate Responses
Poor countries are highly diverse in their social, economic, and politicalconditions. In order to localize PRSPs, three criteria are especially important: (i) the relationship with the international financial system; (ii) presenceor absence of a national development strategy and its quality; and (iii) causes of poverty.
Relationship with the International Financial System

The first determinant of a PRSP is how a developing country is positioned
in the international financial system. This relationship affects the restrictions on external financing, the country’s independence and the power balance with donors, and positioning the PRSP in the country. These in turnaffect a variety of policy options available to implement development strategies and the degree to which the country can maintain ownership throughaid coordination. Three considerations are important.
First is the existence or absence of direct links between the PRSP and
debt relief. For many poor countries in sub-Saharan Africa and Latin
America, preparation of a PRSP is a precondition for obtaining debt relief
under the Enhanced HIPC Initiative. Equally for donors, it is an important
tool to manage aid resources and evaluate development impacts. By contrast, in poor countries in East Asia, including Vietnam, debt forgiveness is
not intended. For them, PRSPs are primarily motivated by the country’s
desire to access IDA financing which is less acute than the need for debt
forgiveness. Because HIPCs also have limited potential to mobilize private
funds, they have fewer policy options available than countries that can
expect a higher level of external financing. The existence or absence of
external financing restrictions is especially important when preparing andimplementing growth strategies.
Second, aid dependency and donor composition are important. Aiddependency in Vietnam is lower than the average in sub-Saharan Africa or
Latin America. Higher aid dependency is or course associated with stronger
4
pressure from the donor group. Moreover, the development strategy canalso be affected by the views of the largest donor(s). In sub-Saharan Africa,

3. According to Ishikawa (2002b), expenditures for broad-based growth first contribute to increasing GDP,and the resultant increase in savings eventually reduces poverty through fiscal, financial and other various channels.

13

CHAPTER 2

prominent donors are the World Bank (IDA) and the Europeans, while in
Latin America and the Caribbean, the World Bank (IDA) and the InterAmerican Development Bank (IDB) are of primary importance. In East
Asia, principal donors are Japan, the World Bank, and the AsianDevelopment Bank (ADB).
Third, donor composition can also affect aid modality. Vietnam
receives about two-thirds of its ODA as concessional loans, while 70 percent of ODA to sub-Saharan Africa is grants. Corresponding ratios for Latin
America and the Caribbean are somewhere between the two groups. These
differences are related to the aforementioned restrictions on external financing (especially the existence or absence of access to development financing
through concessional loans), as well as considered when discussing harmonizing aid modalities.
National Development Strategy and Its Quality

Does a developing country have its own development plan? If so, howmature is it and how effectively does it govern budget allocations andinvestment programs? These factors greatly affect how an imported PRSP istreated domestically. This issue is closely related to how strongly the government takes ownership of the PRSP and the extent to which it is integrated into existing decision-making processes. Although the relationshipbetween existing development plans and a PRSP is complex and highly specific to each country, two prototypes are illustrative (Fig. 2-1).
Figure 2-1. Poverty Reduction Strategy Papers used in two different ways
PRSP as a supplementary document

PRSP as a primary document

Existing development plan

Existing development plan

PRSP

Sector plans

BudgetPRSPSector plans, budget,
MTEF, aid procedures

Prepared by the authors

4. The degree of aid dependency varies even among Asian countries. For example, Mongolia (per capita
ODA US$ 85; ODA/GDP ratio 18.6 percent), Lao PDR (US$ 50, 17.3 percent) and Cambodia (US$ 39,
12.7 percent) are more aid dependent than Vietnam (US$ 16, 3.6 percent) and Indonesia ($6, 0.8 percent). Such differences could also affect how these countries approach the PRSP (World Bank, 2004b;
data are for 2002).

14

Diversifying PRSPs

PRSP as a Supplementary Document

In Vietnam, the core planning documents defining the national vision are
the Strategy for Socio-Economic Development in the Period 2001-2010 (the10-year strategy) and the Seventh Five-Year Plan for Socio-Economic
Development 2001-2005 (the five-year plan). These were reviewed by theCommunist Party and concerned ministries and approved by the Party
Congress. They tower above numerous other official documents in terms oflegitimacy and accountability. They guide all sector plans, public investment plans, and annual budget allocations. Under this framework, the roleof the PRSP is at best supplementary as one of the ‘other’ documents. From
the Vietnamese viewpoint, the PRSP is never intended to dictate overallbudget allocations. Certainly the PRSP is an effective tool to reinforce existing development plans with special attention to poverty reduction and theparticipatory process, but its contribution is limited to a part of national
policies. It is not intended as an overarching document that sums up thedevelopment vision of the country.
PRSP as a Primary Document

When a PRSP co-exists with a national development strategy but the newlyintroduced PRSP exerts a stronger influence than existing plans over thebudgetary and legal framework by effectively absorbing them, it is considered a primary document. For example, Tanzania has its own long-term
development vision (Vision 2025) and poverty eradication strategy(National Poverty Eradication Strategy 2010 [NPES]). In reality, however,these documents are merely symbolic and have little impact on the actual
budget and policies. Uganda had its own vision document (Vision 2025)
before its PRSP was prepared based on the Poverty Eradication Action Plan
(PEAP) contained in Vision 2025. Regardless of this difference, in bothcountries the PRSP plays a decisive role as a planning and aid coordination
document to dictate sector plans. The PRSP is also linked to the MediumTerm Expenditure Framework (MTEF),5 which is a rolling, three-year plan
5. MTEF sets out the medium-term expenditure priorities and hard budget constraints against which sectorplans can be developed and refined. It also contains outcome criteria for performance monitoring.
Throughout the 1990s, Uganda and Tanzania have developed MTEF and sector plans starting fromhealth and education sectors, for which the newly introduced PRSP now provides the overall policy
framework for poverty reduction. Ideally, a PRSP as the core planning document is expected to guideoverall expenditures and sector policies (and aid modality) through its link to MTEF and sector plans.
Where MTEF has been introduced recently, however, the link between MTEF and PRSP is not necessarily strong.

15

CHAPTER 2

that guides all public expenditures (including investment and recurrent
budgets, as well as aid money).6 Moreover, Uganda’s PRSP refers to thedesirability of certain aid modalities, including budget support and a sectorwide approach. Tanzania’s PRSP has no reference to aid modality but isdealt with separately in the Tanzania Assistance Strategy (TAS). In a country that depends on aid for most of its development financing, aid modality
effectively determines how development projects are delivered. These countries structure numerous practical procedures using development funds
around the PRSP as a core document.
As a supplementary document, the PRSP is confined to complementing
and reinforcing the existing national development strategy and sector plans.
It offers an in-depth poverty analyses, a cross-cutting approach to poverty
reduction, and broadens the participatory process. In this case, the mostdesirable and practical involvement for donors would be to respect and support the existing policy configuration rather than reject or replace it. Areasof assistance do not have to be constrained by a PRSP — donors should be
encouraged to support high priority areas in the country’s overall development, regardless of a PRSP.
When used as a primary document, a PRSP has a decisive influence
because operational procedures for the budget, sector plans, and receiving
aid are all structured around it. In this case, donors should support planningand strengthening budgetary systems through the PRSP. Uganda is beginning to see positive results from capacity-building efforts through its PRSP
(which is based on PEAP prepared with Uganda’s own initiative) that also
pays attention to the relationship with MTEF.
Causes of Poverty

While the goal of poverty reduction is shared globally, the nature of poverty
differs from country to country. Reducing poverty requires a specificapproach in each country. Poverty situations vary even within a country,
depending on age, gender, family, occupation, region, social strata, etc.
Insights into the country-specific causes of poverty are crucial if we are to
succeed in reducing poverty (Ishikawa, 2002b).
Causes of poverty may include:
6. In Uganda, various activities such as the use of funds ‘freed up’ by debt relief, public expenditure management through MTEF, expansion of the social sector, and other service deliveries through decentralization are linked with each other and organized through the framework of PRSP (Craig and Porter,
2003).

16

Diversifying PRSPs•

Limited national budgets and income opportunities because the underlying economy is not strong• Lack of or insufficient consideration for equity in policy design; an inadequate redistribution mechanism• Inefficiency or corruption by the government in social service delivery• Breakdown — or even complete absence — of mutual assistance mechanisms at the community level in cases of disease and disaster• Restricted economic opportunities or discrimination based on gender,
race, ethnicity, caste system, etc.
• Economic stagnation caused by policy failures such as economic control
and ‘Big Bang’ approaches.
• Emergence of more poverty due to domestic and international economic
crises and responses that may include macroeconomic austerity andstructural reforms• Wars, civil wars, ethnic conflicts, political persecution, etc.
These causes include failure of the underlying society, policies, andimplementation. They overlap and are interconnected. One can easily imagine that poverty in a country has multiple causes.
Different causes call for different responses. Without correct matchingof diagnosis and prescription for each country’s specific context, even a big
increase in aid money is unlikely to yield results. This is precisely theknowledge that is so far lacking in the PRSP process.
If poverty is caused by insufficient delivery of social services, major
efforts should be directed toward their improvement. If poverty results
mainly from a pro-rich bias in the fiscal system or deep-rooted ethnic discrimination, political initiative is required. If economic crises or uncontrolled globalization is producing ‘new’ poverty, relevant policies should bereconsidered. But if the primary cause of poverty is low productivity and anunderdeveloped market economy, resources must be mobilized to build
infrastructure, upgrade technology, and create industries.
To cope with generalized poverty associated with underdevelopment, a
recent UNCTAD report recommends measures to enhance productive
capacity such as the promotion of rapid and sustained economic growth andthe establishment of a dynamic investment-export link (UNCTAD, 2002a).
Growth Promotion vs. Poverty Targeting

Although many official documents declare that poverty reduction and economic growth are positively related, details of this relationship have rarely
17CHAPTER 2

been detailed in a country-specific context. This relationship must also be
studied as an issue related to research on the causes of poverty in each country.7
For example, if a country already has a system of policies that emphasize social equity and its network of social services reaches rural villages,
there is no need to transplant foreign poverty reduction policies. What islacking is not a system but purchasing power, thus poverty will be eliminated over time if private income and government revenues increase. In thiscase, a growth strategy is the key.
On the other hand, there are countries where past experience has shownthat economic growth alone will leave certain groups behind. For a country
that wants to have the principle of social equity take root or wants toimprove the implementation aspect of social services, it is important toestablish an effective poverty reduction mechanism. If foundations for sucha mechanism do not exist domestically, it may be a good idea to incorporate
a foundation provided by an international organization, either as is or withsome adjustments. In this case, the central challenges include efficient planning and implementation of pro-poor policies in addition to a growth strategy.
These two cases — growth promotion and poverty targeting — are simplified for the sake of discussion; the reality of poverty in a developing
country is far more complex.
Table 2-1 compares PRSPs. In the following sections, we will discuss
the examples of Vietnam and Tanzania, which, as shown in the table, havedifferent strategic and institutional contexts.

7. See Klasen (2001) for a detailed review of existing literature and the scope of policy instruments. The
correlation between economic growth and poverty reduction is shown in many papers (Dollar and Kraay,
2000; Klasen, 2001), but on the other hand, regression analyses are not sufficient to consider whichmeasures each country should take in order to promote growth and reduce poverty. The necessity for the
micro-level and country-specific empirical research has been identified, for example, Ravallion (2001)
suggests that the impact of growth on poverty reduction may differ depending on the level of inequality
as an initial condition.

18

Diversifying PRSPs

Table 2-1. An international comparison of Poverty Reduction Strategy Papersa
Country

Aid dependencyb

Vietnam• Low per capita ODA of$16, ODA to GNP ratiois 3.6 percent• HIPC — sustainablecase, debt forgivenessnot requested• High accessibility toprivate funds

Relationship with existingdevelopment plan

Strategic focus

Supplementary document Equitable growth• Budget is formulated• The overall framework isunder the generalpromoting growth withguidance of nationalsocial equity
development plans• PRSP specifies social• CPRGS and sector plans
policies and pro-poor
also supplement
measures

Tanzania • Relatively high• Per capita ODA is $35,
ODA to GNP ratio is13.2 percent• HIPC — debt
forgiveness requested

Primary document
Social equity• Budget, MTEF, and sector • Main focus is on proplans are guided bypoor measures while
PRSP
also recognizing theimportance of growthpromotion

Ugandac • Relatively high• Per capita ODA is $26,
ODA to GNP ratio is11.2 percent• HIPC — debt
forgiveness requested

Primary document
Growth and equity• Budget, MTEF, and sector • Growth promotion
plans are guided bymeasures and pro-poor
PRSP.
measures are both
• PRSP is the revised
specified in the PRSP
version of PEAP, thenational action plan forpoverty eradication

Boliviad• Relatively highPrimary document
Social equity• Per capita ODA is $77, • PRSP guides pro-poor• Main focus is on proODA to GNP ratio is 9.0
programs administered by poor measures
percent
local governments.
• HIPC — debt
• Operational procedures
forgiveness requested
are legally specified in the
National Dialogue 2000
a. Prepared by authors. Data on aid dependency are from the World Bank (2004b).
b. All dollar amount are US dollars.
c. Uganda’s PRSP was a revised version of PEAP which had been prepared three years
earlier in 1997. The 2000 version of PEAP (=PRSP) is more growth-oriented.
d. In Bolivia, the National Action Plan 1997-2000 was created through the National Dialogue in1997 but the PRSP was later prepared to replace the document. The full PRSP wascompleted in June 2000, but the National Dialogue Act of 2000, enacted at the same time,governs the basic orientation of PRSP and the implementation of pro-poor projects bymunicipalities (cities, towns and villages), thus legally specifying the operational proceduresof PRSP. While a majority of the Public Investment Plan (5-year) can be allocated to priority
projects under PRSP, MTEF is not as firmly established as in the African example describedabove, and there is no established mechanism through which PRSP influences the entire
budget allocation process.

Vietnam’s PRSP Experience— Strong Ownership and Growth Orientation
The PRSP in Vietnam

Vietnam became the first Comprehensive Development Framework (CDF)
pilot country in East Asia in 1999, which led to the establishment of morethan 20 partnership groups. Vietnam also completed a full PRSP ahead ofother East Asian countries. The Ministry of Planning and Investment (MPI),
in coordination with other ministries, played a central role in the preparation

19

CHAPTER 2of the PRSP. After the completion of the interim PRSP (March 2000), theVietnamese government renamed the PRSP as the Comprehensive Poverty
Reduction and Growth Strategy (CPRGS), adding the terms ‘comprehensive’ and ‘growth.’ The final CPRGS was approved by the Prime Minister
in May 2002. The document was reviewed by the Boards of the IMF and
IDA in mid-2002.
The Vietnamese government regards the CPRGS as an action plan thattranslates the Ten-Year Strategy, the Five-Year Plan and sector policies into
concrete measures (Box 2-1). As its name suggests, CPRGS calls for theachievement of both: (i) economic development (doubling the national
income in 10 years and annual GDP growth target of 7.5 percent in the first
five years, etc.) and (ii) poverty reduction and social equity. The economic
goals and budget allocation are simply copied from the Ten-Year Strategy
and the Five-Year Plan. However, to complement the plan and strategy witha strong accent on growth, CPRGS emphasizes the ‘quality’ of growth andproposes ways to minimize income and regional disparities, cut poverty,
8
and achieve social equity in the process of rapid growth. The ownershipand the participatory approach assumed by the Vietnamese government
were highly noted by the international community. Vietnam’s CDF and
PRSP experience has thus become ‘good practice.’
Vietnam’s Aspiration to Catch Up

East Asian development was realized by a dynamic production network created by private firms via trade and investment. One by one, countries in different stages of development joined this regional network, each becoming alink in the international division of labor with a clear order and structure.
For East Asia’s latecomers, economic development is a process of constantly upgrading their industrial capability under competitive pressure, as wellas complementary relationships with their neighbors. Through this complex
relationship of rivalry and cooperation, structural shifts continuously shiftedindustries from one country to another. No other developing region has

8. On the other hand, strength of ownership and the quality of growth strategies are two separate issues.
The underlying development vision of the CPRGS is surely growth-oriented, but the examination anddescription of specific measures is not quite sufficient. It is an especially important challenge forVietnam to deepen its international integration while promoting industrialization. With its accession to
the ASEAN Free Trade Area (AFTA) and negotiations with the World Trade Organization (WTO) on
the horizon, Vietnam has an urgent need to define specific measures to improve productivity and competitiveness.

20

Diversifying PRSPs

Box 2-1. Comprehensive Poverty Reduction and Growth Strategy (CPRGS)
The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) is an action plan thattranslates the Government’s Ten-Year Socioeconomic Development Strategy, Five-Year
Socioeconomic Development Plan as well as other sectoral development plans into concretemeasures with well-defined road maps for implementation. The CPRGS sees harmony
between economic growth and measures to solve social problems. The tasks and objectives
contained in the poverty reduction and growth strategy not only call for targeted measures tosupport specific poverty groups, but also see links within the policy matrix that include
macroeconomic policies, policies on structural adjustment, sectoral development policies andmeasures, as well as social safety policies of all sectors and levels that must work in tandem
to ensure sustainable development.
State-owned
enterprise reform

Economic
structure reform

Human resource
development

Banking reform

Effective use ofVietnamese resources
Nurture non-state
economic sector(private firms,
cooperatives,
farms)

Publicadministration
reformSustainableeconomic growth &poverty reduction

Improve social environment
for economic growth &poverty reduction

Establish social
safety net

Public expenditure
management

Integration to
int'l economy

Source: Socialist Republic of Vietnam (2002). The text is quoted from the introduction of the paper. The
figure was created by authors based on p.65, Figure 3.1 (Enabling Environment for Growth and Poverty
Reduction).

formed such dynamic interdependence as East Asia.9
In its policy aspiration and growth mechanism, Vietnam is a typical East
Asian developing country. With a per capita GDP of US$ 430 in 2002
(World Bank, 2004b), it ranks as one of the poorest countries in the world.
Despite its location at the heart of East Asia, years of wars and central planning left Vietnam economically far behind its ASEAN neighbors. Domestic
enterprises desperately lack competitiveness, and its market economy isseverely underdeveloped.
9. See Ohno, K. (2002) for a concise description of East Asian development. In a series of recently published reports, the United Nations Industrial Development Organization (UNIDO) and UNCTAD
emphasized the importance for the least less-developed countries to adopt a growth strategy based onenhancing competitiveness and called for efforts to create national industrialization strategies (UNIDO
2002) and promote trade and investments (UNCTAD 2002b). These statements echo the East Asiandevelopment experience. The outline of these documents can be found in FASID “Trends in
Development Assistance: Literature Review Series” Nos. 14 and 23 (http://dakis.fasid.or.jp/index.html).

21

CHAPTER 2

In 1986, Vietnam launched a domestic economic reform called ‘Doi
Moi’. Around 1992, it initiated a vigorous process of international integration vis-à-vis Western countries and international organizations. The country restored diplomatic relations with the U.S. and joined ASEAN in 1995,
joined APEC in 1998, and signed a U.S. bilateral trade agreement in 2001.
Within a relatively short period of 10 years, the Vietnamese economy has
become deeply integrated into the global economy through trade, investment, and aid. The synergy of domestic liberalization and external opening
provided the engine for high economic growth, which has averaged 7 to 8
percent per year (Fig. 2-2). The country also experienced dramatic socialtransformation. By the end of the 1990s, Vietnam had already achieved theprincipal goal of the MDGs — halving the ratio of people in extreme poverty between 1990 and 2015 (Fig 2-3).
Figure 2-2. Growth of Gross Domestic Product in Vietnam, 1986 to 2002
12

Percent

10
8
6
4
2
0

1986

1988

1990

1992

1994

1996

1998

2000

2002

Source: Government Statistics Office (GSO), Government of Vietnam

Percent

Figure 2-3. Decline of poverty ratio in Vietnam, 1993 to 2002
70
60
50
40
30
20
10
0

58
37
29

25
15

1993

1998

2002

Below total poverty line

1986

1998

11
2002

Below food poverty line
Source: World Bank et al. (2003)

22

Diversifying PRSPs

The Ten-Year Strategy and the Seventh Five-Year Plan, adopted in
April 2001, outline the Vietnamese government’s medium- and long-term
development plans. They embrace the goal of “industrialization and modernization by the year 2020”, the aspiration of Vietnam to catch up, promote
FDI and industrial development, and participate in East Asia’s production
network.
Strong Concern for Social Equity

Vietnam has long accorded high priority to social equity. Although the
problem of quality and efficiency remains, the country has a vast network ofsocial services extending to the village level. When compared with othercountries at a similar income level, Vietnam’s social achievements are far
superior — a literacy rate of 87 percent among women 15 years or older andan under-five mortality rate of 20 per 1,000 live births (World Bank,
2004b).10 The data also suggest that public social expenditures play animportant role of redistribution, for example, the poorest quintile receives
26 percent of primary education expenditures(World Bank et al., 2000).
Moreover, the Vietnamese government has a tradition of implementing
poverty reduction programs targeted at ethnic minority groups in mountainous areas and poor families in remote areas.
To further reduce poverty, it is necessary to improve existing policies
and institutions. More importantly, the best way to reduce poverty is toenhance the productivity and competitiveness of the entire economy andprovide job and income opportunities. In Vietnam, the relationship between
economic growth and poverty reduction is clear to both citizens and thegovernment. Vietnam halved the poverty ratio during the 1990s, an accomplishment not of improved policies and institutions, but rather of improved
agricultural productivity, increased employment opportunities, inflow offoreign funds, and expanded trade that accompanied economic liberalizationand international integration.
Where Vietnam Stands

In light of the three perspectives just discussed, Vietnam’s experience withPRSP is noteworthy for these reasons: (i) relatively low aid dependency; (ii)a national development strategy embodied in the two core documents; and(iii) strong concern for social equity and the possession of the policy tools
10. Data are for 200223

CHAPTER 2

to offset social problems arising from economic growth (although their efficiency must be improved, as many donors point out). These features in turnstrongly influence the content of Vietnam’s CPRGS. It was compiled understrong ownership of the Vietnamese government as a document subordinate
11
to the core documents that embraced growth-oriented development.
Not all poor countries are like Vietnam, but at the same time, Vietnam is
not the only poor country that aspires to growth-based poverty reduction.
The majority of poor countries in East Asia do not intend to avail themselves of debt relief and have development plans to guide their budgets. In
sub-Saharan Africa, many countries have national development plans. The
CPRGS experience of Vietnam, which considers the PRSP as a supplementary document for planning and budgeting based on an existing planningsystem, should be studied as a possible model for other countries or regions.
We may even ask a more fundamental question: Is it really necessary torequire all poor countries — including those equipped with planning capacity above a certain minimum level — to formulate PRSPs as standard documents? For these countries, it is important to: (i) assess the capacity andinstitutional arrangements of the existing system; (ii) ask if some elementsof a potential PRSP can enhance the existing system; and (iii) decide
whether a formal PRSP is useful or the same effects can be realized through12
partial modification of an existing system and without a PRSP.

11. However, donors are divided over the role of the CPRGS in policy planning and resource mobilization.
Several donors (e.g., the World Bank, UK, Denmark) hold the view that the CPRGS should be treated as
the core document, suggesting that the public investment plan and donor support be aligned to CPRGS.
That document has been finalized without resolving this matter. Ishikawa (2002b) also reports a criticalremark by a high-ranking Vietnamese official, expressing strong reservations about making poverty
reduction an exclusive national goal.
12 In comments prepared for a WSSD workshop (sponsored by the Japanese Ministry of Foreign Affairs,
September 1, 2002), the ADB Country Director for Vietnam said): “A challenge for Vietnam, as indeed
its development partners, is how to further evolve and strengthen Vietnam’s Ten-Year Strategy andFive-Year Plan formulation processes, moving away from the ‘central planning’ tradition to a more market oriented strategic planning framework. In this context also, it may not even be necessary to develop aseparate poverty reduction strategy if poverty reduction is given adequate attention in the analyses, policy development, and budget allocations within the national development strategies and plans. Therefore,
burdening the country with parallel processes should perhaps be avoided. In such a case the CPRGS
could become a section, albeit an integral and critically important one, of the next Ten-Year Strategy andFive-Year Plan.” (Ohno, I. 2002)

24

Diversifying PRSPs

Tanzania’s PRSP Experience— Mainstreaming Growth Aspirations
Outlook for Tanzania’s PRSP

Tanzania was one of the first countries to begin the PRSP process after
Uganda and Burkina Faso. The Tanzanian government prepared the full
PRSP in October 2000 and the Boards of the IMF and IDA reviewed it.
Tanzania is eligible for the Enhanced HIPC Initiative and its PRSP is a typical example of early PRSPs, with an emphasis on poverty reduction and apriority on social sector expenditures.
Issues noted by the current PRSP and the actual budget in the MTEF are
shown in Figure 2-4 — (i) a budget is constructed within the MTEF framework addressing some of the issues listed in PRSP, which means that no
specific means nor sufficient priorities are provided to achieve the statedgoals of the PRSP; and (ii) the actual budget allocation is disproportionately
skewed toward the items related to ‘human capabilities’, showing weakinterest in measures related to the growth strategy (the agricultural sector
and items related to ‘conducive development environment’). However, weneed to understand the background for these decisions: Tanzania’s social
indicators either stopped improving or worsened during the 1980s and1990s, and therefore restructuring social services was considered the prime
task for the first round of the PRSP and received generous budget alloca13
tions in the MTEF. Mainstreaming Growth Aspirations
Tanzania’s current PRSP was finalized in a mere seven months after thecompletion of an interim PRSP because of an urgent need to meet an eligibility
condition for debt reduction under the Enhanced HIPC Initiative. For this reason, Tanzanian government officials and researchers recognized that its strategic contents had not been sufficiently analyzed. The 2002/03 Budget Messageof the government emphasized a goal of reducing aid dependency (United
Republic of Tanzania, 2002). To do so the government must achieve steadyeconomic growth, strengthen its tax base, and increase domestic savings.14

13. Agriculture was regarded as a priority sector, but the sector development strategy and action plans were
not completed in time for the full PRSP, which caused the delay in MTEF budget allocation. Following
progress in 2002 in preparation for the agriculture sector development strategy and action plans, thebudget allocation for the sector was expected to increase for the fiscal year 2002/03.
14. Tanzania depends on aid for 22 percent of its recurrent expenditures and 83 percent of development
expenditures (the government has a short-term goal of paying 100 percent of recurrent expenditures withdomestic funds). On the other hand and the actual coverage of MTEF is only about 30 percent of thetotal expenditure (recurrent expenditures are ‘cost of goods excluding payroll’ with necessary expenditures such as debt repayments and payroll excluded, and the development funds are its own funds).

25

CHAPTER 2

Figure 2-4. Priorities in the Tanzanian PRSP and MTEF budget allocation (shaded boxes are MTEF priorities)
Reduce poverty

Human capabilities

Social being

Conducive environment

Other

Agriculture

Education

Decentralization

Macroeconomic stablily

GenderRoads

HealthGovernment

Tax

Environment

Employment

Water

JusticesystemBusiness
environment

Socially disadvantaged

HIV/AIDS

Poverty

Source: United Republic of Tanzania (2001) Poverty Reduction Strategy Paper Progress Report
2000/2001. Dar-es-Salaam. (http://poverty.worldbank.org/files/Tanzania_PRSP_ProgRep.pdf). Priorities
are taken from Annex (pp.43-49) while the MTEF budget allocation is prepared by authors based on the
text (pp.18-38).

The next round of the PRSP is being prepared (with a goal of completing it by the end of 2004) and the government intends for it to have astronger growth orientation. The World Bank’s Representative Office inTanzania is preparing a PRSC at the same time as the next PRSP, and is setting up a goal of ‘scaling-up growth’ in addition to improving the efficiencyof public expenditures and delivery of social services.
Restructuring the Process of Strategic Planning

The PRSP process tends to create tensions between the finance ministry (incharge of the PRSP) and line ministries, and between civil society that canparticipate in the PRSP and those left out of the framework (Cling et al.,2002). Tanzania began to use rolling plans for public expenditure management in the 1990s. Initially, the Planning Commission under the President’s
Office decided public investment priorities, but after introduction of the
PRSP and MTEF, its role was diminished as authority was concentrated in
the Ministry of Finance, which is in charge of the PRSP and MTEF
(Naschold and Fozzard, 2002).
The PRSP is the ‘primary document’ in Tanzania and is linked to the
MTEF as the sole development plan with budgetary accommodations. The
MTEF translates expenditure priorities into reality based on the PRSP and
sector plans. There is no function in this process (at least in the case of26

Diversifying PRSPs

Tanzania) that determines cross-sector priorities of policy measures. Thishas to be one of the important functions that the PRSP process is expected
to carry out, but as mentioned earlier, the actual process of preparing the
PRSP is not perfect. On the other hand, the MTEF functions mostly as anaccounting framework. A major challenge, therefore, is how to create an
institutional mechanism that fills the gap between the current PRSP and
MTEF.
In Vietnam, which regards the PRSP as a ‘supplementary document’,
the Ministry of Planning and Investment determines cross-sector priorities
and budgets for priority projects and programs proposed by CPRGS andsector plans while preparing the Public Investment Program (PIP).
However, this merely means that a strategic planning function is embeddedin the existing planning process of the Vietnamese government and not thatthe current system has no room for improvement. The challenges include
qualitative improvement of economic planning, i.e., to shift away fromnumerical targets that are characteristic of a planned economy to policy targets that are better suited for a market economy. There is also a need to
improve project appraisal methodologies and ensure consistency between
15
recurrent and investment expenditures. Figure 2-5 offers a comparison
between Vietnam and Tanzania.
The government and the private sector both play an important role inproduction sectors (such as agriculture, manufacturing, and resource development) and in infrastructure building, strategies and policy measures suchas agricultural development, expanding trade and attracting investment, andintroduction of new technologies and industrial locations. The roles of the
public and private sectors need to be examined carefully when the government determines the priorities and budget allocation for public investments.
Deciding the level, allocation, and expenditure channels for production sectors is therefore a complex task. As a result, there is a tendency to allocate
more money to social sectors such as education and health in which thegovernment plays a larger role and public expenditures can be identified
more easily (also emphasized by the World Bank and European donors who
actively promote PRSP and aid coordination).

15. The budgeting and investment planning processes of the Vietnamese government are detailed in WorldBank (2002, pp.82-92). This report suggests that stronger coordination between the Ministry of Planningand Investment and the Ministry of Finance may lead to the introduction of the MTEF in the future.

27

CHAPTER 2

Figure 2-5. PRSP and the budget allocation process — comparing Vietnam andTanzania
Vietnam — PRSP as asupplementary document

Tanzania — PRSP as primary document(Ideal form of MTEF)

CPRGSSectorplans

PRSP
30% of total budget

Cross-sector
coordination

No cross-sector
coordination

Prioritize individual
projects/programs
through PIP a

Ceiling of priority
sectors by MTEF b

Budget (recurrent
budget except payroll +development budget
with domestic funds
On-budget

Budgeting(development+ recurrent budgets
funded by national
budget and aid

Prioritize individual
projects/programs in
sector plans ofpriority sectors

Aid funds(TAS c)a . PIP : Public Investment Program;b . MTEF : Medium-Term Expenditure Frameworkc . TAS : Tanzania Assistance Strategy

There are difficult challenges in how to combine what Ishikawa (2002b)
calls ‘pro-poor targets’ and ‘broad-based growth’ in the context of
Tanzania, and how to narrow possible measures within the constraints ofexternal financing.16 However, if the Tanzanian government intends toincorporate growth promotion in the next PRSP (albeit to a different
degree), it is important to strengthen the currently weak strategic planning
process. In Tanzania, which regards the PRSP as a primary document, arealistic and constructive approach would be to use the PRSP and MTEF as
core policy tools and devise an institution that fills the gap between them.
From this perspective, the move by the President’s Office to prepare
medium- and long-term growth and poverty reduction plans is interesting. It
is unclear whether this is intended to assume the role of prioritizing policies— a missing component in the current PRSP and MTEF procedures — or totranslate the growth strategy into specific action plans. In either case, it will
be interesting to see the development of this move under ownership of the
Tanzanian government.
16. This report, presented at a meeting of The Japan Society for International Development in November
2002, brought up the necessity for African PRSPs to mainly tackle delays in human development andlack of social capital. The report pointed out that expenditures for education are especially effective
because they form the foundation of future economic growth and suppress population growth at the same
time.

28

Diversifying PRSPs

Conclusion — Diversifying the PRSPAs the first round of PRSPs are completed in various countries and theirshortcomings and future challenges are discussed, the interest is shifting,both globally and in Africa, to ‘growth’ and ‘trade and investment’. The
trend in international development has shifted since the World Summit on
Sustainable Development in 2002 with a resurgence of growth aspirations.
The progress report entitled PRSP Progress in Implementation (PRSP-PR),
submitted to the Joint Development Committee at the IMF-World Bank
Annual Meeting in September 2002, acknowledged that early PRSPs were
optimistic in their macroeconomic projections and did not have sufficient
analyses on the sources of and policy measures to achieve growth, anddeclared that they will engage in various research on pro-poor growth.
According to the progress report, PRSPs for nine countries prepared in
March 2002 or later incorporated growth aspirations more explicitly (IMF
and IDA, 2002c). Moreover, the PRSP-PR submitted to the Joint Development
Committee in September 2003 pointed out that more PRSPs are now covering trade-related issues(IMF and IDA, 2003).
To diversify and tailor PRSP for each country, it is essential to: (i) illuminate the causes of poverty and the relationship between poverty reductionand economic growth in the context of each country and prepare appropriate
development strategies; and (ii) build a system to translate the strategies
into specific policy and budgetary measures. This work is also important insocial sectors but has often been neglected in the production sectors where
the roles of the public and private sectors need to be examined, and in
implementing growth strategies because it is an especially complex challenge.
Early PRSPs were concentrated in countries under special conditions:they were all eligible for the Enhanced HIPC Initiative. In the future, as
PRSPs are being prepared and implemented in other countries eligible for
IDA credits, it is becoming increasingly important to think about development strategies and institutional roles played by PRSPs within the uniquecontext of each country. A list of policy options does not make a development strategy. Policies need to be selected based on priorities and theirimplementation order determined while paying attention to the constraints
that each country faces: financial constraints, constraints of human andinstitutional capacities, constraints imposed by trade and investment envi-

29

CHAPTER 2

ronments, etc.17 Institution building should also be implemented from thisperspective.

References
ADB et al. 2003. Vietnam Development Report 2004: Poverty. Joint Donor
Report to the Vietnam Consultative Group Meeting, Hanoi, December
2-3, 2003.
Cling et al. 2002. The PRSP Initiative: Old Wine in New Bottles? Presented
at Annual Bank Conference on Development Economics, June 2002,
Oslo, Norway. http://wbln0018.worldbank.org/eurvp/web.nsf/Pages/
Paper+by+Razafindrakoto/$File/RAZAFINDRAKOTO.PDF
Craig, David and Doug Porter. 2003. Poverty Reduction Strategy Papers: A
New Convergence. World Development: 31(1):53-69.
Dollar, David and Aart Kraay. 2000. Growth is Good for the Poor. Mimeo,
DECRG, World Bank. http://www.worldbank.org/research/growth/
pdfiles/growthgoodfor poor.pdf
Devarajan, S. M.J. Miller, and E.V. Swanson. 2002. Goals forDevelopment: History, Prospects and Costs. World Bank Discussion
Paper No. 2819.
FASID. 2002. Kaihatsu-Enjo no Atarashii Chouryu: Bunken-Syoukai [New
Trend of Development Assistance: Literary Review], No. 14, No. 23,
No. 26. http://dakis.fasid.or.jp/report/reference.html.
GRIPS Development Forum. 2002. Japan’s Development Cooperation in
Vietnam — Supporting Broad-based Growth with Poverty Reduction.
Prepared for the Vietnam-2002 Informal Mid-Year Consultative
Group Meeting (Ho Chi Minh City, Vietnam), May 23-24, 2002.
IMF and IDA. 2003. Poverty Reduction Strategy Papers _Progress in
Implementation. 12 Sept. http://poverty.worldbank.org/files/091203.pdf_____. 2002a. Review of the Poverty Reduction Strategy Paper (PRSP)Approach: Main Findings. 15 March. http://www.worldbank.org/
poverty/strategies/review/findings.pdf_____. 2002b. Review of the Poverty Reduction Strategy Paper (PRSP)Approach: Early Experience with Interim PRSPs and Full PRSPs. 26
March. http://www.worldbank.org/poverty/strategies/review/earlyexp.pdf

17. The consolidation of analyzing perspectives by Ogata (2002) is informative.

30

Diversifying PRSPs_______. 2002c. Poverty Reduction Strategy Papers _ Progress in
Implementation. 11 Sept.
http://wbln0018.worldbank.org/DCS/devcom.nsf/(documentsattachmentsweb)/September2002EnglishDC20020016/$FILE/DC20020016(E)-PRSP.pdf
Ishikawa, Shigeru. 2002a. Growth Promotion versus Poverty Reduction —World Bank Rethinking of Aid Policy and Implications forDeveloping Countries. GRIPS Development Forum Discussion Paper
No. 3, Aug.
_______. Shigeru. 2002b. Hinkon-sakugen ka Seityou-sokushin ka:
Kokusaiteki na Enjyo-seisaku no Minaoshi to Tojyoukoku [Poverty
Reduction or Growth Promotion?: Revision of International Aid
Policy and Developing Countries]. Nihon Gakushiin Kiyou 56(2): 91131. Jan.
Klasen, Stephan. 2001. In Search of The Holy Grail: How to Achieve ProPoor Growth? Paper commissioned by GTZ for the Growth andEquity Task Team of the Strategic Partnership with Africa (SPA).
Ministry of Finance, Planning and Economic Development. 2000. Poverty
Reduction Strategy Paper: Uganda’s Poverty Eradication Action Plan
— Summary and Main Objectives. 24 March, Kampala.
Ministry of Foreign Affairs, Japan. 2000. Japan’s Country Assistance
Program to Viet Nam. http://www.mofa.go.jp/mofaj/gaiko/oda/
seisaku/seisaku_3/sei_3f.html
Ministry of Planning and Investment and Japan International Cooperation
Agency. 2002. White Paper on Official Development Assistance 2001.
Ministry of Planning and Investment and Japan International Cooperation
Agency. 2001. MPI-JICA Study on the Economic Development Policyin the Transition toward a Market-Oriented Economy in the Socialist
Republic of Viet Nam (Phase 3). Final Report Vol.1 General
Commentary.
Naschold, Felix and Adrian Fozzard. 2002. How, When, and Why Ddoes
Poverty Get Budget Priority — PRSP and Public Expenditure in
Tanzania. ODI Working Paper 165.
Ogata, Kentarou. 2002. PRSP Purosesu no Kaizen ni Mukete: Hon-foramu
deno Giron wo Soukatsu suru [For the Improvement of PRSP
Processes: Summing up of Discussions at the Forum], GRIPS
Development Forum Policy Minutes, Washington, DC. Development
Forum Minutes No. 13, Dec.
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Ohno, Izumi. 2002. Diversifying PRPS — The Vietnamese Model for
Growth-Oriented Poverty Reduction. GRIPS Development Forum
Policy Note No.2, October.
Ohno, Kenichi. 2002. East Asian Experience in Economic Development andCooperation. GRIPS Development Forum Policy Note No3,
December.
Quibria, M.G. 2002. Growth and Poverty: Lessons from the East Asian
Miracle Revisited. ADB Institute Research Paper 33, Feb.
Ravallion, Martin. 2001. Growth, Inequality, and Poverty: Looking Beyond
Averages. World Development 29(11):1803-1815.
Republic of Bolivia. 2001. Poverty Reduction Strategy Paper (PRSP):
Estrategia Boliviana de Reduccion de la Pobreza (EBRP), March, La
Paz.
Sasaoka, Yuichi. 2002. Africa ni Okeru Hinkon-Sakugen: PRSP no Khonteki
na Houkousei” [Poverty Reduction in Africa: Fundamental Directionsthof PRSP]. Presented at the 13 Conference of Japan Society forInternational Development. Dec 1. http://www.grips.ac.jp/forum/
Socialist Republic of Vietnam. 2002. Comprehensive Poverty Reduction
and Growth Strategy (approved by the Prime Minister on May 21,2002), Hanoi.
Socialist Republic of Vietnam. 2001a. Strategy for Socio-Economic
Development in the Period 2001-2010 (approved at the 9th Congress in
April 2001). Hanoi.
Socialist Republic of Vietnam. 2001b. Five-Year Plan for Socio-Economic
Development 2001-2005 (approved at the 9th Congress in April 2001),
Hanoi.
UNCTAD (United Nations Conference on Trade and Development). 2002a.
The Least Developed Countries Report 2002: Escaping the Poverty
Trap. http://www.unctad.org/en/pub/ps1ldc02.en.htm.
_______. 2002b. Economic Development in Africa From Adjustment toPoverty Reduction: What is New?
UNIDO (United Nations Industrial Development Organization). 2002.
Industrial Development Report 2002-2003: Competing through innovation and learning. July.
United Republic of Tanzania. 2000. Poverty Reduction Strategy Paper, Dares-Salaam. http://poverty.worldbank.org/files/TanzaniaPRSP.pdf.
_______. 2002. Speech by the Minister for Finance, Hon. Basil P. Mramba(MP) introducing to the national assembly the estimates of govern32

Diversifying PRSPs

ment revenue and expenditure for the financial year 2002/2003 on
13th June..
_______. 2001. Poverty Reduction Strategy Paper Progress Report
2000/2001. Dar-es-Salaam. http://poverty.worldbank.org/files/Tanzania_PRSP_ProgRep.pdf.
World Bank. 2004a. Board Presentations by Country (Completed PRSPs
and I-PRSPs (as of July 31, 2004)). http://www.worldbank.org/poverty/strategies/boardlist.pdf.
_______. 2004b. World Development Indicators 2002. World BankWorld Bank et al. 2003. Vietnam Development Report 2004: Poverty. (Joint
Donor Report to the Vietnam Consultative Group Meeting, Dec. 2-3)
http://worldbank.org.vn/news/VDR04%20Poverty.pdf_______. 2002. Globalization, Growth, and Poverty: Building on an Inclusive
World Economy. New York: Oxford University Press.
_______. 2002. Vietnam Development Report 2003: Vietnam Delivering on its
Promise (The World Bank in collaboration with the AsianDevelopment Bank, Vietnam Consultative Group Meeting, December
10-11), Hanoi.
_______. 2000. World Development Report 2000/2001 Attacking Poverty.
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_______. 2000. Vietnam: Public Expenditure Review (Joint Report of theGovernment of Vietnam-Donor Working Group on Public
Expenditure Review. Presented at the Mid-Year Meeting of theConsultative Group, June 22-23.

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CHAPTER 2

Millennium Development Goals
Suzanne Akiyama
The Millennium Development Goals (MDGs) were embraced and endorsedby the international development community following the Millennium
1
Summit of September 2000. They are now the rallying point for a campaign to bring widespread, monitored, and measurable improvement todeveloping countries and their impoverished people. The 60th session of theUnited Nations General Assembly in September 2005 will mark the 5th
anniversary of the Millennium Declaration by including an MDG+5 summit,2 both to assess progress and spur renewed efforts to attain the MDGs
by the goal of 2015.
Organizations most closely involved with the MDGs — the United
Nations, the United Nations Development Programme, and the Millennium
Project, among others — sense that the imminent 5th anniversary of theMillennium Summit is a significant milestone. If the pace toward achievement remains as it is, there is a great risk that some countries, particularly
those in sub-Saharan Africa, will be irretrievably left behind. On the other
hand, if fresh momentum can be created, then possibly the necessary
resources for completing the task can still be generated. Thus, as preparations proceed for MDG+5, the campaign is intensifying and taking on asense of urgency.
To say that the MDGs originated only in 2000 is somewhat misleading.
Although the social and economic markers that comprise the MDGs did
originate in the Millennium Declaration (UN, 2000) of the Millennium
Summit, they have antecedents in clearly delineated time-bound development targets produced in a series of international conferences held throughout the 1990s.3 An integrated list of various goals from various conferences
first appeared in a May 1996 report from the Development Assistance
Akiyama is research associate, Center for the Study of International Development Strategies, National
Graduate Institute for Policy Studies.
1. Various totals are given for the number of governments and/or heads of state that attended, probably due
to different methods of counting, however, it can safely be said that the Millennium Declaration was
overwhelmingly accepted.
2. Five years following the original summit.
3. Among them (many of which had at least one subsequent follow-up conference) are children 1990; education 1990; environment and development 1992; human rights 1993; population and development 1994;
social development 1995; women 1995; human settlements 1996; food 1996, and climate change 1997.

34

Millennium Development Goals

Committee (DAC) of the Organization for Economic Cooperation andDevelopment (OECD). That report declared that “It is time to select, taking
account of the many targets discussed and agreed . . . a limited number ofindicators of success by which our efforts can be judged (OECD, 1996, p.
2).” Later in the same report, goals were referred to as “indicators of development progress” (OECD, 1996, p. 16).
Japan, at that time the leading ODA donor country, was very influential
in introducing and promoting these goals and the concept within the
OECD/DAC process. They were subsequently picked up by the UK development agency, Department for International Development (DFID), also avery forceful player in the international donor community. In a policy white
paper on international development released in November 1997, DFID presented a list of International Development Targets (DFID, 1997, p. 21) identical to those in the DAC report of the previous year. DFID also associatedthe IDTs with “agreement reached at a series of UN Summits” (DFID,
1997, p. 34).
By the time of the UN Conference on Financing for Development (FfD)
in March 2002, the succinctly brief DAC/DFID International Development
Targets had been reconciled with the sweepingly comprehensive goals of
4
the Millennium Declaration to produce seven measurable goals. There is aneighth goal, ‘develop a global partnership for development’,5 which is lessreadily quantified. The seven quantifiable ‘goals’ are organized into 11 ‘targets’. There are 32 identified ‘indicators’ against which to measureprogress. The eighth goal also has targets and indicators. Collectively, theseelements are now known as the Millennium Development Goals.6

Achieving the Goals
The target year for achievement of the MDGs is 2015. Previous targets set
during the conferences in the 1990s — generally applying to goals that weremore narrow than the MDG complex — have been superceded because they
could not be met. There is high anxiety among the MDG campaigners that
this pattern will repeat itself. To avoid that and ensure that the MDGs are
realized on schedule in all target countries, adequate financing must be
4. A comparison of the IDTs and MDGs is given in UNDP (2001b).
5. Explained as “Develop further an open, rule-based, predictable, nondiscriminatory trading and financial
system (includes a commitment to good governance, development, and poverty reduction — bothnationally and internationally” (from the World Bank website).
6. The UNDP MDG scheme is presented in Appendix 1.

35

CHAPTER 2

made available and stakeholders on both sides of the development relationship must be mobilized.
Financing

Commitments from donor countries for funding sufficient to achieve the
MDGs was the specific purpose of the Monterrey Conference on Financing
for Development. That conference concluded on an upbeat note and wasconsidered a success. Its final document, the Monterrey Consensus, sets
forth the basic framework for matching money to recipients in the MDG
context (UN, 2002a). But it was not entirely clear how much money isenough and even as the five-year anniversary approaches, estimates continue to be made. This fundamental issue is rife with subtleties: Is achievement to be defined and attempted globally or at the country level? What
methodology is to be used for the calculation? How firm are the estimates,
how often must they be updated and otherwise fine-tuned? Is there an ideological component to the calculation?7
Several separate costing exercises were conducted preparatory to the
FfD conference — by the UN, World Bank, and UK — all of which derived
a rough figure of $50 billion additional per year until the target year of
2015. The UN study, Report of the High-level Panel on Financing forDevelopment, known as the Zedillo Report (UN, 2001), cites specificauthoritative studies of the different components of the MDGs in calculating
the additional ODA requirement to be “a total of US$ 50 billion a year,[which] should be interpreted only as indicating an order of magnitude; but
there is no doubt that the magnitude is substantial” (UN, 2001, p. 51). A
World Bank study published in April 2002 (Devarajan, 2002) used two different approaches in its calculations; the first focused on the poverty reduction goal as being directly linked to the others; the second took the opposite
track, linking the health, education, and environmental goals back to poverty. Both tracks produced approximately the same estimate, an additional
US$ 40-60 billion annually in foreign aid to meet the MDGs.
DAC also looked extensively at the costing issue in its Development Cooperation 2001 Report (OECD, 2002). It did not develop its own estimates,
but rather summarized those derived elsewhere including global figuresfrom the World Bank (an earlier report than that referred to above), the UN(the Zedillo Report) and goal-specific figures from WHO (health) and7. See Vandemoortele and Roy (2004) for a discussion of these subtleties

36

Millennium Development Goals

UNESCO (education). DAC also raised red flags about the methodologiesof the calculations — on the one hand based on the hard economic conceptof a ‘financial gap’ yet also based on softer assumptions about costingsocial development goals, the interactions among which are complex and
not easily predictable (OECD, 2002, pp. 75-78).
A lack of estimates for country-level applications to some degree diminished their operational usefulness, as was recognized by the UN in the
Zedillo Report and by the DAC in its report. To some extent this lackreflected an incomplete understanding of how the goals would mutually
reinforce or conflict; a more significant reason was a lack of adequate timeseries data for many of the countries. The UNDP, whose regional and county offices are deeply involved in bringing the MDG concept fully home tolocal governments and populations, provided a Side Panel presentation at
the Monterrey Conference, summarizing five country-specific costing studies, to serve as a model of country-level application (UNDP, 2002b).
In the years since FfD, cost estimation has continued. As part of its continuing effort to integrate the MDGs into national poverty reduction strategies, UNDP has stressed the importance of country-level estimates overglobal ones and short-term costing over long-term. Costing at the country
level is key because national budgets, sectoral plans, and donor assistance atthe operational level must be aligned. Estimating time periods is difficult —UNDP analyses stress that the many changing variables make calculations
very tentative and subject to underlying assumptions, specific environments,
and interactions among the goals. A recent UNDP paper states that cost estimates over the long-term are not reliable, ranging from US$ 30 billion additional per year to more than US$ 100 billion additional per year. Because
cost as a determinant of policy must remain subject to fresh knowledge andchanging circumstances, the paper recommends a rolling 2-3 year framework that is readily adjusted (Vandemoortele and Roy, 2004).
Another MDG-focused United Nations agency — the Millennium
Project — has a quite different perspective on the issue of how much money
is required over what time-period. The Millennium Project is an advisorygroup created by the Secretary-General to identify best practices towardachieving the goals. It set up 10 task forces for in-depth study of each goal
to determine the best way to meet them over the decade remaining until
2015. Its report, submitted to the Secretary-General in December 2004, will
become input to the Millennium Summit+5. The leader of the Millennium
Summit team is Jeffrey Sachs, head of the Earth Institute at Columbia37

CHAPTER 2

University and special advisor to the Secretary-General on the Millennium
Development Goals. Although recognizing the complexities of reliably estimating cost, the Millennium Project calculates that an amount in the rangeof an additional US$ 75 billion per year might be necessary. Furthermore,
MDG-oriented aid should be extended over a long time-frame to allow continuity (Sachs et.al., 2004). This analysis calls for preliminary ‘needs assessment’ of each recipient country to determine actual cost of the most effective strategy at the country level (Sachs, 2004a).
Mobilization

How best to approach to the Millennium Development Goals was not selfevident at the start and there has been (and continues to be) a refining andredefining of the way forward. As more and more becomes understood
about what is involved, and as time shortens, the approach shifts andbecomes more focused. The MDG process, including Millennium Summit
and the Monterrey Conference, is basically a United Nations effort whichbeing stewarded by that organization.
• On September 6, 2001, Secretary-General Kofi Annan presented a
Roadmap Toward Implementation of the United Nations Millennium
8Declarations (UN, 2001a), a follow-up to the Millennium Summit. In it
he described the Millennium Development Goals in broad context andpresented strategies to meet them. He also stated that progress toward
the goals would be coordinated by the Department of Economic andSocial Affairs of the UN Secretariat (DESA) at the global level and by
the United Nations Development Programme (UNDP) at the country
level (UN, 2001a, p. 55). The UNDP has field offices in all the UN
member countries and a dynamic administrator in Mark Malloch Brown.
• In December 2001 the administrator of the UNDP, in his capacity ashead of the United Nations Development Group (UNDG), was named‘scorekeeper and campaign manager’ of the MDG campaign (UNDP
website a). Subsequently, the following March, Mr. Brown announced
that the overall campaign would be four-pronged: (i) GLOBAL monitor9
ing to be overseen by DESA, which will prepare an annual report to bepresented by the Secretary-General to the General Assembly; (ii) moni8. It should be noted that the Millennium Declaration is much broader than the Millennium Development
Goals.
9. The annual reports are mandated by General Assembly resolution. A more comprehensive update to bemade at five year intervals.

38

Millennium Development Goals

toring and guidance at the country level, for which UNDP would havedirect responsibility; (iii) the Millennium Project, an initiative to be led
by Professor Sachs;10 and (iv) the Millennium Campaign, a world-wideawareness campaign.
• On July 1, 2002, the UNDG approved a ‘Core Strategy’, focusing “onaction by the UN system at the global and country levels and supported
by activities at the regional level (DevLink website a). The strategy
incorporated four key elements: (i) monitoring; (ii) analysis, definition,and policy assessment; (iii) campaigning/mobilization; and (iv) operational activities. The Core Strategy is an elaboration of the four-pronged
concept.
On July 31, 2002, the Secretary-General of the United Nations presented
the first annual progress report on implementing the Millennium
Declaration (UN, 2002a). This report is an update of the September 2001
Road Map. Within the report, he announced that a ‘millennium campaign’and a ‘millennium project’ would be undertaken in pursuit of the goals. The
framework for addressing the Millennium Declaration and the Monterrey
Consensus had now been constructed:
On the Global Level••

Global monitoring will include a progress assessment by DESA (incollaboration with relevant agencies) and the Secretary-General’s annual
and five-year reports to the General Assembly.
The Millennium Campaign (UN, 2002c) flowed out of a call in theMonterrey Consensus for a ‘global information campaign’ to create,increase, and generally encourage support for achievement of the goals.
It is situated within UNDP and headed by Eveline Herfkens, former
Netherlands Minister for Development Cooperation and World Bank
Executive Director, who has the title Executive Coordinator. The
Campaign, according to UNDP Administrator Brown, will endeavor to
engage “[t]he man or woman on the street in a developing or developed
country” who may not yet feel part of the Millennium Declaration.
The campaign has three functions: (i) to be a clearinghouse for UNproduced research and analysis; (ii) to build partnerships; and (iii) tocoordinate strategies and messages among the partners. There are two

10. Professor Sachs left the Harvard Center for International Development in July 2001 to head Colombia
University's Earth Institute.

39

CHAPTER 2•

focuses —developed countries with strong media and developing countries. In the developed countries, one campaign now underway is termed‘no excuses 2015’. It entails publicizing the MDG effort and has been
deployed in Italy, whose development assistance is the lowest in Europe,and will also be launched in Austria, Belgium, Canada, Germany, Spain,
and the United States (UNDP website e).
Plans are that the Millennium Campaign will continue, promotinginterest in the MDGs through to 2015.
The Millennium Project (UNDP website c) is the global analysis component under the direction of Jeffrey Sachs. Members of the Millennium
Project are reviewing, evaluating, and prioritizing practices, policies,
and financing options to identify the best strategies for meeting thegoals. The Project is designed to be a research network of interacting
units. Its core activity is performed by 10 task forces, each of which ischaired by a team of coordinators who guide the research effort. The
11
task forces, their targets, and coordinators include:
1. Poverty and Economic Development: millennium development targets 1, 13, 14, 15, and 16 — Chaired by Dr. Mari E. Pangestu andProf. Jeffrey Sachs
2. Hunger: millennium development target 2 — Chaired by Prof. Pedro
Sanchez and Prof. M.S. Swaminathan
3. Education and Gender Equality: millennium development targets 3
and 4 — Chaired by Dr. Nancy Birdsall, Ms. Amina J. Ibrahim, and
Dr. Geeta Rao Gupta.
4. Child Health and Maternal Health: millennium development targets
5 and 6 — Chaired by Dr. Mushtaque Chowdhury and Prof. Allan
Rosenfield.
5. HIV/AIDS, Malaria, TB, Other Major Diseases and Access toEssential Medicines: millennium development targets 7, 8, and 17 —Chaired by Dr. Agnes Bingawaho, Dr. Jaap Broekmans, Dr. Paula
Munderi, Dr. Josh Ruxin, Prof. Burton Singer, and Dr. Awash
Teklehaimanot
6. Environmental Sustainability: millennium development target 9 —Chaired by Ms Yolanda Kakabadse Navarro and Prof. Don J.
Melnick
7. Water and Sanitation: millennium development target 10 — Chaired

11. More information on the coordinators is available at the UNDP website c.

40

Millennium Development Goals•

by Dr. Roberto Lenton and Dr. Albert M Wright
8. Improving the Lives of Slum Dwellers: millennium development target 11 — chaired by Dr. Pietro Garau and Prof. Elliott D. Sclar
9. Open, Rule-Based Trading Systems: millennium development target
12 — Chaired by Prof. Patrick Messerlin and Dr. Ernesto Zedillo
10. Science, Technology and Innovation: millennium development target
18 — Chaired by Prof. Calestrous Juma and Dato’ Ir Lee YeeCheong.
Associated with the Project is a UN Experts Group of senior representative of participating UN and related agencies (such as the World Bankand IMF) which oversee their agencies’ participation. The UN Experts
Group held its first meeting in September 2002. The Millennium
Project, unlike the Millennium Campaign, will not continue through theentire period until 2015. As currently planned, its mandate ends in
September 2005, when the Secretary-General presents the results of its
work to the Millennium Summit+5.
Operations: There is no operational function at the global level.

At the Country Level

Within each country the UN/UNDP strategy is roughly analogous to that at
the global level. It is, for the most part, pursued through the preparation ofreports called Millennium Development Goals Reports (MDGRs).12 These
are meant to complement, on the country level, the UN Secretary-General’sannual report to the General Assembly, and vice-versa. At least one reportfor each developing and transition country is to have been completed by end
13
2004.
The MDGRs are not expected to reflect original research. Staff isencouraged to draw freely on existing information, particularly PRSPs of
the World Bank, the National Human Development Reports (NHDRs) of
UNDP, and the Common Country Assessment (CCA) of the UN system.
The MDGRs are to be updated regularly, thus the existence of monitoring
capacity within the government is considered critical. Pervading all countrylevel efforts is a sensitivity to local leadership. There is an awareness that if
local interests, including but not limited to the central government, do notembrace the goals, little can be accomplished. For that reason, attention is
12. The most current status is available at www.undp.org
13. A total of 78 countries.

41

CHAPTER 2

devoted to encouraging ownership without usurping it.
• Monitoring. Preparing a baseline MDGR is the first step — determining
where the country is in relation to the relevant goals and targets. (It is
recognized that at the county level, relevance of goals will vary according to the situation.) The baseline report then serves as a benchmark
against which progress can be assessed. An underlying objective of the
MDGR, in particular the baseline report, is to clarify the goals, advocate
for them, and by creating ‘ownership’ to bring the government into theprocess. They are not intended to be policy recommendations or actionplans. Rather, goal by goal, they clarify the situation within a particularcountry — which indicators are relevant, how they will be monitored,
what the cost is likely to be, what will be its source, and how achievement of the goals can and should proceed.
UNDP in-country staff take the lead in this process. However, theentire UN ‘country team’ (UNCT) is involved, including staff of all UN
agencies assigned to a country and in some cases staff of sister organizations such as the World Bank.
Initially the UNCTs, led by UNDP staff, created systems for monitoring their countries through a variety of routes — some built their own
systems based on knowledge and contacts; some hired experienced consultants, usually local; some used off-the-shelf, commercially available
software. More recently, a UNICEF application, Child-Info, has been
adapted to MDG monitoring under the name DevInfo (DevInfo website).
• Campaign. At the country level this component is not standardized withuniform structure. Like the MDGRs, it will be country-specific, determined by “local actors according to their needs and country conditions”(DevLink website b). Like the Millennium Campaign at the global level,
each national campaign will be directed toward building and retaining
support for attainment of the MDGs.
• Analysis. At the country level analytic work looks at innovative practices, policies, institutional reforms, implementation issues, and financing options. The UNCT coordinated by UNDP works closely with thelocal government in scheduling, designing, and implementing studies. In
addition to the considerable cross-support among these teams —exchanging ideas, experience, and information —– they can draw on theexpertise of the global Millennium Project and other available sources.
• Operations. It is a tenet of the UN Core Strategy that “The UN, as a
42

Millennium Development Goals

privileged partner of Government, has an opportunity and an obligation
to provide leadership at the country level to support national partners”(DevLink website b). However, operations on the national level require
treading very carefully so that there is no encroachment into governmental purview. The UN has an assortment of mechanisms that it coordinates to identify programs for which it can then help the government toimplement. These mechanisms include the MDGRs, the Common
Country Assessment (CCA), and the UN Development Assistance
Framework (UNDAF). Attention is also given to the interface between
the UN MDG effort and the development approaches and strategies ofother organizations such as the World Bank’s PRSPs and CDFs.
Other Organizations‘Partnership’ is the key element to meeting the Millennium Development
Goals. One type of partnership is active commitment by donor countries,
especially financing. The final report of the Millennium Project stresses that
wealthy countries have a responsibility to provide the funds required bydeveloping counties to meet the goals. Goal 8 explicitly recognizes this.
A second type of partnership is coordination among the panoply ofagencies involved in meeting the goals. The United Nations as executor of
the Millennium Declaration is most central, but there are many other agencies with global responsibility in the various sectors that will compile information on the indicators. In addition, non-governmental organizations(NGOs), the private sector, philanthropic foundations, academic and cultural institutions, and other members of civil society are all called on by the
Secretary-General in his Roadmap.
• Paramount within this partnership is the World Bank, the largest andmost influential development organization. It is a member of the UNDG
Working Group on the MDGs and the UN Experts Group. The WorldBank incorporates the MDGs throughout its poverty reduction strategy.
In addition, the Bank has created some specific programs, one of whichis the fast track component of Education for All (Goal 2). This goal isalso the subject of an Oxfam campaign, Every Child in School.
• Education for girls, part of Goal 2, Target 3 and Goal 3, Target 4, is thefocus of the United Nations Girls Education Initiative (UNGEI). Thisinitiative was launched at the April 2000 Dakar World Education
Forum. It preceded the Millennium Summit and Millennium

43CHAPTER 2

•

•

•

Declaration,14 but nonetheless, it has easily been subsumed into the
MDG process. It is an interagency program involving 13 UN entities led
by UNICEF. (DevLink website b)
UN-Habitat (United Nations Human Habitats Programme) is following
the progress of Goal 7, Target 11, improving the lives of at least 100
million slum dwellers by 2020. It is providing technical guidance andmonitoring initiatives, and has developed a sample of cities to monitor
slums at the local level UN-Habitat website).
DFID (of the UK) has prepared a plan to reach the goal on hunger (Goal1, Target 2). Its strategic plan lists these critical areas for action: tradereform, agricultural investment, alleviating malnutrition, crises reduction(including conflict-related and weather-related), improved food aid procedures, and implementation of social protection measures (DFID,
2002).
The World Health Organization (in conjunction with other agencies) isthe lead reporting agency for several of the goals and targets, specifically those related to child mortality, maternal health, childhood nutritional
status, disease, and access to clean water. It is aligning its priorities tocomplement the MDG process in its current work as well as future programs.

Prognosis
Melding the objectives of the Millennium Declaration with the international
development targets of the OECD/DAC created a list of practicable goals. It
now falls to the development community to realize them. One of the outcomes of the FfD in Mexico was an understanding that developing countries
would take responsibility for their development and the donor community
would support that responsibility financially. This means that primary
responsibility for meeting the goals (ownership) devolves to each country.
Whether or not the Millennium Development Goals can be achieved by2015 remains a open question. Hurdles described by the heads of the IMF,
OECD, UN, and World Bank in a joint report in 2002 are little changed —“weak governance, bad policies, human rights abuses, conflicts, natural disaster, . . . other external shocks, HIV/AIDS, . . . inequities in income andeducation, access to health care, inequalities between men and women,
14. Both this initiative and the World Bank education fast track initiative are directly traceable to the 1990
Jomtien (Thailand) World Conference on Education for All (EFA).

44

Millennium Development Goals[l]imits on . . . access to global markets, the burden of debt, the decline ofdevelopment aid, and . . . inconsistencies in donor policies”.15 In particular,
sub-Saharan Africa is not progressing at all well toward reaching any of thegoals, as seen in the progress report reproduced as Appendix 2.
There are three areas of constraint: (i) technical, because the MDGs are
numerical, (ii) operational, because they are time bound, and (iii) financial,because estimates are unreliable, initial assumptions may prove false, andsome eligibility requirements are being imposed.
Technical Problems• One problem is defining indicators that reveal success. The following
16
questions illustrate the confusion that in many cases continues to exist.
Indicator 2 — Is there an accurate and precise definition of poverty gap
ratio?
Indicator 3 — Can the data be based on national income rather thannational consumption?
Indicator 4 — What is the correct underweight cut for children?
Indicator 5 — Is the minimum level of dietary energy consumption
defined by the country itself?
Indicator 29 — What is the definition of ‘improved water source’?
Indicator 30 — What is the definition of ‘improved sanitation’?
Indicator 32 — What is the definition of ‘secure tenure’?
• Another problem is whether each goal is to be satisfied at the country
level or at the global level. This problem becomes clear in looking at
Goal 1, considered by most observers to be the most fundamental. A
reduction in poverty levels in several very high population countries
such as China, India, Indonesia, and Brazil would probably reduce thenumber of people whose income is less than one dollar a day by one-halfon a global level. However, it would still leave the population of many
countries, perhaps all sub-Saharan Africa, below that line.
• A third problem, related to the previous two, is how to assemble measurable data so that progress and/or achievements can be determined. The
United Nations Statistics Division is monitoring country-level data foreach MDG “for each of the world’s countries, areas and regions, to the
15. A Better World For All (Joint publication 2000) was released in June at the opening of the UN General
Assembly 24th special session on social development (Copenhagen+5). It preceded the Millennium
Summit and it still used the term “international development goals.”
16. Posed by the Argentina UNDP staff in on-line discussion.

45

CHAPTER 2

extent data are available” (UN website), but there are gaps in data as
well as problems of comparability. The identification of useful indicators against which change can be assessed is highly contingent on thecompilation of reliable data for analysis. The absence of complete andreliable data on the national level forces analysis back to the regional
level where gaps can be filled, even though the quality of the gaps isunclear because the data are lacking.
The international development community is working to rectify thissituation. The United Nations Statistics Division supports an InterAgency Expert Group on MDG Indicators that is wrestling with suchdata difficulties as conceptualization, availability, accuracy, aggregation,and consistency. One of its conclusions is that governments will have todevelop their own capacity to obtain the appropriate domestic statistical
data. At least two major efforts are underway to help them do this: The
World Bank’s Trust Fund for Statistical Capacity Building, a technical17
assistance program, was established in 2000. The PARIS21 Consortium,
established in 1999, has both a task team on indicators of statistical
capacity and one on improved statistical support for monitoring development goals (Paris21 website).
Operational Problems

At the outset of the Millennium Declaration there was a 15-year time period
over which the goals were to be attained. To reach the goal, however, andavoid extending the target date (as encountered by previous declarations
from previous conferences), it was important to gain momentum as quickly
as possible. Technical problems posed by poor data impinge on operational
measures because they affect ability to establish a baseline and to accurately
measure deviation from it.
An additional complication was that some (if not all) of the MDGs were
not readily quantifiable in any practical sense. With hunger, for example,
the DFID paper states that “[b]ecause food security is a complex phenomenon, there can be no single measure of hunger. The FAO’s current ‘undernourishment’ indicator gives a snapshot of the situation, but cannot identify
the causes of hunger or assess the impact of policies” (DFID, 2002, p. 8).
The World Health Organization points out the complexity of the healthrelated goals, “[t]he feasibility of meeting the MDGs in the low-income
17. Partnership in Statistics for Development in the 21st Century

46

Millennium Development Goals

countries is widely misjudged . . . the disease burden itself will slow theeconomic growth that is presumed to solve the health problems . . . ” (WHOwebsite). UN-Habitat notes that the informal nature of slums and the stigma
attached to them makes measuring their populations extremely difficult(UN-Habitat website).
At the outset of the MDG drive, there was a rather bullish attitude about
their achievability. As more became known, initial optimism was dampened
by early reports of only limited progress and caveats about ‘bleak’ trends(ActionAid, 2002, p. 1) or warnings that “too many countries are fallingshort or lack the data to monitor progress” (World Bank, 2002a, p. 5). And
the UN Secretary-General, in his first annual report to the General
Assembly on the MDGs, made the gloomy statement that “[w]ithout
progress on a much broader front, the ringing words of the Declaration
would serve only as grim reminders of human needs neglected and promises
unmet” (UN, 2002b, p. 20).
The accuracy of any characterization — gloomy or upbeat — is contingent on accurate and adequate information. A realistic understanding ofwhether targets are being approached and what changes should be made if
they are not, demands solid information with enough time so that modifications can be made. This is especially so for sub-Saharan Africa where
progress appears to be seriously lacking.
Financial Problems

The similarity among the different financing estimates has tended to givethem an aura of authenticity. However, as the DAC Report explained, they
are based on theoretical economic analysis and on unvalidated assumptions.
Some assumptions are turning out to be wrong, such as the extent of relief
to countries as a result of the Highly Indebted Poor Country (HIPC)
Initiative. Some assumptions already have internal inconsistencies, such as
the idea that countries whose policies are below World Bank/IMF ‘reasonable standards’ of policy and governance will respond constructively toincreased aid (DAC, 2002, p. 75). Some assumptions may have to bechanged as and when relevant data become known.
While it is possible that the impact of increased aid will, at least in somecircumstances, be better than thought, it is more likely that the amount committed will be inadequate. This is part of the message from the Millennium
Project, that a ‘big push’, a large infusion of funds, is essential to propellingthe development process within individual countries on to a self-sustaining47

CHAPTER 2

trajectory (Sachs et al., 2004, p. 122).
Financing is also intertwined with eligibility criteria. The Millennium
Project analysis finds that governance is not a major issue in aid absorption
and development progress. However donors — including heads of multilateral development banks (World Bank website c), the World Bank’s
International Development Association, and the United States government
18(Treasury Department, 2002) — have taken the position that ‘measurable
results’ are an important factor in the selection of recipient countries. Thismeans that both quality of governance and capacity to absorb aid may bedeemed so unsatisfactory for some countries that they are ineligible forfinancial aid. Here, as with the operational problems, data are highly relevant.

Conclusion
Efforts are underway on many fronts to meet the goals set at the Millennium
Summit. Technical people are working on data collection, statistical capacity-building, and measurement. Strategists are planning, coordinating, andadapting approaches to the general problems and particular circumstancesof poor countries and their impoverished populations. Operations professionals are incorporating MDGs into development projects. Among all thisactivity, it is still difficult to tie operations on-the-ground to particular
MDGs or targets. In a general sense, all development operations aim generally to achieve the goals, but there is little evidence yet that operations arebeing designed specifically to approach them.
The data problem obscures the view of progress toward the goals. Evenso, as the 2015 deadline approaches concern is growing. As mentioned
above, the UN MDG agencies consider the five-year anniversary of theMillennium Summit to be a critical turning point. Jeffrey Sachs expressed
this in a presentation to ECOSOC (the UN Economic and Social Council) in
July, 2004, in which he said “[t]here is still time to achieve the MDGs —barely” (Sachs, 2004b). The report of the Millennium Project will offersome concrete proposals for reinvigorating the drive to the MDGs.
However, if country-level statistical capacity cannot be built, if the dataremain weak, if the financing cannot be ascertained, then the objectives may
have to be modified to be achievable.
There is, however, reason for measured optimism. An improved picture
18. There have been many addresses by Treasury officials reiterating this policy.

48

Millennium Development Goals

is evident from a comparison of an early report by the Secretary-General to
the General Assembly with his most recent one:
The 2002 annual report describes a mixed picture, advancement in sometargets and goals in some areas, stagnation in others elsewhere:
Progress in East Asia and part of South Asia have been sufficient inrecent years to give hope — if it can continue to be made — of broad
success in meeting many or all of the goals. Yet progress in parts of
Latin America is slow, while much of sub-Saharan Africa and large partof Central Asia are hardly advancing at all — or even worse, are fallingback dramatically (UN, 2002b, p. 8).
The 2004 report still describes a mixed picture, but based on more experience and information it is more detailed and more upbeat:. . . developing countries fall into three broad groups . . . The first is agroup of countries, comprising most of Asia and Northern Africa, that islargely on track to meet the target of halving extreme poverty by 2015
and to achieve many of the social targets of the goals. The second groupof countries, mainly in West Asia and Latin America and the Caribbean,
has been making good progress toward some individual goals, such as
achieving universal primary education, but has been less successful in
reducing poverty. The third group, largely comprising countries in subSaharan Africa but also least developed countries in other regions, arefar from making adequate progress on most of the goals (UN, 2004a).
The MDGs have been described by a World Bank director as “not a19
strategy, [but] an accountability mechanism.” While there may be reason
for optimism that in some areas in some countries the goals will be met,even if does not actually happen, good progress toward them would validate
the MDG mechanism. On the other hand, if a trajectory toward these goals
is not confirmed soon, some compromise path may be endorsed so that success can ultimately be declared. One possibility would be to define the goals
and their measurements in achievable rather than in substantive terms, perhaps by ‘clumping’ the data so that favorable averages rather than unfavorable disaggregations are used. In this way, the impact of larger and more
19. John Page, Director of Poverty Reduction, at a World Bank Tokyo public forum, July 15, 200249

CHAPTER 2

responsive countries can overshadow the resistance of smaller, less responsive ones.
Nonetheless, it is hard to conceive of any successful judgment of MDGs
if the performance of sub-Saharan African countries is not improved. Sinceother countries in other regions are making some progress in some areas,
sub-Saharan Africa has been spotlighted as the critical region. Barring global events that might derail the process, widespread movement toward thegoals in many regions can be expected to continue. In sub-Saharan Africa,
however, it seems that movement must still be started.

50

Millennium Development Goals

Appendix1Millennium Development Goals, Targets, andIndicators
The goals and targets are based on the UN Millennium Declaration. The UN
General Assembly has approved them as part of the Secretary-General’sroad map toward implementing the declaration.
UNDP worked with other UN departments, funds, and programs, theWorld Bank, the International Monetary Fund, and the Organization for
Economic Co-operation and Development to identify over 40 quantifiableindicators to assess progress (UNDP website d).
Goals and Targets

Indicators

Goal 1 — Eradicate extreme poverty and hunger
1. Proportion of population below $1 per
Target 1 — Halve, between 1990 and 2015,
day (PPP-values)
the proportion of people whose income is
2. Poverty gap ratio [incidence x depth ofless than one dollar a day
poverty]
3. Share of poorest quintile in national consumption
4. Prevalence of underweight children
Target 2— Halve, between 1990 and 2015,(under-five years of age)the proportion of people who suffer from
5. Proportion of population below minimum
hungerlevel of dietary energy consumption
Goal 2 — Achieve universal primary education
Target 3 — Ensure that, by 2015 children
everywhere, boys and girls alike, will be able
to complete a full course primary schooling

6. Net enrollment ratio in primary education
7. Proportion of pupils starting grade 1 whoreach grade 5
8. Literacy rate of 15-24 year olds

Goal 3 — Promote gender equality and empower women
9. Ratio of girls to boys in primary, secondTarget 4 — Eliminate gender disparity in priary, and tertiary education
mary and secondary education preferably by
2005 and to all levels of education no later 10. Ratio of literate females to males of 1524 year olds
than 201511. Share of women in wage employment in
the non-agricultural sector
12. Proportion of seats held by women innational parliament
Goal 4 — Reduce child mortality
Target 5 — Reduce by two-thirds, between
1990 and 2015, the under-five mortality rate

13. Under-five mortality rate
14. Infant mortality rate
15. Proportion of 1-year-old children immunized against measles

51

CHAPTER 2

Goals and Targets

Indicators

Goal 5 — Improve maternal health
Target 6 — Reduce by three-quarters,
between 1990 and 2015, the maternal mortality ratio

16. Maternal mortality ratio
17. Proportion of births attended by skilled
health personnel

Goal 6 — Combat HIV/AIDS, malaria and other diseases
18. HIV prevalence among 15-24 year old
Target 7 — Have halted by 2015, andpregnant women
begun to reverse, the spread of HIV/AIDS
19. Condom use rate of the contraceptive
prevalence rate
20. Ratio of school attendance of orphans toschool attendance of non-orphans aged
10-14 years
21. Prevalence and death rates associatedTarget 8 — Have halted by 2015, andwith malaria
begun to reverse, the incidence of malaria
22. Proportion of population in malaria risk
and other major diseases
areas using effective malaria prevention
and treatment measures
23. Prevalence and death rates associatedwith Tuberculosis
24. Proportion of TB cases detected andcured under DOTS (Directly Observed
Treatment Short Course)
Goal 7 — Ensure environmental sustainability
Target 9 — Integrate the principle of sustainable development into country policies
and programmes and reverse the loss ofenvironmental resources

Target 10 — Halve, by 2015, the proportionof people without sustainable access to safe
drinking water and sanitation

Target 11 — By 2020, to have achieved asignificant improvement in the lives of atleast 100 million slum dwellers

25. Proportion of land area covered by forest
26. Ratio of area protected to maintain biological diversity to surface area
27. Energy use (kg oil equivalent) per $1
GDP (PPP)
28. Carbon dioxide emissions (per capita)
and consumption of ozone-depleting
CFCs
29. Proportion of population using solid fuels
30. Proportion of population with sustainable
access to an improved water source,
urban and rural
31. Proportion of population with access toimproved sanitation, urban and rural
32. Proportion of households with access tosecure tenure [Urban/rural disaggregation of several of the above indicators
may be relevant for monitoring improvement in the lives of slum dwellers]

Goal 8 — Develop a Global Partnership for Development
Target 12 — Develop further an open, rule- Some of the indicators listed below will bebased, predictable, non- discriminatory trad- monitored separately for the Least
Developed Countries (LDCs), Africa, landing and financial system. Includes a commitlocked countries and small island development to good governance, development, anding states.
poverty reduction — both nationally andinternationally52

Millennium Development Goals

Goals and Targets
Target 12 — Develop further an open, rulebased, predictable, non- discriminatory trading and financial system. Includes a commitment to good governance, development, andpoverty reduction — both nationally andinternationallyTarget 13 — Address the special needs ofthe least-developed countries. Includes: tariffand quota-free access for least-developed
countries' exports; enhanced programme ofdebt relief for HIPCs and cancellation of official bilateral debt; and more generous ODA
for countries committed to poverty reduction
Target 14 — Address the Special Needs oflandlocked countries and small island developing states (through Barbados Programmeand 22nd General Assembly provisions)Target 15 — Deal comprehensively with thedebt problems of developing countries
through national and international measuresin order to make debt sustainable in the longterm

Indicators
Some of the indicators listed below will bemonitored separately for the Least
Developed Countries (LDCs), Africa, landlocked countries and small island developing states.
Official Development Assistance
33. Net ODA as percentage of DAC donors’
GNI [targets of 0.7% in total and 0.15%
for LDCs]
34. Proportion of total bilateral, sector-allocable ODA of DAC donors to basicsocial services (basic education, primary health care, nutrition, safe waterand sanitation)
35. Proportion of ODA of DAC donors that isuntied
36. ODA received in landlocked developing
countries as a proportion of their GNIs
37. ODA received in small island developing
States as proportion of their GNIs
Market Access
38. Proportion of total developed country
imports (by value and excluding arms)
from developing countries and from
LDCs, admitted free of duty
39. Average tariffs on agricultural products
and textiles and clothing from developing
countries
40. Agricultural support estimate for OECD
countries as percentage of their GDP
41. Proportion of ODA provided to help build
trade capacity
Debt Sustainability
42. Total number of countries that havereached their Heavily Indebted Poor
Countries Initiative (HIPC) decision
points and number that have reachedtheir HIPC completion points (cumulative)
43. Debt relief committed under HIPC initiative
44. Debt service as a percentage of exportsof goods

Target 16 — In cooperation with developing
countries, develop and implement strategies
for decent and productive work for youth

45. Unemployment rate of 15-24 year olds

Target 17 — In cooperation with pharmaceutical companies, provide access toaffordable, essential drugs in developing
countries

46. Proportion of population with access toaffordable essential drugs on a sustainable basis

Target 18 — In cooperation with the private
sector, make available the benefits of newtechnologies, especially information andcommunications

47. Telephone lines and cellular subscribers
per 100 population
48. Personal computers per 100 populationand internet users per 100 population

53

54

Northern

Sub-Saharanon track

progressbut lagging

progressbut lagging

progressbut lagging

Reduce maternal mortality by
three quarters

moderatelevel

low level

...

low,
no change

met

very
high level

progressbut lagging

very high,no change

declineon track

GOAL 5 | Improve maternal health

Measles immunization

Reduce mortality of under-fiveyear-olds by two thir ds

GOAL 4 | Reduce child mortality

Women’s equal representation innational parliaments

met

...

no significant
changelagging

met

progressbut lagging

lagging

met

Equal girls’ enr olment insecondary school

Literacy parity between young
women and men

on track

Equal girls’ enr olment inprimary school

GOAL 3 | Promote gender equality and empower women

Universal primary schoolingon trackon trackvery high,no changeon track

Reduce hunger by half

GOAL 2 | Achieve universal primary education

met

high,
no changeon track

Eastern

Reduce extreme poverty by half

GOAL 1 | Eradicate extreme poverty and hunger

Goals and Targets

840 million(Population 2002)

Africahigh levelon trackon track

progressbut lagging

met

met

on track

lagging

on trackon track

Southeasternveryhigh level

progressbut lagging

progressbut lagging

very low,some progress

laggingno significant
changeprogressbut lagging

progressbut lagging

progressbut lagging

on track

Southern

Westernmoderate levelon track

moderate,no change

very low,
no change

laggingno significant
changeprogressbut lagging

high but
no change

increaseincreasehigh level

declinemoderate,no change

progressbut lagging

lagging

progressbut lagging

on track

progressbut lagging

moderate,no change...

Oceania
8 million

Asia
3,738 millon

moderate levelmet

on track

progressbut lagging

met

on trackon trackon trackon track

low, minimal
improvement

536 million

Latin America& Caribbean

Millennium Development Goals Progress Report
Commonwealth of
Independent States

low

met

low,
no change

recent progress

met

met

met

declinelow, no change

increase

Europelowmetincreasedmortality

declinemet

met

on trackon track

increaseincrease

Asia(former republics of the Soviet Union)
281 million

CHAPTER 2

Appendix2

high,
increasing

low,
declining

Halt and reverse
spread of tuberculosis

Youth unemploymenthigh,no changehigh,
no change

GOAL 8 | A global partnership for development

low,increasing

progressbut lagging

rising number& proportion ofslum-dwellers

on track

progressbut lagging

no significant
changeprogressbut lagging

Halve proportion without
sanitation in rural areas

Improve the livesof slum-dwellers

progressbut lagging

low access,no changeon track

Halve proportion without
sanitation in urban areas

high accessbut no change

declinein accessrapidly
increasing

on track

progressbut lagging

on track

progressbut lagging

declinehigh,declining

moderate risk

stablemet

progressbut lagging

no change

declineprogressbut lagging

met

less than
1% forest

moderate,
declining

moderate riskincrease

Halve proportion without improved high access but
little change
drinking water in rural areas

Halve proportion without improved
drinking water in urban areas

Reverse loss of for ests

GOAL 7 | Ensure environmental sustainability

high risk

low riskHalt and reverse
spread of malaria

stable...

Halt and reverse
spread of HIV/AIDSGOAL 6 | Combat HIV/AIDS, malaria and other diseases

high,increasing

rising number& proportion ofslum-dwellers

no significant
changemet

progressbut lagging

met

less than
1% forest

low,
declining

low risk...

progress but
lagging

met(except Caribbean)

declinelow,
declining

moderate risk

stablehigh access but
limited change

met

met

moderate,increasing

low risk

increasehigh access but
limited change

met

met

moderate,increasing

low risk

increaselow,increasing...

no significant
changeincreasing

progressbut lagging

progressbut lagging

low, rapidly
increasing

low but
no change

no significant
changelow, rapidly
increasing

low but
no change

no significant
changehigh access but high access but high access but high access but
no change
no change
no change
no change

low access,no changehigh accessbut no change

declinehigh,increasing

low risk

increase

Source: UN, 2004b http://www.un.org/millenniumgoals/mdg2004chart.pdf

low,increasingsome progress

progressbut lagging

on trackon trackmetsmall decline

high,declining

moderate riskincrease

Millennium Development Goals

55

CHAPTER 2

References
ActionAid. 2002. Halfway There?
http://www.actionaid.org/ourpriorities/downloads/halfwaythere.pdf
Devarajan, Shantayanan, Margaret J. Miller, and Eric V. Swanson. 2002.
Goals for Development: history, prospects and costs. World Bank
Policy Research Working Paper 2819, April.
http://econ.worldbank.org/files/13269_wps2819.pdf
DevInfo website: http://www.devinfo.org/
DevLink (UNDG) website a. The UN and the MDGs: a Core Strategy.
http://www.undg.org/documents/394-The_UN_and_the_MDGs___A_Core_Strategy___Text.doc
DevLink (UNDG) website b. Girls Education page.
http://www.undg.org/document.cfm?catx=2&caty=34
DFID. 2002. Eliminating Hunger, a strategy for achieving the Millennium
Development Goal on hunger, May. http://www.dfid.gov.uk/
stDFID. 1997. Eliminating World Poverty, a Challenge for the 21 Century.
White Paper on International Development. London, Nov.
http://www.dfid.gov.uk/
International Development Association. 2002b. Additions to IDA
Resources: Thirteenth Replenishment, Report from the Executive
Directors of IDA to the Board of Governors, July. http://www.worldbank.org/ida/IDA13Report.pdf
Joint publication. 2000. A Better World For All. International Monetary
Fund, Organization for Economic Cooperation and Development,
United Nations and World Bank. http://www.paris21.org/betterworld/OECD. 2002. The DAC Journal Development Co-operation 2001 Report3(1).
st______. 1996. Shaping the 21 Century, the Contribution of Development
Cooperation, Paris, May.
http://www.oecd.org/pdf/M00003000/M00003334.pdf.
http://www.oecd.org/EN/document/0,,EN-document-notheme-2-no11-26644-0,00.html
Oxford Analytica. 2002. Millennium goals to fore at Bank meeting. Sep.
27. http://www.oxweb.com/default.asp
Paris21 website. Terms of Reference. Task Team to Improve Statistical
Support for Monitoring Development Goals.
http://www.paris21.org/htm/task/impmdg/ttmdgtor.pdf
Sachs, Jeffrey. 2004a. Doing the Sums on Africa. Economist. May 20, pp.
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21-23.
_______. 2004b. Presentation to ECOSOC. July. http://www.unmillenniumproject.org/documents/MP%20Summary%20Points%20Jul2104%20ECOSOC.pdf
Sachs, Jeffrey and John W. McArthur, Guido Schmidt-Traub, Margaret
Kruk, Chandrika Bahadur, Michael Faye, Gordon McCord. 2004.
Ending Africa's Poverty Trap. Millennium Project, Brooking
Institution Brookings Papers on Economic Activity, 1:2004, pp. 117240.
Treasury Department (United States). 2002. Undersecretary Taylor Speechat the Asian Development Bank. John B. Taylor Under Secretary forInternational Affairs, PO 3454, Sep. http://www.treas.gov/press/releases/po3454.htm?IMAGE.X=28\&IMAGE.Y=6
UN website: http://millenniumindicators.un.org/unsd/mi/mi.asp
UN. 2004a. A/59/282, Implementation of the United Nations Millennium
Declaration, Report of the Secretary-General, Aug. http://ods-ddsny.un.org/doc/UNDOC/GEN/N04/465/40/PDF/N0446540.pdf?OpenE
lement_______. 2004b. http://www.un.org/millenniumgoals/mdg2004chart.pdf_______. 2002a. A/conf/198/11, Report of the International Conference on
Financing for Development, March, (Monterrey Consensus).
http://daccess-ods.un.org/doc/UNDOC/GEN/N02/392/67/PDF/
N0239267.pdf?OpenElement_______. 2002b. A/57/270, Implementation of the United Nations
Millennium Declaration, Report of the Secretary-General, July.
http://daccess-ods.un.org/doc/UNDOC/GEN/N02/506/69/PDF/
N0250669.pdf?OpenElement_______. 2002c. New UN Millennium Campaign Aims to Spark Global
Movement, Oct. 1.
www.globalpolicy.org/socecon/un/22002/1001spark.htm
UN. 2002d. United Nations Millennium Development Goals, Data and Trends,
2002, Report of the Inter-Agency Expert Group on MDG Indicators,
April. http://millenniumindicators.un.org/unsd/mi/mdg_report.pdf_______. 2001. A/55/1000, Executive Summary of the Report of the Highlevel Panel on Financing for Development, June 26.
www.un.org/reports/financing/full_report.pdf (Zedillo Report)

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Nations Millennium Declaration, Sep. 6. http://www.un.org/documents/ga/docs/56/a56326.pdf_______. 2000. A/res/55/2, Resolution Adopted by the General Assembly,
United Nations Millennium Declaration, Sep. http://www.un.org/millennium/declaration/ares552e.pdf
UN-Habitat website http://www.unhabitat.org/mdg/
UNDP. Website a. Building partnerships to achieve development goals.
www.undp.org/mdg/
UNDP. Website b. Newsfronts. www.undp.org/dpa/frontpagearchive/2002/
march/22mar02/index.html_______. Website c. www.unmillenniumproject.org/html/about.htm#top_______. Website d.
http://www.undp.org/mdg/Millennium%20Development%20Goals.pdf_______. website e. http://www.undp.org/mdg/campaign.html_______. 2002a. Human Development Report 2002, Deepening Democracy in a
Fragmented World. Oxford University Press. http://www.undp.org/hdr2002/_______. 2002b. Summary Report, Financing the Development Goals, andAnalysis of Tanzania, Cameroon, Malawi, Uganda and Philippines.
co-ordinated by Martin Maya and Stephen Browne, March.
www.undp.org/ffd/MDGfinal.pdf_______. 2001b. Reporting on the Millennium Development Goals at
the Country Level, Guidance Note. http://www.undp.org/mdg/reportingguide.doc
Vandemoortele, Jan. 2002. Are the MDGs Feasible? June.
http://www.undp.org/mdg/Are%20the%20MDGs%20feasible.doc
Vandemoortele, Jan and Rathin Roy. 2004. Making Sense of MDG Costing. Aug.
http://www.undp.org/poverty/docs/making-sense-of-mdg-costing.pdf
World Bank. 2002a. World View, 2002 World Development Indicators.
http://www.worldbank.org/data/wdi2002/worldview.pdf_______. 2002b. Millennium Development Goals 2002. From World
Development Indicators.
World Bank. Website.
http://www.developmentgoals.org/About_the_goals.htm_______. Website b. World Bank Head Says Poverty Goals Off Track.
http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,date:0925-2002~menuPK:34461~pagePK:34392~piPK:34427~theSitePK:
4607,00.html
58Millennium Development Goals______. Website c. Statement of Heads of Multilateral Development Banks.
WB News Release No 2002/243/S.
http://lnweb18.worldbank.org/MIP/BMMMDR.nsf/0/88af18b30d7bc
6ec85256be800668014/$FILE/MDB%20statement%20-%20Press%
20release.doc
World Health Organization website. http://www.who.int/mdg/en/59CHAPTER 2

Recent Developments in Aid Evaluation
Naonobu Minato
The importance of evaluation in development aid has grown significantly
over the past few years. Especially since the election of George Bush, theUnited States has emphasized results and rigorously demanded the evaluation of effects and achievements of aid programs, not only its own programs, but also those of international organizations. The World Bank andthe United Nations Development Programme (UNDP) are gearing theiractivities toward achieving the Millennium Development Goals (MDGs),
but there are many issues in evaluating progress, including definitions and alack of data and statistical methodologies. There has been a shift in thefocus of evaluation —away from individual projects to programs and sectors. This section describes those and other recent trends and challenges in
the field of evaluation.

Evaluating Development Aid
In the 1980s it became important for aid organizations to evaluate theirwork, mainly for three reasons. First is accountability to taxpayers, who
ultimately fund most development aid. Taxpayers and beneficiaries ofdomestic public services are usually the same and tend to notice glaring
waste and inefficiency. In development aid, however, there is almost no
direct relationship between taxpayers in donor countries and beneficiaries ofaid projects. Even if a project has a very low return relative to input, theinefficiency is unknown to either of them. As long as a system for thirdparty evaluations does not exist, it is difficult to improve the effectivenessof aid projects. Evaluation leads to accountability measuring performancefrom various perspectives and reporting the results to taxpayers and policymakers.
Second, to improve the quality of aid projects, evaluation is an important function in the management process. Evaluation results are fed back to
the process of improving a specific project, as well as other similar projects
or those being implemented in the same region.
Third, the learning effect from evaluation has come under a spotlight inrecent years. Aid organizations and officials can learn much from evaluaMinato is acting director, International Development Research Institute, FASID.

60

Recent Developments in Aid Evaluation

tion results. In a seminar sponsored by the Development AssistanceCommittee (DAC) of the Organization for Economic Cooperation andDevelopment (OECD) in Tokyo in 2000, the necessity to improve evaluation feedback was recognized, but it also became apparent that methods
would vary depending on the aid organization (OECD/DAC, 2001).
Interest in evaluation is rising in Japanese society as well. The Japan
Evaluation Society was established in 2000 and already has more than 400
members. In addition, the Japan Society for International Development frequently conducts studies on evaluation, thus the interest in evaluation has
become strong among researchers and practitioners alike.
An important domestic factor for the growing interest in evaluation is
the Government Policy Evaluations Act that went into effect in April 2002
and requires all administrative agencies, whether national or municipal, tounderstand the impacts of their policies, evaluate their necessity and effectiveness, and ensure that the results will be reflected properly in new policies. Many administrative agencies are still searching for evaluation methods to comply with the law.

Importance of Program Evaluation
Traditional evaluation deals with individual projects. From the mid-1980s,
however, there has been a tendency in aid organizations to expand the scopeof evaluation from projects to programs and sectors. Many donors have narrowed recipient countries and moved on to country programs that respondto specific problems. Central activities of many donors are still at the project level, but even they are recognizing the need for evaluations at the program level.
Moreover, the impact of the MDGs — the tendency to set macro-leveltargets in developing countries — is accelerating the elevation of development aid to the program level. This does not necessarily mean that all aid
activities will be programs and not projects. It does mean that even if projects are implemented, they should not be seen as isolated and that there is aneed for aid coordination and harmonization: coordination with other projects and awareness of shared, macro-level goals. For the MDGs themselves,
the UNDP monitors progress toward the goals based on information supplied by its offices around the globe, analyzes the current status by region,and publishes the results (UNDP, 2002).
Several intermediate levels exist between the project level and the
MDGs. In a process that begins with inputs and moves to outcomes, project61

CHAPTER 2

objectives, and impacts, development indicators cover higher levels thanthat of the inputs, and the subject of monitoring and evaluation is expandedfrom individual projects to include country programs. Monitoring indicators
are established to gauge progress toward the MDGs (Picciotto, 2002). An
evaluation needs to not only look at a project, but also project impact at
higher levels.
For example, UNDP used to require an evaluation for all projects with acost of US$ 1 million or more, but the requirement was recently dropped.
Instead, a certain number of outcome evaluations are required during theterm of a country program. The focus of evaluation is shifting from inputs
and outputs directly related to a project to outcomes that emerge as a resultof outputs. Outcomes are influenced not only by multiple projects, programs, and activities, but also by other donors.
At the World Bank as well, the level of evaluations is shifting from projects to the country level and sector evaluations are shifting to the global
level. The Bank employs various evaluation methods including projectreviews, country assistance evaluations, sector evaluations, thematic evaluations, and process evaluations. From the viewpoint of performance management and evaluation, the Bank has said that in shifting the perspective fromprojects to country programs, a methodology that incorporates the three elements of aid allocation, aid accumulation, and attribution must be used
(Picciotto, 2002).
While there are no commonly accepted evaluation methods that meetthose requirements and can be used at the program, sector, and policy levels, the Foundation for Advanced Studies on International Development(FASID) developed a method called LEAD (Log-Frame Evaluation
Application Design) in 2003 (FASID, 2003b; FASID, 2004). When it is difficult to express the subject program directly with a Log-Frame or PDM,
this method creates a Log-Frame through analytical processes such as ahierarchy tree that reorganizes the subject of evaluation and a logic tree that
constructs objective-means relationships. The Log-Frame is evaluated withfive evaluation criteria. It has good potential to be a competent evaluation
method at the program, sector, and policy levels.

62

Recent Developments in Aid Evaluation

Evaluation Methods and Criteria
In each aid organization, evaluations are divided into different categories
that address projects, the entire organization, themes, and independent evaluations. Project evaluations are often conducted by regional departments
and local offices of an implementing agency while other types are often
conducted by an evaluation department located at headquarters (IDC and
KRI, 2000). An evaluation system faces difficult problems when the department in charge of ex-post evaluations has limited authority within theorganization. In recent years, however, more organizations are adopting asystem where the evaluation department reports directly to top management.
In the World Bank, the Operations Evaluation Department (OED) is incharge of evaluations. As an independent evaluation unit of the Bank, theOED examines development achievements of the Bank, analyzes its effectiveness, and provides feedback to the operations departments and the entire
organization. The OED has four criteria for project evaluations: (i) ‘outcomes’ are evaluated for their appropriateness, effects, and effectiveness;(ii) ‘sustainability’ is evaluated for long-term benefits; (iii) ‘institutional
development impact’ is evaluated for the project’s contribution to building
or improving institutions in the country or the region; and (iv) ‘Bank andBorrower performance’ are evaluated by looking at the Bank’s supervision
and advisory activities and the Borrower’s project implementation, ownership, and responsibility for the project based on the loan agreement.
1
Most aid organizations have traditionally interpreted a project as a
Logical Framework (LF) and evaluated it based on the prescribed indicatorsand five evaluation criteria recommended by the DAC: efficiency, effectiveness, impact, relevance, and sustainability. However, the Inter-American
Development Bank (IDB) uses ‘coherence’ instead of ‘sustainability’ andthe Asian Development Bank uses ‘institutional development’ instead of‘impact’. In Japan, an evaluation model was developed that combined the
Project Design Matrix (PDM),2 five evaluation criteria (efficiency, goal
attainment, impact, relevance, and sustainability) and cross-sectional perspectives (political, technical, environmental, social-cultural, economicfinancial, and institutional) (FASID, 1996). Using this model, attempts have
1. The Swedish International Development Agency (SIDA), The Danish International Development
Agency (DANIDA), The World Bank, The United Nations Food and Agriculture Organization (FAO),The German Corporation for Technical Cooperation (GTZ), The Inter-American Development Bank,
etc.
2. A kind of LF.

63

CHAPTER 2

been made to conduct evaluations that are more objective and comprehensive than before. Now, most projects of the Japan International Cooperation
Agency (JICA) are evaluated using this model (JICA, 2002). Projects of theJapan Bank for International Cooperation (JBIC) are evaluated based on the
PDM and five criteria mentioned above (JBIC, 2002).
It was the United States Agency for International Development(USAID) that initiated the shift of aid activities from project to programlevel. As the number of program operations grew, USAID developed a newframework called Results Framework (RF) in 1995 as a management tool at
the program level. In the RF, a ‘strategic objective’ is established as a common objective of multiple projects and ‘intermediate results’ are placed
under it. The relationship between the strategic objective and the means toattain it is expressed clearly and necessary external conditions are also
noted. Since 1995, USAID has been managing its aid activities — fromplanning to evaluation — with the Results Framework. According to
USAID, the RF is more open than the LF and allows new projects or activities to be added during the implementation stage. It is also flexible, allows
plans to be changed easily, and is favorable for aid coordination. While
USAID implements few projects, it does not disapprove the LF for projectlevel activities. The Canadian International Development Agency (CIDA)
uses a Framework of Result which is similar to the RF.
On the other hand, European aid organizations believe in the principlethat project evaluation methods based on the LF can be applied at the program level. The DAC has not changed its basic concepts of evaluation andevaluation criteria in the last 10 years (OECD/DAC, 1992). Similarly, theDepartment for International Development (DFID) of the United Kingdom
and Germany’s Ministry for Economic Cooperation and Development(BMZ) believe that programs can be expressed with the LF. However, thisapproach can be problematic when a program does not exist, yet a group of
projects are evaluated collectively as a program because the three factors ofa project — duration, objectives, and inputs — are uncertain.

Building Evaluation Capacity in Developing Countries
As the scope of evaluation shifts to higher levels and many aid organizations and international NGOs become involved in achieving common goals,
the role of the host country grows more important. At the project level, thegovernment simply has to evaluate a project jointly with the donor based on
the donor’s evaluation methods. But at the program level, various aid organ64

Recent Developments in Aid Evaluation

izations are involved and their evaluation methods are often different. It isessentially the development of the country itself that is being evaluated, so
the government should take the initiative, find out what needs to be
improved, and take the necessary actions. To do so, their capacity for evaluation needs to be enhanced by developing human resources and building
and improving institutions involved in evaluation. In reality, however, there
are various obstacles.
For example, several obstacles have been recognized in Zimbabwe’s
efforts to improve its evaluation capacity. First, develop a culture where
officials require and effectively use evaluation reports. Second, be sensitive
to the needs and interests of major stakeholders. Third, establish a connection between the evaluation and the public sector, including a system to feed
the evaluation results back to the public sector (Brushett, 1998).
At the Tokyo Workshop on ODA Evaluation hosted by the Ministry ofForeign Affairs of Japan in November 2003, representatives of Asian countries talked about building the capacity for evaluation in aid-recipient countries (FASID, 2003a). Participants pointed out the necessity to establish the
management cycle of planning, implementation, and evaluation, and theimportance of covering not only projects but also sectors and policies. For
monitoring and evaluation, they proposed to establish academic societies
and strengthen the network of evaluation experts. The Seminar/Workshop
on ODA Evaluation, jointly hosted by Japan and Thailand, was held inJanuary 2005 in Bangkok where policymakers from Asian countries discussed how to improve their evaluation capacity. Participants recognizedanew the importance of evaluation for accountability and effectiveness ofODA, and recognized the need to establish an aid management mechanism
3and the importance of ‘owning’ aid recipient countries.

Discussions at OECD/DAC Meetings
The DAC, which is a group of donor countries, has discussed many aspects
of development aid evaluation. In recent years, development results and aid
effectiveness are becoming central points of discussion. The relationshipbetween the amount of aid and improving its effectiveness has been discussed in light of three issues.
The first issue is results-based reform. Whether bilateral or multilateral,many aid organizations are adopting a results-based management system
3. Charperson’s Summary, Seminar/Workshop on ODA Evaluation, Bangkok, January 21, 2005.

65

CHAPTER 2

and new aid mechanisms to improve their effectiveness (Kusek and Rist,
2004). In a results-based management system, various indicators are incorporated at the planning stage and progress toward achieving them is measured during the implementation stage. Now evaluations include more than
ex-post evaluations: the importance of monitoring during implementation,and moreover, evaluation at the planning stage (ex-ante evaluations) isemphasized. Ex-ante evaluations are likely to significantly improve thequality of planning.
Individual countries tend to emphasize the results of aid as well. The
Millennium Challenge Account (MCA) of the U.S. is one example. Many
developing countries recognize the need for public sector reform, and someattempts are being made in Uganda and Chile. In a results-oriented
approach, incentives are considered as an important factor. For both donors
and developing countries, participation, transparency, and accountability are
considered to be powerful incentives to improve performance.
The second issue is the emergence of ‘harmonization’, now considered
important among aid organizations and projects. Lowering the burden of aid
implementation procedures and reporting requirements is a basic step
toward efficient Official Development Assistance (ODA). The idea is to
reduce transaction costs and improve effectiveness by cooperation and harmonization instead of implementing aid projects as if they were isolated
from one another. The importance of harmonization was shared at a DAC
forum in Rome in February 2003. Development programs and projects thatemerge from international and regional harmonization are now emphasized.
Specific activities to promote harmonization include — in addition to the
obvious partnerships between donors and developing countries — harmonizing priorities with partner countries, reviewing aid organizations andcountry policies from the perspective of harmonization, and strengthening
incentives within organizations so that managers and staff will recognize thebenefits of harmonization. Discussions continue today on the merits of unification and aid diversity.
The third issue concerns the evaluation of impacts. Several aid organizations have posed questions about how to measure impacts, one of thewell-established evaluation criteria. Aid projects and programs generate
impacts, either direct or indirect, but whether indirect effects should be considered as impacts of assistance is still open to question.

66

Recent Developments in Aid Evaluation

Joint Evaluations
When projects implemented by different donors that share a goal lackcoherence, project costs rise and efforts by all are less efficient. If individual
donors evaluate their projects separately, the results may be used in a disjointed manner, and moreover, evaluation activities bring a huge burden on
a developing country because they employ different methods. For donors,
the solution lies in collaboration, coordination, and partnerships. Unifying
evaluation methods should be promoted by using networks of evaluators,
circles of experts, joint evaluations, and parallel evaluations. There has beensome progress on the coordination of evaluation methods among multilateral development finance organizations at the level of individual projects, but
progress is slow among bilateral donors and the U.N. agencies (Picciotto,2002).
A potential breakthrough can be found in joint multi-donor evaluations.
When various projects share a goal, the aid organizations could work
together on evaluation. This is different from a joint evaluation between adonor and a recipient or between an aid organization and an NGO. There
are many difficulties, however, associated with joint evaluations among
multiple donors. For example, each donor has different aid modalities andfocuses. They may be using modalities such as projects, programs, SectorWide Approaches (SWAps), and co-financing. Evaluation methods are also
different. Moreover, as a matter of course, participation and the role of therecipient country become important. Capacity building for that purpose isalso a significant challenge.
According to the DAC, advantages of joint evaluations include(OECD/DAC, 2000):• Reducing the burden of multiple, separate donor evaluations on recipient
country institutions, including overlapping team visits and duplicative
data collection efforts.
• Providing an opportunity for donor agencies to learn and share theirevaluation processes and techniques.
• Enabling more diverse perspectives and talents on the joint evaluation
team.
• Permitting cost-sharing of evaluation expenses.
• Enabling a broader scope and number of evaluation questions to beaddressed, given extra (jointly-shared) resources.
• Promoting higher quality, more credible evaluations with broader ownership of findings and greater influence on decisions by the participating
67

CHAPTER 2

agencies.
Fostering a greater consensus among donors and host-country agencies
on program and country priorities and needs, thus stimulating improved
coordination of donor programs.
On the other hand, obstacles and difficulties may be encountered in:• Identifying other donors interested in the same evaluation topic.
• Developing comprehensive, yet manageable, terms of reference that
accommodate each participating donor’s particular issues and interests.
• Selecting teams that are mutually acceptable to all participants.
• Coordinating schedules and travel logistics.
• Agreeing on cost-sharing and contracting arrangements.
• Developing joint management structures and communication processes
that work effectively.
• Reaching agreement on reporting formats, findings, and recommendations.
Thus, there are significant advantages to joint evaluations but also many
obstacles. The most prudent way would be to begin with those programs
that lend themselves easily to joint evaluations so that local governments
and aid organizations can gain experience and remove the obstacles one byone. Joint evaluations can be understood as aid coordination and harmonization in the evaluation stage.
As an example, the road sub-sector in Ghana was the subject of a joint
evaluation for the period 1996 to 2000. The above-mentioned five criteria(efficiency, goal attainment, impact, relevance, sustainability) were used toassess information and documents available as of June 2000. The Danish
International Development Agency (DANIDA) led the joint evaluation after
obtaining consent from Germany, the U.K., Japan, the Netherlands, theAfrican Development Bank, the European Union (EU), the World Bank, thegovernment of Ghana, and the Ghana Highway Authority (DANIDA,
1999).
Evaluation results should be shared not only with the governments ofdonor countries and international organizations, but also with private companies, NGOs, and NPOs. Governments of developing countries, bilateral
donors, international NGOs, and private enterprises participate in and contribute to the achievement of sector goals. Feeding evaluation results backto these actors will offer opportunities to review and rethink their activities.
•

68Recent Developments in Aid Evaluation

Challenges in Evaluation
Four challenges may arise when confronting shared, macro-level goals andtheir monitoring and evaluation.
First, we can expect statistical problems associated with the use of various indicators. In October 2002, Paris21 discussed statistical problems witha results-oriented approach. Reliable data cannot be obtained easily or
cheaply in developing countries. In addition, indicators should accurately
express goals and should not deviate from them.
Second, there is a large gap between the shared, macro-level goal of aid
and objectives of individual projects. Specific goals and indicators are
established both at the macro level for many projects. Many project objectives are realistic and reasonable. In many cases, projects are planned realistically under the given environment, donor aid policies, priority sectors of
the recipient country, the needs of project beneficiaries, and through various
studies and dialogues. A large gap can emerge, however, between objectives at a project level and shared goals at the macro level. It is quite possible that a country may not achieve its macro goals even if many projects
achieve their objectives. If there is a large gap between a plan to achieve the
MDGs by 2015 and actual progress, where should we look to find the reasons? Should we say that the goals were unrealistic, or should we blame thecountries that are lagging behind in terms of country-specific goals? Many
factors not directly related to development aid are involved when impacts ofaid spread from project level to a macro level. These include public projects
implemented directly by the government, private activities such as trade anddirect investments, changes in the domestic and international economic climate, and political and social landscapes. The question of how to handle
these factors is also important.
Third, another difficult challenge lies in how to measure the contributions of individual projects in achieving shared goals. Regardless of whether
or not a shared goal is achieved, it is very difficult to measure the contributions made by individual projects. And if the goal is not achieved orprogress is slow, pinpointing the causes will be difficult. To achieve common goals, we need support from all donor countries and aid organizations
as well as participation by NGOs and civil societies, not to mention theefforts of the national government. It is also unclear what kinds of feedback
should be given to these individual activities. Was the original plan unreasonable? Was there a problem in inter-project harmonization even if individual projects played their parts? Were the inputs insufficient to begin69

CHAPTER 2

with? Or was an important issue left untouched, creating a bottleneck thatmade it harder to improve the situations? It is not easy to clarify thesecausal relations and make judgments based on them. When expected results
are not obtained, countries and organizations must try to avoid blaming eachother.
Fourth, it is the difficult to evaluate projects and programs designed tobuild and/or improve institutions, strengthen organizational capabilities, or
promote decentralization or local autonomy. It is difficult to establish indicators of success in these areas. For example, while various indicators canbe suggested for a goal of improving the health care system of a provincial
government, including whether or not the health care system was established in a systematic manner, clarification of authorities and responsibilities of individuals in the new health care organization and the quality ofhealth care services provided to the residents. But if the wrong indicators
are chosen, they may misidentify the original intent of the aid activity. We
need to accumulate experience not only in the area of evaluation but also inplanning these types of projects or programs.

Recommendations for Japanese Aid
With the global trend of aid moving toward shared goals exemplified by the
MDGs, the current keywords for discussing the future of Japanese aid are
aid coordination and harmonization in the planning, implementation, andevaluation stages. Because coordination and harmonization, unlike unification, accept the diversity of aid, they are important to achieve common
goals while capitalizing on the comparative advantages of each donor country and aid organization.
Unlike international organizations that in principle do not have diplomatic objectives, all bilateral aid organizations are required, to varying
degrees, to consider their national interests. Moreover, providing knowledge, skills, and experience is as important as providing funds. One country,
therefore, cannot assist another country unless it has sufficient knowledge,
experience, and confidence. Instead of doing the same as others, each aidorganization needs to operate in areas where it has comparative advantages,
and at the same time, clarify its role in the framework of achieving common
goals. In this context, in addition to coordinating its aid with other projects
and programs, Japan should set common goals as the intended impacts (orhigher-level goals) to be attained if individual projects achieve their project
objectives. Specifically, at the project planning stage, Japan should under70

Recent Developments in Aid Evaluation

stand the content of projects being implemented by other aid organizations
and NGOs in the same region and/or the same sector, try to avoid redundancy, aim for synergy with other projects, and align project orientation with
common goals established by the local government. Furthermore, in evaluating projects, Japan must examine synergistic effects with other projects
and look at the relevance of project objectives to common goals.
If efforts are made to align Japanese projects to the intended orientationof the local development community at every stage of planning, implementation, and evaluation, the role of Japanese aid in the quest to reduce poverty and achieve other MDGs will become clearer. For example, when implementing a road project, Japan should consider how it would contribute to
the common goal of reducing poverty. Road construction may improveaccess to an inland area, which in turn could increase production andemployment opportunities for the poor who may move to the area. It is certainly possible to plan a road project that directly benefits the poor — construct a road that goes through a poor, rural area that has no access to cities
and make it easier for poor farmers to sell their produce in the markets.
Aid coordination in the evaluation stage is realized by joint efforts. By
conducting joint evaluations with other aid organizations, not to mention
recipient countries, Japan can maintain its comparative advantages and at
the same time establish its role in achieving common goals. In principle,
recipient countries should initiate joint evaluations. The most important task
to make that possible, and an important assistance area for Japan, is to build
evaluation capacity and institutions in the recipient country.

References
Brushett, Stephen. 1998. Evaluation Capacity Development in Zimbabwe:
Issues and Opportunities. ECD Working Paper Series No.2. Washington, DC: World Bank.
CIDA (Canadian International Development Agency). 2000. CIDA
Evaluation Guide. Ottawa: CIDA.
DANIDA (Danish International Development Agency). 1999. Evaluation
Guideline. DANIDA.
Evaluation Division, Economic Cooperation Bureau, Ministry of Foreign
Affairs of Japan. 2003. ODA Hyouka Gaido-Rain [ODA Evaluation
Guidelines]. Tokyo: Ministry of Foreign Affairs.
FASID. 2004. The Users Guide to LEAD (Log-frame Evaluation Application Design).
71

CHAPTER 2

http://www.fasid.or.jp/english/surveys/research/policy/LEAD-UGE.pdf
FASID. 2003a. Saishin Kaihatsu-Enjyo Doko Repoto [Report on Trends in
Development Assistance] No. 10 - Dai 3-kai ODA Hyouka Wakusyoppu no Seika [Result of the Third Tokyo Workshop on ODA Evaluation]. http://dakis.fasid.or.jp/report/pdf/report10.pdf.
_______. 2003b. Seisaku and Puroguramu Hyouka Handobukku: Atarashii
Hyouka Syuhou wo Mezashite [Policy and Program Evaluation
Handbook: In Pursuit of a New Evaluation Method].
_______. 1996. Project Cycle Management: Monitoring and Evaluation
Based on the PCM Method.
IDC and KRI (International Development Center of Japan and KRI International Corp). 2000. Seisaku-Reberu oyobi Puroguramu-Reveru Hyouka no Syuhou tou ni Kansuru Chousa Kenkyu [Research on methodsof Policy-Level Evaluation]. A research project commissioned by
Ministry of Foreign Affairs, Japan.
JBIC. 2002. Ex-Post Evaluation Report on ODA Loan Projects 2002.
Jones, S. and A. Lawson. 2000. Moving from Projects to Programmatic
Aid. OED Working Paper Series No.5. Washington, DC: World Bank.
Kusek, J. Z. and R. C. Rist. 2004. Ten Steps to a Results- Based Monitoringand Evaluation System. World Bank.
OECD/DAC. 2002. Evaluation and Aid Effectiveness. No.6 — Glossary of
Key Terms in Evaluation and Results Based Management.
_______. 2001. Evaluation Feedback for Effective Learning andAccountability.
_______. 2000. Effective Practices in Conducting a Joint Multi-Donor
Evaluation.
_______. 1992. DAC Principles for Effective Partnerships: A Working
Checklist. OECD
JICA, Office of Evaluation, Planning and Coordination Department. 2002.
JICA Guideline for Project Evaluation.
Ministry of Foreign Affairs of Japan. 2002. Seufu Kaihatsu Enjyo (ODA)
Hakusyo 2001 nendo ban [White Paper on Official Development
Assistance 2001].
Ministry of Foreign Affairs of the Netherlands and DANIDA. 2000. Evaluation-Ghana-Joint Evaluation of the Road Sub-Sector Programme
1996-2000.
Picciotto, Robert. 2002. Development Cooperation and Performance72

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Evaluation: The Monterrey Challenge. OED Working Paper Series.
Washington, DC: World Bank.
UNDP. 2002. Results-Oriented Annual Report 2001
World Bank Tokyo Office. 2002. Mireniam Kaihatsu Mokuhyou ni Tsuite[About the Millennium Development Goals].
Yamaya, Kiyoshi. 1997. Seisaku-Hyouka no Riron to sono Tenkai: Seifu no
Akauntabiriti [Theory and Practice of Policy Evaluation: Government
Accountability], Koyo Shobo.

73

CHAPTER 3

3
Aid Trends by Sector
Educational Development
Yasuyuki Sawada
Kazuo Kuroda
Takako Yuki
In the 1990s, academic circles, international organizations, and the aid community began to show a marked interest in reducing poverty in developing
countries. Since then, the issue of educational development has been debated as one of the central issues of poverty reduction. This emphasis in thelatter half of the 1990s eventually turned into numerical targets in the formof the Millennium Development Goals (MDGs), adopted in September 2000
by the United Nations General Assembly with support from 149 heads ofstate. One of the MDGs is to “achieve universal primary education”, i.e., toensure that all boys and girls complete a full course of primary schooling by
2015.
In the field of educational development, however, it has been a longtime since the World Conference on Education for All was held in Jomtien,
Thailand in 1990, and the goal of universal primary education -’basic education’ - was positioned as one of the central challenges in international
development. The World Education Forum in June 2000 reviewed the statusof these goals, and adopted the Dakar Framework for Action, which established the goals of providing access to free and compulsory primary education [of good quality] to all children by 2015, and eliminating gender disparities in primary and secondary education by 2005, among others.

Sawada is associate professor, Department of Advanced Social and International Studies, University ofTokyo. Kuroda is associate professor, Graduate School of Asia-Pacific Studies, Waseda University. Yuki isvisiting fellow, Research Center for Advanced Science and Technology, University of Tokyo. Opinions
expressed in this chapter are those of the authors and not of any particular organization or government.

74

Educational Development

The importance of education in the economic development of developing countries - especially basic education -has been recognized anew in various research fields, including those that are close to purely theoretical suchas endogenous growth theory, policy research by international organizations
exemplified by the World Bank’s research on the ‘East Asian miracle,’ and1development micro-econometrics.
This paper deals with international development issues in the education
sector and reviews trends in development economics as well as the education sector policies of international organizations, especially the World
Bank, and makes recommendations about Japan’s cooperation policy in the
sector. In this paper, we first provide an overview of educational development, then look at international trends, the World Bank education sector
strategy, Japan’s international work in the sector, and finally, offer somepolicy recommendations for Japan.

Economics of Educational Development - An Overview 2This section looks at existing economic research on educational development in developing countries.
Educational Demand and Policy Intervention

If we understand educational demand as demand for investments in humancapital, then the optimal behavior for a household is to keep investing until
the marginal rate of return becomes equal to the investment cost, which isthe cost of borrowing funds.
Low-income households in developing countries, however, often faceborrowing constraints because they do not have assets such as land that canbe used as collateral. This situation drives up the cost of borrowing, thus,
they rationally choose a low level of educational investment. In fact, thenotion that financial constraints significantly lower educational investments
has been widely supported (Strauss and Thomas, 1995; Ljungqivist, 1993).
1. There are several factors behind recent advances in the discipline of development micro-econometrics(Deaton, 1997; Kurosaki, 2001) that focuses on empirical research on social sector issues such as poverty reduction, education, and healthcare. First, as represented by Living Standard Measurement Studies(LSMS), the World Bank’s systematic multi-purpose family budget surveys, there has been tremendous
progress in collecting micro data needed for detailed analysis of poverty issues and in access to theirindividual raw data (Grosh and Glewwe, 2000). Second, following the theoretical development of gametheories and contract theories in microeconomics, the discussion in development economics has shiftedfrom neo-classical market-oriented research to explicit analyses of institutions or non-market issues ofsocial sectors such as education and healthcare.
2. See Sawada (2003) for more details.

75CHAPTER 3This relationship has been empirically confirmed by research that usedmicroeconomic data from various developing countries (Behrman andKnowles, 1999). For example, in El Salvador the enrollment ratio by grade
is higher in urban areas where income is higher or the financial markets
function better than in rural areas (Fig. 3-1). Moreover, the positive correlation between income and education levels has been shown in cross-country
macroeconomic data. Figure 3-2 shows the cross-country relationship byplotting the income and education levels in different regions of the world.
Figure 3-1. Primary and secondary education enrollment ratio in El Salvador
Propotion of 16 to 18 year olds who have complated
each grade El Salvador 1996

1

urban
rural

0.9
Proportion

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

1

2

3

4

5
Grade

6

7

8

9

Source: Jimenez and Sawada (2001).

Figure 3-2. Relationship between education and income by region
120
100
Asia

Literacy80

Middle East

Sub-Sahara Africa
South Asia

60

Developed
countries
EuropeLatin America

40
20
0
0

10

100

1000

10000

100000Logarithm of GNI per capita ($US, 2000)
Data Source: World Bank

76

Educational Development

The educational investment model mentioned above enables us to discuss the distribution of educational resources within a household, especiallythe education gap between boys and girls. In general, in a patrilineal society, the return from investments for a daughter’s education will be separated
from household income after her marriage. If a dowry (bride price) is necessary at a daughter’s wedding or there is a clear wage gap between men andwomen in the labor market, or having a son is considered more important
than having a daughter as an old age insurance, then the marginal rate of
return from educating girls will be lower than that of educating boys.
3
Rational behavior thus produces a gender gap in educational investments.
Assuming that educational investments are decided through such amechanism, what policy interventions would promote educational investments? Direct interventions aimed at poverty reduction, including meanstested targeting, geographical targeting, self-targeting - such as workfare and other poverty targeting will indirectly increase the demand for educational investments. Microfinance programs that provide better access tofinancial markets for the poor (who have been excluded from traditionalborrowing channels) will indirectly promote educational investments, as
will policies that reduce income risks associated with agriculture by nurturing market mechanisms such as insurance against bad harvest.
These policies, however, are inefficient to increase educational investments. Direct policy interventions are more efficient and could include
scholarships for girls from poor households with attendance or performance4
conditions, school lunch/feeding programs (Box 3-1), and distribution ofrice, wheat, and edible oil at schools.

3. Competition for resources among siblings intensifies when the household is faced with restrictions on
borrowing and household resources allocated to educational investments are limited (Greenhalgh 1985;
Parish and Willis 1993; Garg and Morduch 1998). In such a case, more resources can be allocated toboys than to girls, which can increase the gender gap in education. In fact, many empirical studies indicate this tendency with data from East Asia and South Asia.
4. However, school feeding programs have been researched as a policy to improve the nutrition of children
rather than a demand-side intervention designed to provide incentives to increase educational investments.

77

CHAPTER 3

Box 3-1. Food for Education Program (FFE) in Bangladesh
The Food for Education Program in Bangladesh is an example ofdirect intervention toward educational demand. The program distributes 15 kg of wheat per child per month with a condition that the child
maintains an attendance rate of at least 85 percent. In FY 1995-96,
approximately 2.2 million children, or 13 percent of all students
enrolled in primary education, participated in the program. A twostage targeting method is used. In the first stage, less-developed
areas are selected, while in the second stage, FFE recipients are
selected by community groups. FFE increased the average enrollment ratio in primary education by as much as 24 percent (Ravallion
and Wodon, 2000).

Educational Services and Outcome

Educational output is generated when investments are made in response to
demand. At this stage supply factors meet demand and educational output isproduced. One of the well-known frameworks to consolidate and analyze
such mechanisms is the ‘education production function’ (Hanushek, 1995;
Gleww, 2002), which is a ‘derivative’ function that describes the relationship between educational inputs and outputs (Fig. 3-3).
Figure 3-3. Education production function
Inputs — character and motivation of students, home environment
including parents and siblings, attributes of teachers and schools,
inputs such as textbooks, community and social environment

Education production function

Outputs — academic performance, rate of grade promotion, andyears of education that lead to values (wage, productivity, etc.) in thelabor market.

Hanushek (1995) conducted exhaustive research on existing estimates ofthe education production function. Variables that had been considered central to education in traditional research such as the class size, teacher education level and experience, teacher salaries, and school expenditure per student did not seem to be important in explaining educational outputs (Table
3-1). Intangible institutional elements such as an internal incentive structure
seemed more important than the observable variables.

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Educational Development

Table 3-1. Effect of school-level educational inputs on student academic performance. Summary of existing research
Input variable

Number of researchstudiesNo. of studies w/significant
positive effects

30
63
46
13
12
34

8
35
16
4
6
22

No. of teachers per student
Teacher education level
Teacher experience (years)
Teacher salaries
Expenditure per student
School facilities

Source: Hanushek, 1995, Table 1

Traditional education policies often aimed to increase the ‘quantity’ of
traditional variables, but recently ‘quality of educational supply’ has beenemphasized. As mechanisms to attain these policy goals, ‘decentralizationof educational systems’ and the ‘role of communities (or beneficiaries)’ areattracting world-wide attention from both practitioners and researchers.5
For example, the community-managed schools program in El Salvador(EDUCO) promotes decentralized public primary schools. For each school,
parents meet biennially to elect some of them to serve as the school management committee that independently manages the school, including selection of teachers and teacher salaries. According to Jimenez and Sawada(1999, 2001), EDUCO primary schools produce better academic performance, attendance, and grade promotion rates than traditional public schools
with centralized management. The school governance structure secures thelearning environment and the level of teacher efforts. Sawada (2002)
demonstrated that the benefit of decentralization in EDUCO schools is theconstruction of desirable mechanisms that enhance educational incentives
for teachers.
Benefit of Educational Outcome

We next examine the educational rate of return, an evaluation of educationin the labor market. The Mincerian wage equation is commonly used tomeasure the rate of return.
The estimated educational rates of return using the Mincerian equation
5. For example, charter schools in the United States are publicly funded and privately managed. Parents,
teachers and/or community leaders prepare the plans for the school and enter into a contract with theboard of education. These decentralized schools are operated as public schools. In the fiscal year 20022003, 36 states and the District of Columbia had 2,700 such primary schools providing education tomore than 575,000 students.

79CHAPTER 3

for sub-Saharan Africa, Asia, and Latin America are 11.7 percent, 9.9 percent, and 7.1 percent, respectively, which are very high considering that the
average for OECD member countries was 7.5 percent (Table 3-2)
(Psacharopoulos and Patrinos, 2002). Many developing countries do notinvest as many resources into education as warranted by these high rates ofreturn, therefore, these numbers suggest that the funding for educational
investments is very high in many developing regions because financial markets are deficient.
Table 3-2. Average number of years of education and educational rate of return,by region
RegionSub-Saharan Africa
Asia
Europe, Middle East, North Africa
Latin America
OECD country
World

Years of education

Educational rate of
return (percent)

7.3
8.4
8.8
8.2
9.0
8.3

11.7
9.9
7.1
12.0
7.5
9.7
Source: Psacharopoulos and Patrinos (2002)

Economic Contributions of Education

How do educational outcomes contribute to economic development? We
will summarize the economic contributions of education from a macro-level
perspective (economic growth) and micro-level perspective (farmers, workers, and household behavior).
Macro-level contributions of education
First, let us review the economic growth theory as theoretical and empiricalresearch surrounding the Baumol triangle which was described by Baumol(1986). Figure 3-4 is based on data from Summers and Heston (1991). The
horizontal axis shows the value of GDP per worker in 1960 at an initial
income level while the vertical axis shows the annual average economic
growth rate from 1960 to 1998. It was Baumol (1986) who first pointed out
the roughly triangular shape of this distribution of cross-country data in thisfigure, which is therefore called a Baumol triangle. As of 1960, it was theUnited States that had achieved the highest level of Gross Domestic Product(GDP) per worker. The dots along the upper, downward-sloping side of thetriangle represent countries whose initial income level was lower, but longterm economic growth rate was higher than the U.S., and thus were on their80

Educational Development

way to ‘converge’ with the U.S. and other developed countries. This showsthat countries in lower initial development stages are catching up with
developed countries and converging to a similar income level through somekind of a ‘negative’ feedback mechanism. On the other hand, the dots along
the lower, upward-sloping side of the triangle represent a group of countries
whose initial income level and long-term economic growth rate were both
lower than the U.S., and thus were on their way to ‘diverge’ from developed
countries.

Annual average economic growth 1960-90

Figure 3-4. Baumol triangle - relationship between real GDP per worker in 1960
and long-term economic growth rate
7
6
5
4
3
2
1
0

0

5000

10000

15000

20000

25000

30000

-1
-2
-3
Real GDP per woker in 1960

Source: Prepared by authors. Data source: Penn World Table Mark 6 (http://pwt.econ.upenn.edu/)

Some research indicates that the variation in economic growth rates isstrongly correlated to a variable that shows the level of primary and secondary education (Barro, 1991; Mankiw et al., 1992). This suggests that the
Baumol triangle can be rewritten as a downward-sloping relationship ifcross-country differences in the steady-state income level are controlled bythat variable indicating the education level. This tendency is called ‘conditional β convergence’.
While Barro (1991) confirmed the importance of primary and secondary
education, Barro and Lee (1993) analyzed economic growth data of 116
economies from 1965 to 1985 in greater detail and concluded that “boys’
secondary education enrollment ratio at an early stage has a strong economic growth effect.” Moreover, since investment in human capital should beconsidered as a kind of up-front investment for economic growth, an educa81

CHAPTER 3

tion strategy must receive a high priority within an overall development
strategy even at an early stage (Hayami, 2000, Chap. 2). This strategy canbe also justified by other research showing the growth rate of education
6
level does not have a positive correlation with the economic growth rate.
However, the most serious problem of the Solow model used by Mankiw etal. (1992) is that the long-term economic growth rate in the steady state is asum of exogenous variables (growth rate of population + exogenous rate oftechnological progress). Thus, the Solow model is quite imperfect as amodel to identify factors that determine economic growth rates.
Research that aimed to overcome this problem by building microeconomic foundations for population growth rate and rate of technologicalprogress and by searching their endogenous determining factors was called‘endogenous growth theory’ or ‘new growth theory’, and advanced remarkably from the latter half of the 1980s to the 1990s. There was an especiallysignificant advance in the endogenous growth theory as a “theory to endogenize the rate of technological progress”.7 In either case, the theory statesthat human capital has a Marshallian (technological) externality and for thatreason becomes the Core Capital as the source for long-term economic
growth (Lucas, 1988; Romer, 1986). Since externalities exist in this model,
it provides a theoretical foundation to justify proactive, subsidizing policies
by governments that aim to promote the accumulation of human capital,such as free compulsory education and establishing public higher education
institutions.8
Micro-level contributions of education
The macro-level relationship between education and economic growth musthave its foundations in the behavior of households and individuals at the
micro-level. Raising the basic education level in agricultural areas has been
considered an important strategy to improve agricultural productivity
because there seems to be a complementary relationship between the basic
6. Pritchett (2001) found a statistically significant negative correlation between the growth rate of education level and the growth rate of Total Factor Productivity (TFP).
7. We do not get into the details of the endogenous growth theory because many reviews and textbooks areavailable. See Shibata (1993) and Barro and Sala-i-Martin (1995) for details, and Jones (1998) for an
introduction.
8. In light of the relationship between human capital and technological advancement, which is the source oflong-term economic growth, human capital is important to developing countries not to promote R&D
investments, but for the capacity to receive imported technologies that can become a source of economic
growth (Okawa and Kohama, 1993; Kang and Sawada, 2000; Grossman and Helpman, 1991b, Lucas
1993).

82

Educational Development

education level of farmers and adoption of new varieties of crops, chemicalfertilizers, and pesticides (Lockheed, Jamison, and Lau; 1980; Foster andRosenzweig, 1995, 1996). For example, when a household has an educatedmember, its agricultural productivity may improve through better management as a result of that person’s knowledge, even if the educated member is
employed in a non-agricultural sector (Lockheed et al., 1982; Foster andRosenzweig, 1995, 1996). The importance of this knowledge-dissemination
effect within a household through a sort of Marshallian externality has been
also pointed out by Jollifee (1997).
Such an externality within a household brings not only improved productivity but important non-monetary benefits. For example, Behrman et al.
(1997), using data from India, discovered the importance of home education
provided by mothers to their children, and supported the role of home teaching as a channel through which the educational level of parents is passed tochildren. Such an externality within a household also plays an importantrole in child health. When parents’ education level is high, the accumulationof human capital in their children is promoted because the parents - who arein a position to influence the nutritional and educational levels of their children - can acquire basic knowledge and abilities to do so (King and Hill,
1993).
There are important interfaces between the micro- and macro-level perspectives. Various estimates of the Mincerian wage equation using household-level employment data in developing countries have confirmed that theeducational rate of return is especially high for workers in nonagricultural
sectors (Fafchamps and Quisumbing, 1999). This rate of return is an indication that there is a complementary relationship between improved educationlevels and macroeconomic development in which the entire economy shifts
its weight to the secondary and tertiary industries.

World Trends in International Cooperation Policies for
Education
Before 1990

In the 1960s many colonies achieved political independence. As these
newly formed states pursued social and economic independence, educational development became one of the most important issues. UNESCO held
regional conferences on educational development in Asia, Africa, and Latin
America in Karachi (1960), Addis Ababa (1961), and Santiago (1962), andadopted a resolution to provide primary education to all school-age children
83CHAPTER 3

by 1980.9 Primary education expanded rapidly and enrollments have soaredsince then, but the goal of universal primary education was not attained as
populations grew even faster. During the 1980s, developing countries suffered unprecedented debt crises and education budgets were slashed to put
macroeconomic stabilization policies first. As a result, advancements in
education as well as the entire social sector either stalled or were rolled
back, thus rendering the 1980s a ‘lost decade’ for many developing countries (except in Asia).
World Conference on Education for All

In 1990 the World Conference on Education for All was held in Jomtien,
Thailand (Box 3-2). We can no longer talk about educational development
in developing countries in the 1990s without mentioning the Jomtien
Conference. This international conference, co-sponsored by the World
Bank, UNESCO, UNICEF, and UNDP, had a tremendous impact on theformation of education policies in developing countries and international
cooperation in the education sector. Why did this conference have such agreat impact? First, it was a timely conference held during a transition period between the ‘lost decade’ and the 1990s when an emphasis was placedon social development. Second, the co-sponsorship of the World Bank andother international organizations gave it as much international legitimacy as
was possible. The third key factor for its success was that the conference
didn’t end at simply adopting a joint declaration but it also led to follow-up
activities such as the meetings in Amman and Dakar. After the importanceof social development and poverty reduction was repeatedly emphasized ina series of international conferences and declarations during the 1990s(Table 3-3), more importance was attached to education, which occupies a
prominent position in the social sector.
Box 3-2. Main targets set by the World Conference on Education for All• Strengthen early childhood care
• Achieve universal primary education by 2000
• Emphasize the learning outcome• Emphasize women’s literacy• Expand basic education and training for youth and adults• Learning required for better living and sustainable development

9. The target year for Latin America was 1970.

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Educational Development

Table 3-3. International conferences on international cooperation in the education sector and formation of Japanese policies and strategies in the 1990s
International conferences that influYear enced trends in international cooperation in the education sector

Formation of Japanese internationalYear cooperation policies and strategies
in the education sector

1990 World Conference on Education for All(Jomtien)

1990 Japan International Cooperation Agency(JICA) establishes Investigative
Commission on Educational Assistance1992 Cabinet adopts ODA Charter
1993 Fifth ODA Medium-Term Target adopted
First Tokyo International Conference on
African Development (TICAD)JICA Aid Study Committee on Development and Education Report
1994 JICA Task Force for Expansion of
Educational Assistance Report
1995 Japan’s Initiative for Cooperation for
Africa announced
1996 Ministry of Education Conference forInternational Educational Cooperation
Responding to Current International
Needs
1997 Center for the Study of International
Cooperation in Education is establishedin Hiroshima University
1997 JICA Study on Educational Assistance
Report1998 Second Tokyo International Conferenceon African Development (TICAD II)
1998 Medium-Term Policy on ODA announced
1999 Ministry of Education Committee forInternational Cooperation in Education
2000 Basic Education for Growth Initiative isannounced

1990 World Children’s Summit (New York)1993 E9 Education Summit (New Delhi)

1994 International Conference on Population
and Development (Cairo)
1995 World Summit for Social Development(Copenhagen)1995 The 4th World Conference on Women(Beijing)

1995 OECD/DAC’s adoption of
Development Strategy (Paris)

New

1996 EFA International Consultative Forummid-decade meeting (Amman)
1998 UNESCO World Conference on Higher
Education (Paris)
2000 World Education Forum (Dakar)
2000 United Nations Millennium Summit(New York)2002 United Nations General AssemblySpecial Session on Children (NewYork)
2002 G8 Summit (Kananaskis)

2002 Ministry of Education, Culture, Sports,
Science and Technology (Second)
Committee for International Cooperationin Education
2002 JICA prepares Issue-Specific Guideline

Source: UNICEF (1998), Ministry of Foreign Affairs (2001), Murata (2001)

Emphasis on Basic Education

In an analysis of cross-country data from 91 countries over 25 years, Barro(1991) found that a 10 percent rise in the primary education enrollment ratio
at an early stage of economic development will keep boosting future percapita economic growth rate by an annual average of 0.25 percent over a85

CHAPTER 3

long period. The clearest message from the Jomtien Conference was thisemphasis on basic education, which is also strongly supported by researchfindings such as those of Barro. In this conference, basic education was
defined as “educational activities aimed to acquire knowledge and skills thatare required by human beings to be able to survive”, which includes preschool education, primary education, lower secondary education, and nonformal education such as literacy training. UNICEF saw basic education asa basic human need or basic human right. The development approach led by
the World Bank saw basic education as a subsector that can bring the highest social rate of return and the largest development and investment effects.
After this conference, education policies in developing countries and decision-making in international cooperation policies of developed countries
and international organizations, began to move on the basis of this clearly
established priority. EFA - Education for All - became the keyword for educational development.
Researchers of the educational economy had been advocating the importance of basic education since the 1960s. It was in the 1970s when Basic
Human Needs (BHN) were discussed extensively. But in Jomtien, they succeeded in pushing the policy agenda of ‘emphasizing basic education’,
which was almost too obvious, by amicably partnering with both a development approach and a human rights approach (Kuroda, 2001a).
The concept of emphasizing earlier stages of human development for the
benefit of social and economic development was later further refined, andby the mid-1990s the importance of early childhood and infant education
was being emphasized by international organizations. The value of preschool education, which had traditionally been considered a luxury in developing countries, was now recognized for its value at all levels of subsequent
education.
Emphasis on Girls’ Education

Another education policy that rapidly gained attention after the Jomtien
Conference was the promotion of girls’ enrollment in schools. It was a natural consequence that stemmed from the goal of ‘education for all’ because
enrollment for girls was lower than for boys in most developing societies.
Making girls’ education a policy priority was a clear, policy-oriented message emerging from the trend of development assistance and development
research that continued from WID (Women in Development) to GAD(Gender and Development). There are various academic and policy debates
86

Educational Development

about the effect of girls’ education on economic development, but researchhas verified the notion that girls’ education is an effective and efficientinvestment for social development (Kuroda, 2001a). A tremendous amountof research has shown a positive correlation between a mother’s educationlevel and children’s education and nutrition levels (Behrman et al., 1997;
Caldwell, 1979; Strauss and Thomas, 1995; Thomas et al., 1991; King andHill; 1993).
Emphasis on the Quality of Education

Conventional wisdom used to hold that there was a trade-off between thequality of education and access to education - an improvement in the qualityof education (for example, reducing the number of students per teacher)must come at the expense of quantity (the number of admissible students).
But since the Jomtien Conference, the international community recognizedthat a certain quality must be maintained in order to achieve a quantitative
goal of education, and that the two aspects are complementary. They began
to pay attention to the learning outcome in educational development ofdeveloping countries that had a tendency to focus on enrollment ratios.
The Jomtien Conference also emphasized continued learning by youth
and adults as well as the acquisition by individuals and families of knowledge, skills, and values required for better living and sustainable development.
Other Movements in Educational Assistance during the 1990s

There were factors other than the Jomtien Conference that affected educational assistance in the 1990s. In 1990, the same year as the Jomtien
Conference, the World Children’s Summit was held in New York under the
auspices of UNICEF. It gathered political leaders of the world and succeeded in illuminating the condition of children in the third world. In 1993, theE-9 Education Summit was held in New Delhi, where the nine most populated countries that accounted for about a one-half of the world population
and 70 percent of illiterate adults (Bangladesh, Brazil, China, Egypt, India,
Indonesia, Mexico, Nigeria and Pakistan) agreed to a goal of achieving universal education by 2000. In 1994, the International Conference on
Population and Development was held in Cairo, which advocated a special
emphasis on girls’ education and called for universal access to quality education. In 1995, the World Summit for Social Development was held in
Copenhagen and leaders promised favorable allocations of aid and domestic
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budgets to education and other social sectors. In the same year, the 4thWorld Conference on Women was held in Beijing and successfully
appealed the importance of girls’ education to the world. In 1996, the MidDecade Meeting of the International Consultative Forum on Education for
All in Amman established new goals toward 2000, the target year set in the
Jomtien Conference. These international conferences raised awareness ofthe education sector in developing countries and provided a driving force,
not only for allocation of more resources, but also for a shift in priorities
within the education sector from higher and vocational education to primaryand girls’ education.
Changes in education sector cooperation policies can also be found in
official documents and annual reports published by international organizations in the 1990s. After the World Conference on Education for All, theOECD began its effort to steer more developed-country bilateral aid to primary education. In its official Development Cooperation 1991 Report, theDevelopment Assistance Committee (DAC) showed the importance of primary and girls’ education and recommended that donor countries discussbasic education in their macroeconomic policy consultations with recipient
countries. Also, the OECD adopted the New Development Strategy, which
recognized universal primary education and elimination of the gender gap in
education as top priorities.
In its World Education Report, UNESCO pointed out that higher education in developing countries experienced rapid and unbalanced expansion
compared to other educational stages, and explained that the world began toshift its attention toward primary and girls’ education and to demand moremanagement accountability and efficiency in higher education. The Human
Development Reports that UNDP began to publish in 1990 placed the highest priority on budget allocations for primary education. The report pointed
out that primary education has the strongest redistribution effect for thepoor among all educational stages, but in reality education budgets areunjustifiably skewed toward higher education. The Human Development
Report 1995 focused on gender and explained that education for women canhave a greater impact on both economic and social development than education for men.
Education has traditionally been regarded by UNICEF as a basic humanright that relied on the Universal Declaration of Human Rights (1948) andthe Convention on the Rights of the Child (1999) as a basis to promote education. In the Status of the World’s Children 1999, with the chosen annual88Educational Development

theme of education, UNICEF wrote, “First of all, education in schools must
be the foundation of lifelong learning, accessible, of high quality, flexible,
gender-sensitive and emphasize girls’ education. The state must be a key
partner, and it must begin with the care for young children,” and definedthem as the key elements of the education revolution designed to achieve
Education for All.
The World Development Report 1991 of the World Bank shows thelarge role education - especially women’s education - plays in promoting
economic growth, higher productivity, and other aspects of social development. The Bank has consistently upheld this argument. In 1995 the Bank
published its first education sector policy paper in 15 years entitled Priority
and Strategy for Education, which said that “the highest priority in almost
all countries should be the achievement of universal, high-quality basic education with special attention to girls’ education” (Box 3-3). In 1999 theBank published its Education Sector Strategy. This paper indicated somepolicy changes, including a move away from analysis methods based mainly on educational economy and a statement that educational cooperation
policy is not a prescriptive framework and should respect the uniqueness ofeach developing country. These changes notwithstanding, the paper stillemphasized basic education and girls’ education as high priority issues.
Box 3-3. Main goals of the World Bank’s Priority and Strategy for
Education (1995)• Ensure higher priority for education on government agendas• Pay more attention to educational outcomes in labor market• Emphasize on basic education in public investment• Pay sufficient attention to equity in education• Promote household and community involvement in education• Ensure financial autonomy and accountability in educational institutions

Reassessment of Higher Education and Vocational Education

The emphasis on basic education during the 1990s meant a reduction in
investments for higher education and vocational education. In the background were three criticisms against higher and vocational education. The
first was that their unit cost is much higher than primary and secondary education. The second was related to the investment efficiency - in general theireconomic impact is not large in considering their high cost, especially withthe emergence of unemployment among highly educated population. The
third criticism was that public expenditures for higher education are socially89CHAPTER 3

unjust because the beneficiaries of higher education tend to be relatively
rich. The higher education sector in developing countries was required to
become more self-sufficient during the late 1980s and early 1990s.
Policymakers reduced budgets, raised tuition, and promoted cooperation
between industries and academia. Many countries, however, experienced
difficulties such as student activism and significant deterioration of thequality of higher education.
Critics pointed out the high unit cost of vocational education and its mismatch with the labor market. For example, the World Bank suggested that
improved general education before vocational education ultimately has alarge effect on the acceptance of vocational knowledge and that vocational
education can be managed more efficiently by building close partnerships
with the workplace.
Until the mid-1990s, higher education and vocational education werecriticized for their inefficiency and the priority for resource allocations was
firmly held by primary and secondary education. The rapid progress of
information and communication technologies (ICTs) created a realization of
the importance of preparing for a knowledge-based economy in the education sector. Since the UNESCO World Conference on Higher Education of1998 and after the report Higher Education in Developing Countries - Periland Promise, there has been a renewed recognition of the importance of
higher education. Within this broad trend, there is hope for virtual universities that rely on ICTs to absorb the large demand for higher education andreduce its unit cost.
As a related matter, it is important to note that while ‘formal education’is undoubtedly important for economic development, more is required for
economic development. If we believe that education in a larger sense is an
essential part of effective poverty reduction, then it becomes important toexamine the role of non-formal education (NFE) for the illiterate and theless educated - literacy education and practical vocational training for theless educated - which have not been a central agenda in traditional researchand education policies. The United Nations declared the years 2003 to 2012
as the International Literacy Decade, with the expectation of advancing
NFE within the framework of poverty reduction.

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World Education Forum and Its Impact

The World Education Forum was held in 2000 in Dakar, Senegal as a follow-up to the World Conference on Education for All as well as the MidDecade Meeting of the International Consultative Forum on Education for
All in 1996. Under a grim recognition that the efforts for EFA during the
1990s brought some progress but fell short - by a large margin - of achieving the stated goals, the Forum adopted the Dakar Framework for Action asa goal and strategy. The six goals and 12 strategies can be seen as a summary of the international cooperation trends in the education sector in the
1990s (Box 3-4).
Later in 2001, world leaders at the Genoa Summit mentioned the Dakar
Framework for Action. The statement said that education is a central basefor growth and employment and again pointed out the importance of universal primary education, girls’ education, teacher training, and expanded useof ICTs. The G8 also established a task force on education in developing
countries.
Box 3-4. Goals and Strategies of Dakar Framework for Action
Goals• Expanding and improving early childhood care and education;• Ensuring that by 2015 all children have access to and complete free and compulsory primary education of good quality;• Meeting the learning needs of all young people and adults;• Achieving a 50 per cent improvement in levels of adult literacy by 2015 (especially for women);• Eliminating gender disparities in primary and secondary education by 2005; and• Improving the quality of education in literacy, numeracy and essential life skills.
Strategies• Mobilize political commitment and enhance investment in basic education;• Promote EFA policies within a sector framework;• Ensure the engagement and participation of civil society;• Develop systems of educational governance and management;• Prevent violence and conflict in education programs• Implement strategies for gender equality in education;• Implement education programs to combat the HIV/AIDS pandemic;• Create safe, healthy, inclusive and equitably resourced educational environments;• Enhance the status, morale and professionalism of teachers;• Harness new information and communication technologies;• Monitor progress towards EFA goals and strategies; and• Build on existing mechanisms to accelerate progress.
Sources: Murata (2002), JICA (2002); Committee for International Cooperation in Education,
MEXT (2002), with adjustments.

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The task force submitted a report at the Kananaskis Summit the following year that called for a commitment from both developing and developed
countries, along with evaluation and monitoring (Box 3-5).
Terrorist attacks in the U.S. in September 2001 and world affairs thereafter had an impact on educational cooperation as well. They emphasized
the role of education in social cohesion and post-conflict peacebuilding.
It is clear that trends of international development policies have raised
the awareness of how important education is in developing countries. Goals
in the education sector and the policies and approaches to achieve them
have been discussed, with an emphasis on the need for different choices indifferent countries and regions. At the same time, however, it has become
abundantly clear that international agreements and common understandingof educational challenges do not immediately lead to the implementation ofdesired policies.
The Dakar Framework for Action and its follow-up activities advocatethat developing countries prepare more decisive sector strategies and actionplans to achieve priority objectives in education and that donors firmly support these plans. Although major donors have adopted a strategy to strength10
en partnerships and implement the Dakar Framework for Action, they still
have major challenges in answering this question:
Box 3-5. Main points of the report of the G8 Education Task Force at
the Kananaskis Summit
Developing-country commitment• Political commitment is a prerequisite.
• Resource commitments must be adequate.
• National education plans must address issues of access, equity (especially forgirls, AIDS-affected children, working children, children with disabilities, children
affected by conflict and children in rural areas) and quality (with special attention
to issues of dropout, teacher salaries, teacher training and the effect of
HIV/AIDS).
Developed-country response• Promote on-the-ground donor cooperation and sector-wide approaches.
• Recognize the high recurrent-cost component in basic education and unlock
resources for EFA (support the Monterrey Consensus and the World Bank’s Fast
Track Initiative [FTI]).
Better assessment and monitoring• A high-quality EFA monitoring report is essential.
• Continued efforts by the UNESCO Institute of Statistics and the World Bank andthe need for cooperation among international organizations.
• Increased political support in developing countries and capacity building.
Sources: Committee for International Cooperation in Education, MEXT (2002), Reference 4.
2-2 “G8 Education Task Force Report.”

10. An international strategy to operationalize the Dakar Framework for Action on EFA, April 2002.

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What kinds of strategies should developing countries prepare and implement, and when they do so how much support can be gained from the international community?

World Bank Education Sector Strategy
The World Bank Education Sector Strategy (WBESS) was published in
1999 and has had a growing influence in the education sector (World Bank,
1999a-d). The Bank treats education ‘comprehensively’ and work ‘selectively’ depending on each country’s priorities. The Bank believes that there
can be no single prescription for all countries about what needs to be done,
given the huge differences in education and development needs. The
WBESS is structured on three levels - country, regional, and global. The
Bank has an overall strategy that includes global priorities and processes(the WBESS itself), 120 country action plans, and six regional sector strategies that bridge global strategic thinking and country action plans.
The global priorities, which reflect a commitment to international goals
in education and a consensus on educational quality, are: (i) basic education(with a focus on the poor and girls), (ii) early interventions (early childdevelopment and school health), (iii) innovative delivery (distance education, use of new technologies), and (iv) system reform (standards, curriculum, and achievement assessment; governance and decentralization;
providers and financiers outside of government). The WBESS commits
Bank staff to work with clients in each country and do their best to take thenecessary strategic steps. For that purpose, the strategy has five operating
principles: (i) focus on the client; (ii) analyze comprehensively, act selectively; (iii) use knowledge well; (iv) concentrate on development impact;and (v) work with others in productive partnerships.
Kuroda (2001a) said the strategy was an improvement over an earlier
work (World Bank, 1995) in that the WBESS did not treat the world as asingle entity and it was not a discussion of policy priorities based solely on
economic analyses. The WBESS has been criticized, however, as full of
pretty rhetoric with no meaningful policy analyses (Klees, 2002). It is a fairly generic document.
Sector strategies began as a complement to Country Assistance Strategies (CAS). While a CAS provides cross-sector analyses of a country, a sector strategy was intended to provide an approach to determine the Bank’s

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cross-country and cross-regional priorities and directions.11
Preparation Process and Final Product of WBESS

A new mechanism called the Education Sector Network was introduced aspart of the Bank’s organizational reform and a position of Sector
Manager/Leader in education was created in each regional department.
Sector Managers/Leaders were expected to manage education-related activities in each regional department, encourage the preparation of country
action plans, and formulate a regional strategy as their summary. In addition, facilitation of the process and coordination were entrusted to a section
called an educational Network Center which was responsible for keeping
track of all regions. A bottom-up approach was not carried through because
it was necessary to summarize various themes into one vision in order tomeet the demands of top management, and as a result chapters on policy
priorities and operating principles were later added to the draft WBESS(World Bank, 2002a, p.430).
Specific actions for global priorities and operating principles, which are
the two strategic pillars of WBESS, were summarized as an execution plan
in a matrix, and were intended to be monitored quarterly by senior managers.
For global priorities the strategy paper indicated target countries but did
not specify the processes of the actions and how their outcome should bereflected in country operations because these activities were non-lending
operations implemented mainly by outside partners and the Bank’s Network
Centers. For example, for ‘basic education for girls’ the WBESS planned
activities focused on 31 target countries with UNICEF, the British
Department for International Development (DFID), and the Rockefeller
Foundation as partners, but their stated outcome indicator was abstract:“Movement towards EFA/DAC goals for girls in 31 target countries.”
Specific operational plans were entrusted to the management of regional
departments, country/education teams, and other departments in charge of
research and assessment activities.

11. In more practical terms, the purpose of a sector strategy is to give a larger voice to the education sector
in the organizational management of the Bank and to improve operations both in terms of quality andquantity. Concrete examples include an effort to improve the relationship in regional departments
between the education sector team and the country team that is mostly economists, to increase the levelof expertise of staff involved in operations in the education sector, and to improve the quality of products
from the viewpoint of sector experts.

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Perhaps lending plans were never intended to be included in the
WBESS. It is also possible that they couldn’t wait for all country sector
analyses and action plans to be completed because the original preparation
process was changed mid-course, which may have led to a lack of specificity. However, even if we treat the WBESS as a guideline to improve operations intended for regional and country education teams, the lack of concrete proposals may have reduced its ability to be implemented. If theprocess intended by the Network and the country- and region-centered orientation had been carried through, what would have been the final outcomeof the WBESS? For example, would it have contained more extensive country, cross-country, and cross-regional education sector analyses? Would it
have contained country action plans based on these analyses and proposed
more concrete education sector strategies for each region and for the Bank
as a whole? Ultimately, given the finite resources such as time, budget, andskills of the donor and partner country, this kind of strategy paper may be
simply impossible to complete within a fixed period.
There were wide disparities in the time it took to complete the final
Regional Education Strategies (RES) - the East Asia and the Pacific department published its RES in June 1998, with Sub-Saharan Africa publishingin 2001. There is no published RES for South Asia. The RES for Latin
America and the Caribbean and East Europe and Central Asia are centeredon sector analyses while the RES for East Asia and the Pacific is focused on
the Bank’s internal operations. The RES for Sub-Saharan Africa and Middle
East and North Africa are somewhere in the middle. No RES, however,contains concrete plans for lending operations as was the case with the
WBESS. Some RES recognize common policy challenges and propose
improved quality of operations but do not offer specific information about
what kinds of lending and non-lending operations are planned for whichcountries in the region for the next few years. This suggests, as was the casewith the WBESS, the authors of RES intended them as a tool to confirm
basic policies and operational principles with country teams and left implementation matters to country action plans and country strategies.
Strategy Implementation

Overall Progress (since July, 1999)
There was progress in establishing the Education Sector Network, a system
to connect education-related staff in the regional and other departments,
during the implementation period of the WBESS. Actions taken include95

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level assessments of education staff who belong to the Network12 by the
Sector Board,13 training led by the Network Center, promotion of information and data sharing, and priority studies. Assessments included education
staff that belong to the by the training led by the Network Center, promotionof information and data sharing, and priority studies.
Questions remained about the role and effectiveness of the Center, especially with its lack of budget and stability. For example, the appropriatenessof the Center’s staff and research themes has been questioned (Mundy,
2002, p. 499). In 2002 a new Network chairperson led a reform of theCenter and various organizational reforms also took place in regional
departments, but there remains a system in which there are Sector Leadersin each regional department and corresponding representatives on the Sector
Board. Looking at the organization of the entire World Bank, the representative of the Human Development Sector joined the ranks of senior manage14
ment in 2000. This may help the Education Sector Network to expand its
influence in the Bank’s development strategies and their implementation.15
The Bank has maintained its priority on education, especially basic education, in its overall development strategy. The FTI, which began as a follow-up activity for the Dakar Conference, is a reflection of the Bank’s special emphasis on primary education within the education sector. In addition,
the PRSP Source Book, prepared as a reference for those who prepare
Poverty Reduction Strategy Papers, also focuses on policy analyses in basic
and primary education and their typical approaches within the education
sector (Aoki et al., 2001). Experts on higher education from all regions prepared a comprehensive report on higher education in 2001 (World Bank,
2002a), but it was not positioned as a global sub-sector strategy for the Bank.
When we look at improvements in the volume and quality of Bank operations, there has been no marked increase in operational volume. There areseveral reasons (Human Development network, 2002a, p. 436). In somecases, increased efforts to improve the quality of project preparation and

12. According to the Bank, about 250 staffs registered the education sector as their first network as of July
2000. (Mundy 2002, p.500)
13. The Board consists of the chairperson of the network and representatives of regional departments, among
others.
14. There were four Managing Directors in the entire Bank as of May 2000.
15. As far as the author is aware, there are no monitoring reports or other documents that have been published with regard to the two implementation plans. Also, Human Development Network (2002a) mentions the progress of the Bank's loan amounts and new efforts for Dakar but does not contain direct evaluations of the implementation plans.

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supervision (there have been marked improvements in this area according to
the QAG) 16 slowed the volume increase. 17 Other reasons include theincreased number of small-scale, innovative projects, political changes, andfiscal crises in Latin America and East Asia. Fiscal years 2002 and 2003
showed improvements (the total amount of new loans in 2003 was US$ 2.3
billion and 44 percent of it was IDA credits). Suggested reasons for thisinclude stronger global commitment for the MDGs, adoption of more
PRSPs that position education as the pillar of national development, andadvancement of debt relief based on the Heavily Indebted Poor Country(HIPC) initiative (World Bank, 2002b). One of the remaining questions is
how much of the effort to achieve the EFA goals by way of the FTI willtranslate into actual resource allocations.
The Case of Yemen
In Yemen, a partner country of the Middle East and North Africa department, an Education Public Expenditure Review was conducted as part of themulti-sector Public Expenditure Review (PER) around June 1998 when thedraft RES was completed. The analyses and policy proposals in the PER
were discussed and agreed upon by the Bank’s education team and highranking officials of Yemen’s Education Ministry, and were later approvedby the Bank’s country managers in charge of all sectors. At the beginning of
1999, the Sector Leader of the Middle East and North Africa department
and others prepared the Yemen Education Sector Assistance Strategy(YESAS). After meetings with the Education Ministry officials and discussions at a donor meeting, the government reached an agreement with the
Bank on the YESAS. The CAS for Yemen, prepared in 1999 (CAS99), stated that the proposed lending program for the education sector was based ona strong consensus for the sector strategy with the Education Ministry, andthat the Bank intended to conduct strategy implementation reviews as a
non-lending operation and issue early warnings on problems when they are18
found. Also, the YESAS contained a concrete schedule of new loans and
16. QAG stands for the Quality Assurance Group. Established in 1997 for monitoring purposes, the QAG
promotes qualitative improvements of projects and sector studies by having sector experts evaluate themin a four-grade scale, among others.
17. For example, if the quality does not reach a certain level, they can delay loans by not allowing appraisalsof new projects.
18. World Bank (1999e) pp.16-17. The YESAS had some influence on loan proposals. For example, its
emphasis on the high priority of basic education and on strengthening project ownership by the
Education Ministry were prominently reflected in the design of the Basic Education Expansion Project.
For details, see Yuki (2002: pp.230-239).

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non-lending operations for the next three years that was consistent with theCAS99 in addition to a schedule for supervision of ongoing projects.19
Moreover, it mentioned assistance programs that were multi-sector in nature
but were deemed to have a significant influence on implementation of theeducation sector strategy, such as the Public Sector Management
Adjustment Project (World Bank, 1999d, pp. 15-18).
What results were achieved by the operational plan proposed in the
CAS99 and YESAS? According to a new CAS completed in August 2002,
the “[e]ducation efforts went better than expected” (World Bank, 2002c).
Unfortunately, the CAS02 does not elaborate on why implementation in the
education sector progressed better than other sectors. Possible reasons
include differences in consensus with the government, the quality of strategies, or activities employed to follow-up strategy implementation. The
CAS02 revealed that despite a plan in the CAS99 to perform a strategy
implementation review every year for the three sectors of education, health,20
and agriculture, only the education sector was reviewed in 2001. Thismight be an indication that the education sector did or could place astronger emphasis on follow-up activities. Considering the extremely limited budget for the sector, however, it is doubtful whether the quality ofanalyses was satisfactory. In fact, the CAS02 believes the CAS99 provided
few non-lending operations in the form of analyses and advisory services ingeneral, regardless of the sector. The CAS02 aims to expand this area andprovides a specific budget in addition to titles of individual studies.
Lessons Learned

Based on the foregoing review of the Bank’s education sector strategy, there
are three lessons for future donor strategies in the sector (including an aid
strategy for the achievement of EFA).
• First, recognize beforehand that there are limits in sector assistancestrategies for multiple countries, and emphasize an appropriate allocation of organizational resources (budget, human resources, information,etc.) for drafting country-specific sector assistance strategies and actionplans.
• Second, form a team of experts who are familiar with international
19. To be precise, the YESAS contains the schedule for four years including FY99, but FY99 had already
ended before the paper was completed.
20. Compare World Bank (1999e) Annex B3: Base Case Non-Lending Services and World Bank (2002c)
Annex B4: Summary of Non-Lending Service.

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issues in the education sector and who have the ability to build a strong
consensus with the government and other donors on a macro-level (andmulti-sector) policies that can help form country-specific sector assistance strategies and action plans. Also, allowing the team to be continuously involved in implementation of these strategies can improve aid
effectiveness.
Third, sector assistance strategies for multiple countries accompanied by
the donor’s organizational reforms can help strengthen ties among therelevant actors within the organization. However, attention needs to be
paid to the balance between sector strategies and country operations
when allocating limited organizational resources.

Japan’s International Cooperation Policy in the Education
SectorPrior to 1990

Until the 1990 Jomtien Conference, Japan’s international cooperation in the
education sector centered on higher education and vocational training.
There were some exceptions that had a certain level of success, including
dispatch of secondary school science and math teachers through Japan
Overseas Cooperation Volunteers (JOCV) and the (former) Ministry of
Education’s assistance in primary and literacy education through UNESCO.
For example, activities of the Asia/Pacific Cultural Centre for UNESCO(ACCU) represent a pinnacle of Japan’s official cooperation in basic education. However, most of Japan’s educational development assistance took theform of accepting foreign students and trainees, sending experts to universities and vocational training schools, and providing materials and equipment.
Assistance through the Japan International Cooperation Agency (JICA)
such as long-term partnerships with King Mongkut’s University of Technology Thunbun in Thailand and Jomo Kenyatta University of Agriculture andTechnology in Kenya were known as exemplary educational cooperation
projects. There are several reasons why Japan’s educational assistance wasmainly in higher education and vocational training until 1990. First, basic
education did not fit with the overall tendency of Japanese international
cooperation to emphasize economic infrastructure projects. Second, theJapanese had a shared belief that basic education is such an essential foundation for a nation’s development that it is not suitable for foreign assistance that may introduce outside influences. Third, Japan’s history of forcing Japanese style and language education in its colonies and occupied terri99

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tories before and during World War II associated these mistakes with foreign assistance in primary and secondary education.
After 1990

When the 1990 Jomtien Conference defined the achievement of EFA as acommon goal of the international community, Japanese officials began discussions to expand assistance in basic education.
Immediately following the Jomtien Conference in 1990, JICA established the Investigative Commission on Educational Assistance with cooperation from the Foreign and Education ministries. In 1992 the Aid Study
Committee on Development and Education was established, and its report
was published in 1994. Since then, JICA has continued its research aimed at
expanding Japan’s international cooperation in the education sector, publishing Report of the Task Force for Expansion of Educational Assistance in
1994, Development Studies Implementation Guidelines in the Education
Sector and Study on Educational Assistance in 1997, and Approaches for
Systematic Planning of Development Projects-Basic Education in 2001
(Box 3-6). The study on educational assistance proposed a distinctive direction for Japan’s cooperation in the sector and has had a large impact on
JICA’s operations since then (Box 3-7).
Box 3-6. Proposals by JICA’s Aid Study Committee on Development and
Education• Increase educational assistance including vocational training to 15% of overall ODA.
• Give basic education the highest priority as the essential foundation for development.
• Provide assistance to areas where it is most needed after assessing the balance of educational development stages.
Source: JICA (1994)

Box 3-7. JICA’s Study on Educational Assistance• Shift from higher education and vocational training towards basic education• Shift from “hardware” to “software”• Shift from Asia to Africa
Source: JICA (1997)

The Ministry of Foreign Affairs revealed an increasing emphasis on
human resource development, especially basic education, through preparation of the ODA Charter (1992), the Fifth Medium-Term Target of Official
Development Assistance (1993), and the Medium-Term Policy on Official
Development Assistance (1999). It was against such a backdrop that the
Ministry led the Basic Education for Growth Initiative (BEGIN) announced100

Educational Developmentin 2002.
The Ministry of Education (which has since been renamed the Ministryof Education, Culture, Sports, Science and Technology or MEXT) organized conferences on international educational cooperation in 1995, 2000,
and 2002 to build its support system in this area. Based on recommendations from the Committee for International Cooperation in Education(2002), the Ministry established Centers for the Study of International
Cooperation in Education (CICE) in Hiroshima University and Tsukuba
University, and Research Centers for International Cooperation in Education in Nagoya University, Tokyo University, and Toyohashi University ofTechnology to promote international cooperation in higher education inagriculture and law (Nagoya), medicine (Tokyo), and engineering (Toyohashi).
International Cooperation Policy in the Education Sector in 2002

More recent trends in Japan’s policy in the education sector are based on
two policy documents published in 2002 - the Basic Education for Growth
Initiative (BEGIN) from the Ministry of Foreign Affairs, and the Report of
the Second Committee for International Cooperation in Education from
MEXT.
Both policy documents show a strong awareness of the Dakar Framework for Action. The contents of the two documents are quite different, andalthough they do not contradict each other, the documents also show the different positions of the two ministries. The BEGIN is a policy document
designed to appeal to the international community and is focused on theaccommodation of international trends in aid and Japan’s ODA philosophies. The second report is designed for a domestic audience and is intended to build domestic support for international cooperation in the education
sector.
As a guideline for Japan’s policy in the education sector, the BEGIN iswell balanced between domestic resources and discussions and international
demands and trends. Building on Prime Minister Koizumi’s ‘spirit of 100
bales of rice’ as a basic philosophy, it offers unique aid principles, including
self-help efforts and recognition of cultural diversity.
The BEGIN was designed to balance access with quality in priority
areas, alternately incorporating international priorities such as girls’ education and ICTs, and areas where Japan is strong such as school construction
and math/science education. The BEGIN is a policy document that aims to101

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strike a balance between adapting to changes in international aid trends andstressing Japan’s unique approaches to educational assistance (Box 3-8).
Box 3-8. Summary of the Basic Education for Growth Initiative (BEGIN)
Along with this initiative, the Japanese government announced its plan to provide more than
250 billion yen in ODA for the education sector over the next five years in order to support
lower income countries that were having difficulty achieving the goals of the Dakar
Framework for Action.
Basic Philosophy• Emphasize a commitment by the governments of developing countries and support of ownership• Recognize cultural diversity and promotion of mutual understanding• Assistance based on collaboration and cooperation with the international community (partnerships)• Promote community involvement and use of local resources• Links with other development sectors• Use of Japan’s experience in education
Priority Areas
Assistance to ensure access to education• Construction of school buildings and related facilities• Assistance to eliminate gender disparities (girls’ education)• Assistance for non-formal education (promotion of literacy education)• Active use of information and communication technology (ICT)Assistance to improve quality of education• Science and mathematics education• Teacher training• Improve school administration and operation
Improved education management• Support to create education policies and education development plans• Help improve educational administration system
New Efforts by JapanUse of in-service teachers and establishment of ‘cooperation bases’
Promotion of wide-ranging collaboration with international frameworks• Support to UNESCO• Support to UNICEF• Consideration for World Bank’s Fast Track Initiative• Participation in the Association for the Development of Education in Africa (ADEA)
Support for education for post-conflict nation-building

The final report of the Committee for International Cooperation in
Education was written mainly as a proposal for building domestic support
systems based on thorough research of Japan’s resources for international
education assistance. To respond to the Dakar Framework for Action, thereport distinguishes areas in which Japan has a wealth of experience andachievements and recommends building ‘cooperation bases’ to promote
cooperation in both categories. As with the BEGIN, the report considers
international trends such as collaboration with international organizations
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and post-conflict nation building, but the overall recommendations are related to domestic resource mobilization such as use of in-service teachers,
community involvement, and promotion of international development cooperation in universities. Preparation of this policy document involved not
only the ODA implementing agencies such as JICA and Japan Bank forInternational Cooperation but also prefect boards of education, universities,
consulting companies, and numerous surveys and hearings. In bilateral
donor countries, it is rare to see a ministry in charge of domestic education
play a significant role in forming ODA policies in the education sector. The
effort of MEXT to use its distinguished expertise for international cooperation is commendable.
A unique aspect of this committee was that it had specific discussions on
how to use universities under the authority of MEXT for international cooperation. These discussions were not limited to the education sector but
encompassed international cooperation in general. Considering the program
to reorganize national universities into independent administrative institutions, the committee’s discussions centered on shifting Japanese international cooperation systems of universities from ‘no pay, no accountability’ to‘with pay, with accountability’.
Box 3-9. Summary of the Second Committee for International Cooperation in
Education, the Ministry of Education, Culture, Sports, Science and Technology
Japan’s Response to the Dakar Framework for Action• Emphasize cooperation in primary and secondary education• Promote international educational cooperation using Japan’s experience• Share and communicate knowledge in areas in which Japan has more cooperation experience• More provision of information and dialogue in areas in which Japan has less cooperation
experience• Use Japan’s experience in education through collaboration with international organizations• Promote cooperation that shows the ‘heart of the Japanese’ by using in-service teachers• Cooperation bases’ for stronger cooperation in primary and secondary education• Share cooperation experience to expand Japan’s main education cooperation areas• Support in-service teachers (communication of shared cooperation experience)• Support to promote the use of areas with less cooperation experience• Expand international educational cooperation in post-conflict nation building• Expand international educational cooperation with an emphasis on community involvement
Promote international development cooperation in universities• Shift from cooperation by individual faculty members to cooperation by universities• Respond to restraining factors and issues of international educational cooperation by
Japanese universities• Establish support centers to promote international development cooperation in universities• Establish an international development strategy research center

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Issues with International Cooperation Policy in the
Education Sector
There have been significant developments in Japan’s international cooperation in the education sector in recent years. This concluding section builds
on the discussions above and examines issues relevant to the outlook forJapan’s educational development cooperation policies.
Insufficient Quantity and Quality

The biggest challenge is that international cooperation in the education sector is still insufficient both in terms of quantity and quality. Efforts areneeded to improve related policies.
• Japan’s educational cooperation has historically accounted for about 5 to
9 percent of total ODA, far below the target of 15 percent proposed by
JICA’s Aid Study Committee on Development and Education. Despite
the stronger policy emphasis placed on the sector throughout the 1990s,
actual expenditures have not increased accordingly.
• In order to use limited ODA funds effectively and increase the effectiveness of Japan’s educational cooperation, loan assistance should be added
to the traditional grant aid and technical cooperation. It is important torealize an organic collaboration between loan assistance and other formsof aid based on a results-oriented perspective.
• The policy goal to ‘emphasize basic education’ that was agreed upon in
the early 1990s has not been achieved: JICA’s aid in 1999 for preschool,
primary, secondary, and non-formal education was only 25 percent of
the education sector total, far below the 59 percent for higher education,
21
vocational training, and industrial technology education. The number
of JICA’s basic education projects increased tremendously throughout
the 1990s, but Japan’s educational cooperation is still centered on higher
education and vocational training. More efforts to create projects toimprove policies are needed.
• Formal education is important for economic development, but it is not
the only condition necessary for economic development. From thestandpoint that education in a broader sense is essential for effective
poverty reduction, it is also important to reexamine the role of non-formal education (NFE) - the role of literacy education and practical voca21. Murata (2001). Other categories are: education administration 9%; secondary technical education 3%;other 4%. All figures are taken from Murata (2001).

104

Educational Developmenttional training targeting the less educated - that has not been considered
as a central agenda for traditional research and education policies.
Support for NFE is highly significant for poverty reduction. The United
Nations designated the decade beginning in 2003 as the International
Literacy Decade.
Institution Building

There is a need for institution building so that Japan can be actively involvedin the trend of international aid in the education sector.
• The BEGIN says that the government will accommodate the sector-wide
approach for collaboration and coordination with the international community, but in reality, there are many instances where Japan is clearly
unable to respond to donor modalities in sector programs that are rapidly
becoming popular in sub-Saharan Africa and other regions. There is aconcern that this kind of policy statement may turn out to be ‘pie in thesky’.
• Education is a priority sector in many countries in which the Poverty
Reduction Strategy Paper (PRSP) and sector programs are promoted. Inorder to expand educational cooperation in these countries, we need tobuild a system that allows Japan to respond to the standardization of aid
modalities. As stated in both policy documents, Japan needs to try toconform to the donor coordination framework, especially to actively
engage in educational cooperation for the target countries of the WorldBank’s Fast Track Initiative.
• We propose two institution-building measures to grasp the overall picture of Japan’s ODA in the education sector and to be actively involvedin the donor coordination framework: (i) create a system to collect andshare comprehensive country information in a timely manner, and at thesame time, (ii) build a capacity for individual research that responds tothe domestic and international environment of each ODA priority country so as to prepare country-specific educational assistance plans, andlink them with implementation and follow-up systems.
Promote Domestic Educational Research

As part of the domestic institution building for effective cooperation in the
education sector, there is a need to promote domestic academic research on
educational development and cooperation, and a need for more efforts toaccumulate and use intellectual information and human resources.
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As BEGIN points out, girls’ education, education policy, and educational assistance in post-conflict nation building are certainly potential areasin which Japan may have a comparative advantage as a peace-loving,
non-Western nation that has traveled a unique path of development.
However, even in these important areas, there has not been much development of domestic resources or system building that would lead toeffective cooperation that is responsive to local needs. Although we areseeing rapid progress in research and human resource development inthese areas, an appropriate official support system should be strengthened. This is especially important because competent private-sector consultants determine the success of cooperation in the education sector.
It is important to establish a knowledge management network that accumulates the knowledge on educational development to be used by related professionals. JICA launched the Education Issue-Specific Team in
January, 2002 and this energetic team is expanding its activities. Thereis a need for such a movement to lead the formation of a nationwide network that involves related ministries, JBIC, development consultants,
and universities.

Reform Educational Cooperation Schemes

There is an urgent need to reform existing educational cooperation schemes,
especially in the policy arena, to improve the effectiveness and efficiency of
educational cooperation.
• School construction by general grant aid was an important component of
the progress of educational cooperation during the 1990s. Also, “construction of school buildings and related facilities serving various needs”
is considered a priority area in the BEGIN. However, school construction by Japan’s general grant aid is receiving harsh criticism from theWorld Bank, OECD, and other international actors due to its high unit
cost and lack of local participation. Japan does not have sufficient comparative advantage to declare it as its priority area. Very few bilateral
donors are involved in school construction, so there is a potential for thisarea, if done properly, to become a unique contribution that Japan can beproud of. Significant efforts have been made to respond to the criticism,
but it is now clear that fundamental reform is impossible unless restrictions on the scheme are removed at the policy level.
• These issues inherent in Japanese aid schemes have become a fatal
restriction in countries where sector programs are advancing. In this106

Educational Development

sense, recent diversification of educational cooperation schemes including Development Studies, Development Partnership Programs,
Development Welfare Assistance, and technical cooperation projects
with public participation should be welcomed. Ultimately, however,there is a strong need to build a framework that can remove restrictions
imposed on various schemes, collaborate with other donors, and meetthe individual needs of developing countries in a flexible manner.
Diverse Cooperation Areas

It is important to build a flexible system for educational cooperation throughdiversified cooperation areas.
• After a period of trial and error, Japan’s technical cooperation in scienceand math education and development studies focused on improving education policies is now appreciated by recipient developing countries, andis emerging as forms of cooperation that Japan can promote internationally. To overcome restrictions on domestic resources and meet thediverse needs of developing countries, however, it is also important todevelop other areas of strength.
• The areas currently being considered include girls’ education, education
for children with disabilities, health education, and environmental education. The MEXT is trying to support these areas with budgetary andother measures. There is no other way to build a full-fledged support
structure than to strengthen domestic institutions at the same timethrough the formation and implementation of projects. What is desirable
for this purpose is close collaboration between the implementing agencies and other cooperating organizations, including universities, NGOs,
and development consultants as well as steady, on-the-ground efforts inproject formation.
• It is important to systematize Japan’s experience in educational development and selectively using the knowledge base to formulate and identify
projects that are appropriate for the recipient country.
• More fundamentally, it would also be meaningful to systematize the vast
numbers of studies on existing policy interventions that have been discussed to promote development of the education sector, and through thiseffort attempt to diversify policy tools that will make Japan’s assistancemore flexible and responsive to the conditions of recipient countries.

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CHAPTER 3

Focus on the Recipient Country

We need to reconfirm that the starting point for educational cooperation is
the need of the developing country, before looking for ways to use Japan’s
experience.
• Before the international community began to emphasize ‘ownership’,Japan called it ‘self-help effort’ and defined its importance as the core
principle of foreign aid. Before the 1990s, there was a strong belief inJapan that caution and prudence were needed for foreign interference ineducation because education is the fundamental basis of national culture.
• Recent policy documents often lack sufficient consideration for theneeds of developing countries and self-help efforts and ownership.
These new documents tend to emphasize ‘the heart of the Japanese’ and‘Japan’s experience in education’, suggesting a merger of cultural policy
and educational cooperation that Japan has traditionally avoided. This isprobably in the same vein as the increasingly active discussions of ‘aidwith a human face’, ‘aid with popular participation,’ and ‘aid in thenational interests’ in the context of overall policy for Japan’s ODA.
Educational cooperation by nature, of course, has an element of cultural
exchange and Japan’s educational cooperation should be conducted inareas where Japan has competitive advantage. As long as Japan’s educational cooperation is financed by taxpayer money as part of public policy, obviously it should be evaluated and managed based on various criteria.
• However, if international cooperation supports social development indeveloping countries, the starting point must be a reflection of theirneeds and support for their ownership. In this cultural issue of educationin developing countries, Japan is a donor with a unique, non-Western
standpoint. We strongly hope that Japan will cherish its cultural sensitivity and self-help efforts as it always has while advancing international
cooperation for educational development that is inspired by developing
countries. Systematizing and using Japan’s experience in educational
development based on these premises will have significant meaning in
proposing non-singular, multi-track, and diverse ways of educational
development to the international community.

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International Assistance in the Health Care
SectorMasanori Kondo
International health care assistance has taken on increasing importance inrecent years. In September 2000, the United Nations General Assembly
adopted the Millennium Development Goals (MDGs) with support from149 heads of state. Among the eight goals, three are directly related tohealth care, hence improving health care in developing countries is essential
to achieve the MDGs.
Health care in developing countries is far from satisfactory but there has
been some progress - from 1978 to 1998 the average life expectancy in theworld increased from 61 to 66 years, the infant mortality rate declined from87 to 57 per 1,000 live births, and the under-five mortality rate dropped
from 124 to 83 per 1,000 live births. There is, however, still a gap of 14
years in life expectancy at birth between developed and developing countries. New and re-emerging infectious diseases such as HIV/AIDS andtuberculosis (TB) are an international problem.
About one-half of deaths caused by infectious diseases are attributed tothree major illnesses: AIDS, malaria, and TB. Of the 300 million patients, 5
million die every year from these diseases, for which no effective vaccines
have been developed. These diseases not only cause human suffering but
also affect regional economies. According to one estimate, the Gross
Domestic Product (GDP) of African countries would have increased bymore than US$ 100 billion if malaria had been eradicated on the continent.
It is also estimated that an HIV infection rate of 20 percent among an adult
population leads to a 1 percent annual reduction of GDP.
To cope with infectious diseases, existing resources need to be usedeffectively. The international community made a commitment to reduce thenumber of TB and malaria patients by 50 percent and HIV infections by 25
percent. These three diseases were discussed at the Kyushu-Okinawa
Summit in July 2000, and President Bush of the United States announced aplan to provide US$ 200 million in related assistance. In addition to securing necessary official funds, however, technical cooperation including thedevelopment of vaccines and drugs is essential. Cooperation among public
Kondo is associate professor, International Christian University. This paper was written in July 2003.

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International Assistance in the Health Care Sector

agencies, private companies, and NGOs is also necessary.
This paper first describes international trends in the health care sector,
followed by an analysis of the strategies and activities employed by multilateral and bilateral donors. Next, we describe donor efforts against malaria
and HIV/AIDS, and conclude with a recommendation on the role to beplayed by Japan and the international community.

Emphasis on the Health Care Sector
Alma-Ata Declaration

In September 1978, the World Health Organization (WHO) and the United
Nations Children's Fund (UNICEF) co-hosted the International Conference
on Primary Health Care in Alma-Ata (currently known as Almaty) in the
Republic of Kazakhstan. Representatives of 143 governments and 67 organizations attended this conference and adopted the Alma-Ata Declaration,
which later became the reference point for the principles and policies dealing with health care in developing countries. The Declaration noted theinequality in health status of people in developed and developing countries,
as well as the political, social, and economic inequality in each country, andalso noted that political and economic stability and self-reliance for residents are essential to attain good health.
The Primary Health Care (PHC) advocated in Alma-Ata was defined as"essential health care based on practical, scientifically sound, and sociallyacceptable methods and technology made universally accessible to individuals and families in the community through their full participation and at a
cost that the community and country can afford to maintain at every stage of
their development." To improve PHC, the Declaration proposed an
approach based on four principles - community participation, appropriatetechnology, maximum use of local resources, and cross-sector coordination.
In practical terms, implementation goals included "education concerning
prevailing health problems and the methods of preventing and controllingthem; promotion of food supply and proper nutrition; an adequate supply ofsafe water and basic sanitation; maternal and child health care, including
family planning; immunization against the major infectious diseases; prevention and control of locally endemic diseases; appropriate treatment ofcommon diseases and injuries; and provision of essential drugs." This general policy that covered all angles was later called 'comprehensive PHC' andwas criticized as too ambitious and unrealistic. In response to this criticism,
the concept of 'selective PHC' was proposed, which suggests that stakehold119

CHAPTER 3

ers should select high-priority disease control measures and implement individual programs vertically. UNICEF and the United States adopted this concept. As a result, the initial objective of improving the health status of entire
communities was obscured.
Bamako Initiative

After the Alma-Ata Declaration, in 1981 the World Health Assembly (ofWHO) established a goal of Health for All by the Year 2000 (HFA) anddeclared that the strategy for its achievement would be based on PHC.
Prevention rather than treatment and community-based health management
rather than doctor medical practices in hospitals would be emphasized. Thus
the idea of Community-Based Health Care (CBHC) was born. Based on thisconcept, community health workers and community health promoters wereselected in each community in an effort to identify and meet the particularcommunity's needs.
The oil shock and ensuing recession pushed developed countries toward
political conservatism. Assistance for the health care sector was reduced
throughout the 1980s. The accumulated debt of Latin American and Africancountries turned into crises, and the acceptance of structural adjustment
policies thereafter significantly reduced government budget allocations forhealth care and education. The focus shifted to cost-effectiveness and thevoice of the people who most needed aid was once again obscured. Even
under such adverse circumstances, community-based health care, which canbe improved with little cost, spread slowly in many communities.
Against this background, the African nations, WHO, and UNICEF hosted a conference in 1987 in Bamako, Mali and launched the Bamako
Initiative. This initiative acted as a launching pad for a new form of healthservices in which local residents manage public shelters and the beneficiaries share drug costs. The idea was to enable joint management by the community and cost recovery from beneficiary payments so that essential drugs
can be supplied to those who need them. UNICEF encouraged village healthcenters that embraced the beneficiary-payment principle, a core concept of
the Bamako Initiative. This concept was popular among the U.S. and other
donors who supported structural adjustments in developing countries.
This effort, however, was not entirely successful. According to this concept, poor people will pay for drugs no matter how difficult it is so that
medical facilities with an inadequate supply of drugs will have some revenue even if health care budgets are reduced due to structural adjustments.
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But this fails to give sufficient consideration to the people who do not havemoney, no matter how much they want to buy drugs.1
Sector Reform, Children, and Women

During the 1990s, the central challenge of international assistance in thehealth care sector shifted to sector reform and capacity-building to makegovernments more self-reliant. This led to a major shift in emphasis from
disease control and promotion of PHC through support for health service
programs to construction of entire health care systems and capacity-building
for governments. Common interests of donors included reform of entire
administrative and fiscal systems in developing countries, decentralization,
introduction of beneficiary payments and health insurance, and involvementof the private sector (IDC, 1999).
There was another trend. Based on recognition that past assistancefocusing on economic development did not necessarily help raise living
standards of the poorest people, the aid community began to focus on provision of minimum necessities for survival such as food, shelter, and clothing
as well as safe drinking water, sanitation, health care, and education forchildren and women who are socially vulnerable. In 1993, UNICEF put theConvention on Rights of the Child into effect and formed an international
consensus that all children have a right to Basic Human Needs (BHN).
Moreover, the International Conference on Population and Development(Cairo, 1994) and the World Conference on Women (Beijing, 1995) emphasized reproductive rights and reconfirmed the choice and rights of women tobear children. This field used to be characterized by such ideas as 'control
from above' and 'keeping the population down', but new perspectives suchas individual choice and women's health were introduced. After this conference, reproductive health of unwed young people also became a legitimate
topic in this field where the sole concern used to be married couples. Furthermore, the World Summit for Social Development, held the same year in
Copenhagen, emphasized consideration for children and women's healthcare in a larger framework that encompassed poverty and urbanization. In
1996, the New Development Strategy of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Develop1. In Kenya, for example, introduction of user fees in Sexually Transmitted Diseases (STD) centers led to asteep decline in the number of outpatients and an increase in the number of untreated STD patients.
Recently, however, the concept of payment by beneficiaries seems to be regaining support among
donors.

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ment (OECD) confirmed the importance of children and women as the central stakeholders in development.
MDGs and Challenges Ahead

The International Development Targets (IDTs), defined by the DAC in
1996, included numerical targets in the areas of poverty, education, gender,mortality rate, health care, and the environment. We can see that health care
was already emphasized in the arena of international assistance. Among the2
11 targets of MDGs 1 to 7 , which have roots in the IDTs, four are related
to the health care sector:• Reduce by two-thirds, between 1990 and 2015, the under-five mortality
rate.
• Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio.
• Have halted by 2015 and have begun to reverse the spread of
HIV/AIDS.
• Have halted by 2015 and have begun to reverse the incidence of malaria
and other major diseases.
The health care sector is recognized as essential to achieve the MDGs,
3
one of the largest areas of concern for the donor community. The shift inemphasis from individual projects to sector reform has since become a general trend in development assistance as well as in health care. From this perspective, in the near future policy coordination among donors and establishing ownership by governments of recipient countries will be especially
important. These are the remaining challenges for Japan and other donors.
Educational assistance is essential in the health care sector. Many donors
now provide assistance to the education sector for HIV/AIDS prevention
and other health-related issues. While diffusion of knowledge is important,many efforts seem to go no further than acquiring knowledge. Turningknowledge into action is an important challenge in education, especially inhealth education. It is important for future assistance not only to spreadknowledge but also to encourage changes in behavior.
Finally, we need to touch on the issue of 'vertical' and 'horizontal'
2. Goal 8, "Develop a Global Partnership for Development" is set primarily for developed countries towork toward and complement the other seven goals.
3. However, there is no indication that the impact of the MDGs caused more financial aid to flow to thehealth care sector from the World Bank. Measures against infectious diseases seemed to have had a larger impact.

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approaches in the health care sector. If we call disease-specific approaches'vertical' and sector-wide approaches including community-based PHC 'horizontal', then the latter in which entire communities tackled health-related
issues predominated for a period after the Alma-Ata Declaration. Today, we
are witnessing a shift towards vertical policies that are easier to implement
and produce larger impacts. For example, WHO is highly respected because
it has attained concrete achievements, including eradication of smallpox.
WHO scored big points with its disease control measures in recent SARS
outbreaks. Nevertheless, education that empowers people, communitybased health care activities and other horizontal policies are also importantto overcome HIV/AIDS and other diseases that cannot be solved by immunization based on today's medical science. The aid community is now awareof the importance of education and empowerment, but projects that fully
incorporate these elements tend to be overshadowed by other, more 'efficient' projects. For this reason, organizations that should be the 'voice' of thehealth care sector need to promote education and community-based initiatives more aggressively. From now on, we should pursue policies that
include community-based NGOs as stakeholders and incorporate both vertical and horizontal approaches.

Activities of Multilateral Donors
Initiatives of International Organizations

WHO has generally been the central force promoting international cooperation in health care, and its functions and importance remain unchanged.
However, international financial institutions with more abundant financial
resources such as the World Bank are increasingly involved in health carerelated projects from the viewpoint of human development, and morediverse donors are also now involved in the health care sector (Japan
Association for International Health, 2001).
Against this background, the United Nations established the Task Forceon Basic Social Services for All in October 1995 to help coordinate theresponse of the UN system to the recommendations of UN conferences andsummits. The aim was to strengthen the capacity of the UN system to provide appropriate support at the country and regional levels and to identify
priority and focus areas. The Task Force examined six focus areas - population (mainly reproductive health and family planning), PHC, nutrition, basic
education, drinking water and sanitation, and shelter. The primary membersof the Task Force are WHO, UNICEF, and the World Bank. Initiatives from123

CHAPTER 3

international organizations in this area have so far taken many forms basedon the foundation of the 1978 Alma-Ata Declaration. At this point, cooperation among organizations in the effort to solve global health care problems
is paramount.
World Health Organization (WHO)The primary function of WHO is to coordinate and manage organizations,research, and activities related to international health. Its objective is to prepare proposals and suggestions for international conventions, agreements,
and rules that promote partnerships. In its immunization expansion program, for example, WHO has a partnership with UNICEF, which supplies
vaccines and other necessary goods and equipment. Another importantfunction of WHO is research and studies on international health. It is waging campaigns against various illnesses while at the same time promoting
primary health.
One of the most often mentioned success stories of WHO is its smallpox
eradication program. In 1980, eradication of smallpox was declared by theWorld Health Assembly in Geneva. The success of this program was above
all due to cooperation between donors and developing countries, but thepartnerships were promoted by WHO. It received high marks when it
obtained permission for its eradication activities even in countries at war. In
the middle of the campaign, WHO stopped nation-wide vaccination programs in favor of vaccinating just 50 families who lived near an identified
patient. Introduction of the Active Patient Discovery/Surveillance System
was also successful.
In the 1980s and following the HFA Declaration, the strategic focus of
WHO shifted from traditional treatment of illnesses and injuries and prevention of infectious diseases to overall improvement of health based on theconcept of PHC. Accordingly, its activities changed from the traditionalvertical programs designed to tackle specific illnesses to horizontal pro4
grams organized in accordance with the reality in different regions.
Today, WHO's operations, based on its basic policy of PHC, include
four main pillars: (i) preparing global guidelines for the health care sector,(ii) presenting global health standards, (iii) supporting member countries'
health policies, and (iv) standardization, development, and transfer of
4

However, the pendulum seems to be swinging again from the effectiveness of horizontal programs to thedirection of emphasizing a vertical approach. The future direction of this trend is worth watching.

124International Assistance in the Health Care Sector

appropriate medical technologies and information (sending experts, providing equipment, materials and fellowships) (Kobayakawa, 1998).
Examining several specific programs is instructive:• The highest priority since the Alma-Ata Declaration is to maintain andimprove the standard of health by building core community institutionsin health care and sanitation.
• The Action Program on Essential Drugs is a long-term program thatbegan in 1970. The objective is to ensure that "people can obtain necessary drugs as cheaply as possible and that these drugs are safe, effective
and of good quality, and are administered and used properly" by supporting the supply, management, and planning of essential drugs indeveloping countries.
• The HIV/AIDS Program will be discussed in detail later. Setting
December 1 as World AIDS Day, WHO is implementing awareness andeducational programs in various regions.
• The Tobacco Free Initiative has set May 31 as World No Tobacco Day
with a slogan of "Tobacco or Health." WHO is educating people about
how to reduce or control smoking.
• The Special Program for Research and Training in Tropical Diseases
promotes basic and applied research on six tropical infectious diseases malaria, schistosomiasis, filariasis, leprosy, leishmaniasis, and trypanosomiasis. It also trains experts with special knowledge and techniques including new and improved disease control approaches.
• The Global Polio Eradication Initiative promotes improved immunization ratios, enhanced surveillance, and network building. Based on theexperience of smallpox eradication, WHO is also advancing a TB control strategy called DOTS (Directory Observed Treatment, Short-course)
based on an immunization expansion plan.
• Through its humanitarian and emergency assistance, WHO tries to prevent adverse effects of ethnic and other conflicts on the health of thegeneral population.
• WHO is also trying to improve the health infrastructure by tackling such
issues as the delivery, availability of, and access to, services, management information systems, logistics, and disease surveillance.
• WHO is also actively involved in health care system reform. As part ofthis effort, it focuses on health-related human resource development andimproving health services.

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United Nations Children's Fund (UNICEF)

UNICEF and WHO announced the Alma-Ata Declaration in 1978, followedby the International Year of the Child in 1979 and the launch of the Child
Survival and Development Revolution Program. Even today, UNICEF's
operations are guided by the 1959 Declaration of the Rights of the Childand the Convention on the Rights of the Child, adopted by the UN General
Assembly in 1989. During the 1980s, UNICEF's top priorities were immunization and oral rehydration therapy (ORT). This therapy was recommended by WHO, adopted by both organizations, and subsequently implemented
in many countries. Aggressive campaigns raised the immunization ratio
from 20 percent in the 1980s to 80 percent in the early 1990s. This success
was spawned by global political interest and revolutionary changes inawareness achieved through the efforts of UNICEF and WHO. UNICEF
began to focus on nutrition based on a belief that malnutrition can cause
physical and mental illnesses in children.
In 1983 UNICEF announced a new and economically feasible strategy
for the Child Survival and Development Revolution. In this strategy,
UNICEF accorded priority to four important health care activities it called
GOBI - growth curve, ORT, breast feeding, and immunization. This strategy was consistent with mainstream thinking at the time - selective PHC because the Child Survival and Development Revolution Program was inexpensive and efficient. In 1984, UNICEF announced an expanded version of
GOBI called GOBI-FFF which included the additional elements of foodsupplements, family planning, and female education. The expanded initiative, however, was considered almost impossible to implement by healthministries of developing countries, the World Bank, and USAID. The original GOBI that had been announced the previous year received more support. For this reason, the scope of the Child Survival Program was reduced
at the implementation stage and limited to ORT and immunization.
UNICEF called these two programs the 'twin-engine' but many developing
countries had no choice but to focus on one or the other.
In 1984, the Task Force for Child Survival was established by UNICEF,
WHO, the United Nations Development Program (UNDP), the Rockefeller
Foundation, and other partners. The objective of the Task Force was to
identify determining factors for child deaths such as pregnancy, environmental pollution, poor nutrition, disabilities, and illnesses and promote all
effective countermeasures such as immunization, ORT, and family planningin order to reduce global child morbidity and mortality rates. In 1990, the126International Assistance in the Health Care Sector

United Nations held the World Summit for Children which proposed theProgram 2000 and reconfirmed the central importance of children in development.
Currently, UNICEF operates mainly in six areas - health, water and sanitation, gender equality, nutrition, education, and emergency assistance.
Main programs include the Expanded Program on Immunization (EPI),
Acute Respiratory Infections (ARI) Program, Control of Diarrheal Diseases(CDD) Program, HIV/AIDS, Essential Drugs Program, Maternal and Child
Health (MCH), and malaria prevention. UNICEF is very active in providing
vaccines in partnership with WHO and others toward the goal of eradicating
polio. It also developed a cold-chain transportation system which is effective for transporting vaccines.
In the area of nutrition, UNICEF trains nutritionists to disseminate accurate information and provides vitamin and iodine supplements in many
developing countries. The MCH activities promote breast-feeding, which isan effective way to improve nutrition and prevent diarrheal diseases, andteaches parents how to make baby food with accessible foodstuffs. In 1990,
UNICEF launched the Baby-friendly Hospital Initiative, which promotes
breast-feeding using the "10 steps to successful breastfeeding" it preparedwith WHO in 1989.
World Bank

The World Bank began to support the health care sector from a humandevelopment perspective based on experience from the previous several
decades - the quickest way to improve living standards in developing countries is to invest in people's welfare. More specifically, the Bank has shifted
its focus from the population in the 1970s, to PHC in the 1980s, to healthsystem reform in the 1990s. A big turning point for the Bank's aid operations in the health sector was the World Development Report 1993:
Investing in Health. The central focus of this report was the relevance to thepoor of policy choices in and out of the health sector. The report said that
official policies required to achieve three goals - improve health indicators,
reach the poor, and reduce costs - could be summarized as: (i) build an
enabling environment for health improvements at the household level, (ii)
improve government investments for health care, and (iii) encourage private
sector involvement.
The Bank's strategy in the health care sector, Health, Nutrition, andPopulation (HNP), includes three elements: (i) improving the health, nutri127

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tion, and life expectancy of the poor and disease prevention, (ii) ensuring
the use of medical, nutritional, and family services and improving healthsystems in order to provide low-cost and high-quality prevention and treatment, and (iii) ensuring sustainable financing for the health sector by utilizing existing resources, ensuring effective provision of services, and establishing appropriate policies. The Bank has treated this strategy as its central
task since fiscal year 1998.
Recent Bank operations in the health care sector center on HIV/AIDS
prevention, malaria eradication, and reform of the health system to meet theneeds of the poor. Health sector reform supports introduction of healthinsurance, establishing priorities, rural development with an emphasis on
human development and the environment, and investing in infrastructure
and institution building.
Three-quarters of the Bank's HNP lending has been provided since 1990.
Recently, there has been an increase in International Development
Association (IDA) credits in this area, the largest share of which is devoted
to the social sector. Currently, the Bank provides an average of US$ 1.3 billion annually in new loans for HNP projects. Supplementing the Bank's
HNP lending are the special grant programs, which have more resources
and a longer timeframe than typical Bank projects. Moreover, the special
programs can target several countries simultaneously. Examples include theSpecial Program for Research and Training in Tropical Diseases, the River
Blindness Elimination Program, the Population Program, the Safe
Motherhood Initiative, the Task Force for Child Survival, the Global
HIV/AIDS Program, and the Sub-Committee on Nutrition of the United
Nations Administrative Committee on Coordination.
There are three possible reasons for the increase in the Bank's HNP
lending. First, the Bank and governments are increasingly emphasizing
human resource development and social sector reform at the macroeconomic level. Reflecting this change, the Bank in recent years has accorded thehighest priority to poverty reduction, thus activities in the health sector thatprovide basic social services to the poor are considered as a high priority.
Second is concern that rapid population growth causes environmental
degradation in both urban and rural areas and deprives people of opportunities to escape poverty. Third is population growth that fuels demand forfamily planning. Developing countries, especially in Africa, are recognizing
the harmful effects of population growth and the value of family planning.
The Bank's operations in nutrition are growing as well. Its nutrition proj128

International Assistance in the Health Care Sector

ects focus on people who are susceptible to malnutrition, especially womenin late pregnancy and children under the age of three, and emphasizes comprehensive intervention. Central components of the projects include monitoring child development, related education in nutrition, and supplying foodto under-developed children. According to the Bank's research, many lives
can be saved and others improved at low cost by eliminating vitamin andmineral deficiencies through an improved diet. The Bank is aggressively
implementing projects that subsidize food and water supplies.
Recognizing that maternal mortality rates are still high in developing
countries, the Bank is also increasing its efforts to improve maternal andchild health. Projects are mainly implemented by NGOs and community
groups to ensure that benefits reach intended targets. In addition, the Bankis putting much effort into the Information, Education and Communication(IEC) campaign that provides nutrition education, including how best to
feed infants and recognize iodine deficiency symptoms. In November 1993,
the Bank hosted the conference Overcoming Global Hunger: A Conferenceon Actions to Reduce Hunger Worldwide, and has since increased lending
in this area.
The Bank is also active with tobacco-related illnesses. In 1991 the Bank
announced a policy to stop investing in tobacco cultivation and manufacture, and since then has promoted ways to reduce smoking. Since 1998, theBank has had projects that include disseminating information about tobacco's effects on health, effective taxation and pricing measures, improving
trade regulations and contraband control, and banning advertisements andsales promotions. In these anti-smoking activities, the Bank partners withother international organizations such as WHO and UNICEF, governments,
and NGOs.
The Bank's recent activities in these areas are increasingly incorporated
into its country assistance strategies. Through sector analyses, the Bank isshifting toward activities in the human resource and social sectors that are
now implemented with several ministries of recipient governments. In these
operations, the Bank accords priority to basic health while emphasizing
capacity building for health-related policy making, program planning, management, and administration. The Bank is also beginning to pay attention to
women's health and its effect on the health and welfare of entire families,
eradication of specific illnesses, and financing and other economic management issues (including investments in local hospitals) in the health sector.
Furthermore, the Bank is increasingly emphasizing NGOs in project design.
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The overall orientation of Bank assistance has changed from economic
development to poverty reduction and BHN, and health sector assistancehas shifted toward PHC. Efficiency is still of primary importance to theBank, but while focusing on efficiency there was a tendency to put little
effort into empowerment and capacity building, both truly useful tools forcommunity development. A majority of budgets are used in administrative
departments. While it takes time to implement community empowerment
such as PHC, from now on, the World Bank needs to look for an aid modality based on a long-term perspective.

Activities of Bilateral Donors
United States (USAID)The United States Agency for International Development (USAID) is theworld's largest donor in the area of HNP in developing countries (Umenai,
2001). As part of its organizational reform in 1993, USAID created the
Global Bureau in order to promote sustainable development and implement
its programs related to global issues more efficiently and effectively. Thisbureau's role is to give technical advice and support to regional bureaus andforeign offices, oversee global issues and donor coordination, and financeresearch activities. The Global Bureau includes five offices for the five
strategic goals of USAID (population, health, and nutrition; the environment; economic development; human capacity development; and democracy and governance) as well as cross-sector issues such as Women in
Development (WID). The Population Health and Nutrition Center is one ofthem.
A 1986 policy paper said that the goal of its health assistance programwas "to improve health status in USAID assisted countries as reflected inincreased life expectancy" with special attention to children and mothers.
USAID's goals in the HNP area remain the same after 10 years. USAID
launched the Population Health and Nutrition Program and established thePopulation Health and Nutrition Center to promote the program. Its four
objectives are: (i) reduce unintended pregnancies,5 (ii) reduce death towomen as a result of pregnancy and child birth, (iii) reduce infant and childmortality, and (iv) reduce sexually transmitted diseases with special focus
on HIV/AIDS. Sustainability of HNP programs and program integration are
an important common theme, and USAID is involved in activities to
5. For example, USAID successfully established a private company to market condoms and contraceptive
pills.

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improve the quality and accessibility of projects in population, health andnutrition, and family planning and reproductive health.
One significant characteristic of USAID's health assistance is its emphasis on population. Since the election of President Bush, however, religious
and political considerations have made it difficult to approach the issue withterms like 'population planning' and 'reproductive health', and as a result,
HIV/AIDS work became more prominent. USAID has close partnerships
with international organizations and NGOs due to its location, historic relationships, and personal connections. The needs and reality of health care indeveloping countries are meticulously identified and accumulated by its
many resident representatives, some of whom are health care experts.
USAID frequently exchanges information with the World Bank, WHO, andother UN agencies. It also has a network in the health care sector because it
contracts many consultants, universities, and research institutions in thecourse of implementing its health care projects. This network enables
USAID to collect, analyze, and accumulate information efficiently.
Contributions to health programs undertaken by WHO and other international organizations also account for a large share in the USAID budget.
NGOs are considered essential partners for its foreign assistance programs.
USAID provides grants to many NGOs that implement projects in line withthe agency's country programs. As of 1993, 390 U.S. NGOs were registeredwith USAID and received 14.3 percent of Official Development Assistance(ODA) funds. Moreover, USAID has very close relationships with universities and research institutions that are an essential element of the implementation of its health care assistance.
Another characteristic of USAID's health assistance is that it does notsupport therapeutic treatments with the exception of malaria, acute respiratory infections, and diarrheal diseases. For this reason, there are very few
clinicians among its experts. In terms of aid modality, USAID accords priority to advice on health policies in developing countries and administrationof entire health care systems. As a result, experts in management and financial affairs are valued more than health care workers. In fact, about half ofapproximately 500 long-term experts dispatched all over the world are local
experts, while medical doctors account for only about 20 percent ofAmerican experts. It has adopted a strategy to hire an entire organization to
manage experts and nurture that organization instead of hiring individual
experts.

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United Kingdom (DFID)The Department for International Development (DFID) of the United
Kingdom places its highest priority on helping the poor and emphasizes
BHN assistance to the poorest countries based on humanitarian considerations. While health is an important part of BHN, it is a notable that DFID
has rapidly increased its assistance in social and community services inrecent years from a perspective of emphasizing sustainability. The focus of
DFID's health care assistance is placed on PHC and population. It should be
noted that DFID does not focus on therapeutic treatments and therefore is
not involved in building hospitals. The major recipients are least less-developed countries and British Commonwealth nations - four-fifths of U.K.'s
bilateral aid is allocated to countries with a per capita income of less than
US$ 700 while three-quarters are allocated to British Commonwealth6
nations.
As with the U.S., partnerships with international organizations are oneof the characteristics of British health assistance, for example, the partnership with WHO is reflected in its large budget share. In the U.K., contributions destined for specific use are ODA, but general contributions are handled by the Department of Health. Another prominent characteristic isstrong partnerships with NGOs. Among British NGOs, there are active
groups with a long history, solid organizational base, and global fame. The
government partially bears the cost of sending volunteers and implementing
projects, and also supports NGO development education activities.
Another strong point of British aid, regardless of sectors, is that all typesof aid - bilateral and multilateral, from project formation to implementation- are handled by a single organization, DFID. This arrangement avoids
redundancies, turf wars, and lack of consistency that can be found in other
donor countries. British assistance is focused on BHN assistance in thepoorest countries, and within that category, important health care assistanceis clearly focused on PHC and population.
Activities of Other Bilateral Donors

We have thus far reviewed the aid activities of USAID and DFID. In addition, Japan, Germany, France, Holland, and Sweden are actively engaged inaid activities in the health care sector (Table 3-4).

6. http://www.dfid.gov.uk/

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Table 3-4. Development assistance in the health and population sectors frommajor bilateral donors (average of 1997-99)
Health(A)

Population(B)

Health andpopulation(A+B)(US$ million)

Donor

Total ODA
(C)

Share of health andpopulation(%)(A+B) / C

Japan

339

21

360

11,774

3.1

U.S.

536

358

921

8,270

11.1

U.K.

267

19

286

3,566

8.0

Germany

118

66

184

5,651

3.3

France

184

2

186

5,895

3.2

Holland

80

21

101

3,041

3.3

Sweden

59

20

79

1,644

4.8

Source: Macroeconomy and Health Committee Report, OECD Chairman's Annual Report

Each country provides assistance based on its own development assistance goals. For example, Sweden allocates about 80 percent of its healthassistance to programs related to women's health. Sweden concentrates its
assistance to a few selected countries and also contributes to internationalorganizations. On the other hand, the main focus of aid from France is medical research on infectious diseases and other issues.

Fight against Malaria
Malaria is present in more than 90 countries and more than 40 percent of theworld's population is said to be in risk of infection. Every year, 200 to 300
million people are infected and 1.5 to 2.7 million die. A majority of malaria
victims are children and pregnant and parturient women. Regionally, about
90 percent of malaria patients are said to be in Africa. It is reported that
more children are dying of malaria now in southeast Africa than during the
1980s (WHO/UNICEF, 2003). African countries are spending US$ 12 billion annually to combat malaria, which is estimated to reduce the annual
economic growth rate by as much as 1.3 percent.
Malaria is a difficult disease. Vaccines for malaria are being developed,
but none is effective so far. The majority of malaria victims reside in developing countries, so drugs to treat the disease do not represent a lucrative
market for pharmaceutical companies. As a result, the share of researchmoney allocated to malaria is very low. For example, in 1993, the international research budget for malaria was just US$ 84 million, a fraction of the133CHAPTER 3

US$ 2.3 billion allocated for cancer research.7 Developing countries are
waiting for a new anti-malarial that replaces existing affordable drugs suchas chloroquine, to which drug-resistance is increasing. The malaria parasite
is becoming resistant to affordable drugs such as chloroquine, and developing countries are waiting for a new anti-malarial to replace it.
Current plans to control malaria include establishing early diagnosis andtreatment systems, measures to reduce transmission, epidemiological surveillance, and cooperative research among domestic and foreign research
institutions (Kobayakawa, 1998). A few countries including China, some
Latin American countries, Vietnam, and the Solomon Islands are successfully controlling malaria by using traditional methods, including mosquito
nets. A majority of countries, including those in Africa, have yet to come up
with effective countermeasures.
Changes in Assistance Trends

Following the global anti-malaria campaign launched by the League of
Nations during World War II, WHO began the Malaria Eradication Programthat had a global reach. The program used DDT spray to kill the mosquitoesthat spread the virus. It was successful in many temperate countries but
eventually stalled due to protozoan resistance to chloroquine, the mosquito's
resistance to DDT, lax management, and increasingly serious environmental
contamination by residual DDT. The plan has since been toned down and is
now called the Malaria Control Program.
In 1992, WHO hosted the Malaria Summit in Amsterdam, which adopted the World Declaration on the Control of Malaria and the Global Malaria
Control Strategy. The technical elements of the strategy included: providing early diagnosis and prompt treatment; planning and implementing selective and sustainable preventive measures including vector control; detecting
early, containing, or preventing epidemics; and strengthening local capacity
in basic and applied research to promote regular assessments of malaria in acountry.
While smallpox control relied mainly on vaccines, malaria control needs
environmental and individual protection. In 1998, WHO began the Roll
Back Malaria (RBM) campaign, which will be described later, and isemphasizing malaria control in Africa. Health care systems are essential tocontrol malaria - it is essential to coordinate with other sectors including
7. According to the campaign of Medecines sans Frontiers Japan

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International Assistance in the Health Care Sector

education, agriculture, and the environment, as well as work with communities and private health care providers to improve organizations and financing.
Efforts of International Organizations

WHO
The World Health Organization has three priorities in malaria control projects: (i) help each country strengthen its health sector so it is capable offighting malaria with prevention plans at all levels, (ii) build and maintainpartnerships with related organizations and donors to support harmonious
implementation of planned projects in each country, and (iii) support global
research and development of cost-effective malaria control measures.
The Roll Back Malaria campaign is a global partnership launched by
WHO, UNICEF, UNDP, and the World Bank in 1998 in reaction to the concerns of countries plagued by ever-increasing malaria infections and deaths,
especially those in Africa. Governments of affected countries, development
assistance agencies, NGOs, international private organizations, and researchgroups joined the campaign later. The goal of RBM is to halve the world's
malaria deaths by 2010, and halve them again by 2015. To achieve thisgoal, all stakeholders need to be involved.
The campaign focuses on four strategies selected for the sustainability of
their efficiency, effectiveness, and prevention as well as cost benefit: provide early diagnosis and timely treatment, (ii) provide insecticide-treatedmosquito nets and vector control, (iii) prevent and manage malaria during
pregnancy in order to alleviate the negative effects on the health of mothers
and children, and (iv) prevent and deal with infectious diseases. RBM seeks
to strengthen and improve health systems, tries to improve the situation bymobilizing and empowering communities most afflicted by malaria, andtries to achieve better use of resources through partnerships with governments, civil society, and the private sector.
Partner countries of RBM are also engaged in other activities. They prepare strategic plans, reduce taxes and duties on insecticide-treated mosquito
nets and insecticides, and lower their prices to affordable levels. Efforts to
reduce debt and secure long-term financial resources also contribute tomalaria prevention. RBM is also trying to develop affordable and effective
new drugs together with pharmaceutical companies.
At the African Summit on Roll Back Malaria in April 2000, representatives of 44 malaria-afflicted countries agreed on interim goals to be135

CHAPTER 3

achieved by 2005: (i) at least 60 percent of those suffering from malaria
should be able to access and use correct, affordable, and appropriate treatment within 24 hours of the onset of symptoms, (ii) at least 60 percent of
those at risk for malaria, particularly pregnant women and children under
five, should benefit from suitable personal and community protective measures such as insecticide-treated mosquito nets, and (iii) at least 60 percent of
all pregnant women at risk of malaria, especially those in their first pregnancies, should receive intermittent preventive treatment.
World BankIn FY1999 the World Bank began two activities in the area of public health.
First, following a declaration by WHO, UNICEF, UNDP, and the Bank tolaunch a global malaria elimination campaign in October 1998, the Bank
promised to take a drastic approach toward elimination of malaria by focusing on health system reform and providing complementary support to othersectors including education and infrastructure. The Bank also recognizedmalaria as a high-priority disease that needs its immediate attention. As aresult, the Bank has so far implemented malaria elimination projects in 46
countries. In light of the steady increase in malaria-related deaths and resistance to drugs, the Bank decided to place priority on vaccine administration.
Preventive inoculation is one of the most cost-effective measures in thehealth sector. The Bank supports afflicted countries' efforts to increase thepopulation that can be inoculated, introduce new vaccines and establish theorder of inoculation priorities. Moreover, the Bank is providing financial
assistance to the Medicines for Malaria Venture (MMV) under a partnershipwith several private foundations. Bayer, a major pharmaceutical company
based in Germany, signed a contract with MMV to develop a new medicine
for malaria in cooperation with WHO. Progress under this initiative isimportant because development of new medicines for malaria has not kept
up with general expectations.
Efforts of Bilateral Donors

United States (USAID)
USAID has been involved in projects that support the prevention, early
detection, and treatment of malaria. For example, USAID has been engaged
in the development of new vaccines and experimenting with various technologies and antibodies. In October 2001, the agency announced a $3.7 million, three-year grant to support the research and development of a novel,136

International Assistance in the Health Care Sector

widely effective malaria vaccine by Maxygen, Inc.8 In 2002, it announced aplan to expand NETMARK, a successful malaria control project, to Africancountries. Through the NETMARK project, USAID partnered with thecommercial sector and expanded sales of insecticide-treated mosquito nets,
and has mobilized the commercial sector and invested to develop markets
for insecticide-treated mosquito nets in African countries.
United Kingdom (DFID)
DFID has been involved in various malaria control activities. Since 1997,
DFID has spent more than Åí1.5 billion for health services in developing
countries. In May 2003, it indicated its long-term commitment to tackle
infectious diseases including malaria and announced an additional contribu9
tion of US$ 80 million to the Global Health Fund (GHF) to fight malaria.
With this contribution, the total of DFID's financial assistance reached US$
280 million. It plans to keep providing drugs and preventive items to help
achieve the MDGs.
The GHF is a mechanism intended to build a partnership between publicorganizations and the private sector to support and improve basic health indeveloping countries by preventing and treating infectious diseases, including malaria. It has two functions: make preventive items available andstrengthen insurance systems, and help with cross-sector HIV/AIDS assistance. DFID supports the former. In light of heavy burdens shouldered by
the poor in developing countries, the Fund focuses on HIV/AIDS, TB, andmalaria and centers its activities in sub-Saharan Africa. Preventive items forcost-effective intervention include drugs, diagnosis, and condoms. Longterm institution building requires continued efforts on the part of recipient
countries and support from multilateral and bilateral donors. These efforts
by the GHF are a new form of multilateral assistance in the health sector.
The key element of GHF is the timely transfer of resources to developing
countries to support poverty reduction strategies, sector programs, and thedecision-making and development processes at the country level.
The U.K. actively supports government efforts to maintain access to
medicines for malaria, but the GHF does not overlap with these efforts atthe country level. It supplies preventive items that are required in developing countries but have not been the focus of DFID and other efforts in the
8. http://www.usaid.gov/press/releases/2001/pr011003.html
9. http://62.189.42.51/DFIDstage/news/PressReleases/files/pr30_1may03.html

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CHAPTER 3

health sector. DFID supports GHF in response to the success of its efforts.
Success is measured by flexible fiscal assistance, consent to donor monitoring of progress and program impact, and effective integration of the GHF
and national programs.
Japan
If population is the strong point of American and British assistance in thehealth care sector, Japan's strong point is TB and polio. Along with international organizations and other donors, Japan has been providing assistancein the health sector, beginning with these areas, to improve health andhealth care in developing countries. Japan is actively involved in the fightagainst malaria and other parasites that present especially serious healthproblems in tropical regions. The government plans to create bases in Asia
and Africa for human resource development and research activities and promote information exchange. In the Kyushu-Okinawa G8 Summit in July
2000, infectious diseases were discussed as a major challenge for developing countries. The Japanese government announced its Okinawa Infectious
Diseases Initiative and plans to spend $US 3 billion during next five years.
Against the background of such efforts by the government, the Japan
International Cooperation Agency (JICA) has been supporting malaria prevention in various parts of the world. For example, JICA is hosting a local
training program in Tanzania for laboratory technicians and nurses.
Training includes instructions on definite diagnoses of malaria and maintenance of microscopes and other laboratory equipment. The program is10
administered and guided by JICA experts, and trained 705 people by 2001.
In Indonesia, JICA's goal since 2001 is to build capacity to implement andmonitor actions to control malaria tailored to the epidemiological characterof the region based on past studies, and to suppress the spread of malaria inmodel regions. In Papua New Guinea, JICA has been involved in comprehensive research assistance to prevent malaria since 2001, strengthening
research functions at Papua New Guinea University, and skills development
to plan and implement malaria-related research, human resource development, and preparation of a malaria suppression strategy.
In terms of government-private sector cooperation, many Japanese pharmaceutical companies; the Ministry of Health, Labor and Welfare; WHO;and the Special Program for Research and Training in Tropical Diseases
10. http://www.jica.go.jp/tanzania/activities/09.html

138

International Assistance in the Health Care Sector(TDR) launched a partnership project in October 1999 called the JPMW
Alliance, which aims to develop new anti-malarial drugs. The objective of
the Alliance is to screen chemical compounds for anti-malarial effects thatare provided free-of-charge by Japanese pharmaceutical companies. The
JPMW Coordination Center in Tokyo administers the project, and screening
is performed at Kitasato Institute. The TDR and related pharmaceuticalcompanies are expected to continue their research in pursuit of effective
anti-malarial compounds.

Fight against HIV/AIDS
HIV/AIDS is one of the newest diseases to confront mankind; it was first
confirmed by the U.S. government's Centers for Disease Control andPrevention (CDC) in 1981. Once infected by HIV, the virus slowly destroys
the immune system over two to 20 years, which leads to eventual death.
Since 1986, WHO has been the center of international efforts to contain
HIV/AIDS. The Joint United Nations Program on HIV/AIDS (UNAIDS)
was established in 1996 as the successor to WHO's Global Program on
AIDS (GPA). The mission of this organization is to lead multi-sector efforts
to prevent HIV transmission; provide care and support for HIV carriers and
AIDS patients; alleviate social, economic, and human impacts of the epidemic; and reduce vulnerability of individuals and communities.
Since the 1990s, the issue of HIV/AIDS has been recognized as a serious global problem. The G8 Summit held in Kyushu and Okinawa in July
2000 declared a commitment to increase efforts in the health sector, including those aimed at reducing new HIV infections. The United Nations
General Assembly, held in August of the same year, included prevention of
epidemics (including HIV/AIDS) as one of the MDGs. The UN General
Assembly Special Session on HIV/AIDS, held in June 2001, renewed therecognition that HIV/AIDS is a global problem and presented guidelines forinternational cooperation. At the Kyushu Okinawa Summit held the following month, the G8 leaders joined the UN Secretary-General to establish the
Global Fund to Fight AIDS, Tuberculosis and Malaria, and the G8 countries
committed US$ 1.3 billion in assistance (JICA, 2002).
Status of HIV/AIDS Infection

The total number of HIV carriers in the world is estimated to have reached
40 million (UNAIDS, 2002). About 95 percent of the newly infected residein developing countries, and about one-half are children under the age of 15.
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The number of adult HIV carriers is increasing much faster than the worstcase forecast made in 1990, growing steadily to 25.5 million in 1996 and tothe current level of about 40 million (Table 3-5).11 Another big problem isthat fewer than 10 percent receive appropriate treatment and medicines.
According to a recent report of the U.S. Department of Health and Human
Resources, as many as 25 million people have died of AIDS in the world
during the past 20 years.
Table 3-5. HIV/AIDS patients in 2002 (million)
Group
Total
Adults
WomenChildren under 15

Patients

Newly infected

Deaths

42.0
38.6
19.2
3.2

5.0
4.2
2.0
0.8

3.1
2.5
1.2
0.61

Source: UNAIDS AIDS Epidemic Update, 2002.

Strategies to fight HIV/AIDS include: (i) improving the social environment (education), (ii) prevention (vaccines), (iii) treatment (chemotherapy),(iv) epidemiology research, (v) immunology research, and (vi) virology
research. Among these, the development of preventive vaccines (virus-specific CTL [CD8 positive lymph cells] and virus-specific neutralizing antibodies) has not reached the clinical testing stage. In the current situation, theonly viable means to stop the infection is considered to be the first strategy- improving the social environment. There are four infection routes for
HIV/AIDS - sexual intercourse, blood transfusion, sharing intravenous needles, and mother-child transmission.
HIV/AIDS is currently the largest problem in many African countries.
According to UNAIDS (2002), 28.5 million or over 70 percent of the 40
million HIV carriers in the world live in Sub-Saharan Africa, a region that isbelieved to be vulnerable to HIV/AIDS mainly because of poverty, conflicts, and cultural and customary behavior. As a matter of serious concern,
it is estimated that less than 60 percent of AIDS patients in Sub-Saharan
12
African are under treatment. According to a study by the World Bank, theaverage life expectancy in Sub-Saharan Africa is falling rapidly due to
11. The number of HIV carriers is more difficult to estimate than that of AIDS patients because in manycases carriers are not aware of their infection.
12. Statement of Dr. M. R. Reich, Director, Harvard Center for Population and Development Studies (at ameeting of FASID's International Development Assistance Trend Study Group, February 13, 2003).

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increased deaths caused by AIDS, with some countries falling back to levels
recorded in the 1960s.
Thirty-seven percent of the world's AIDS patients reside in Central andEast Africa (UNAIDS, 2002). The situation in southern Africa is evenworse - according to the same source, the share of HIV carriers in adult
population is 39 percent in Botswana, 31 percent in Lesotho, 34 percent in
Swaziland, 34 percent in Zimbabwe, and 20 percent in South Africa. In
Botswana and South Africa, the number of new infections has risen dramatically in just a few years. Food shortages seem to have an effect in many
countries. The situation in these African countries is dire because the fightagainst HIV/AIDS becomes exponentially more difficult as the number of
infected people rises.
The new infection rate is highest in those of 15-24 years. In some areasof countries where HIV/AIDS spread in the early 1980s, such as Kenya,
Malawi, Rwanda, Tanzania, Uganda, Zambia and Zimbabwe, 10 to 40 percent of pregnant women are infected. It is estimated that infections begin in
the early teens and peak before they reach 25. As a result, more than 90 percent of infant infections in the world are believed to occur in Africa.
Moreover, fewer teachers and fewer children attending school (especiallygirls) has a negative impact on the society. In Malawi and Zambia, 30 percent of school teachers are said to be infected with HIV.
The incidence of AIDS in pregnant women under age 20 has dropped
from 21 percent in 1998 to 15.4 percent in 2001 (UNAIDS, 2002). Although changes in the infection rate cannot be clearly attributed to changes
in sexual behavior, communal pressure in a male-dominated society may
work to control sexual behavior and reduce infections among young women(UNAIDS, 1999).
Thailand and Uganda are often cited as success stories. Thailand has traditionally had well-developed PHC, and its fight against HIV/AIDS has
been successful due to local participation, counseling, and nurturing of selfhelp groups. In addition, at the central government level the Ministry of
Public Health and the Secretariat of the Prime Minister were actively
involved, promoting the 'Condom 100 percent' campaign and providing special budgets for the heavily infected Northeastern region. PHC was not
well-developed in Uganda, but tremendous local participation led to reduc13
tion of the HIV infection rate among young, pregnant women. Senegal is a
13. Uganda's statistics are said to be problematic.

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leader in HIV/AIDS prevention. There are reports that preventive actions inEthiopia and South Africa have led to reduced incidence of HIV/AIDS
among pregnant women. It is also reported that programs to manage sexually transmitted diseases (STDs) through early diagnoses, treatment, and promotion of safe sex have markedly reduced STD infections, with successful
examples in Zambia and Zimbabwe. Based on these examples, 40 countries
in sub-Saharan Africa have prepared plans to tackle HIV/AIDS and 19 haveestablished National AIDS Councils, a noteworthy achievement that gives
hope for future improvements.
The problem of HIV/AIDS is not confined to Africa; it is also serious in
Asia. The CDC of the United States pointed out that AIDS is spreading very
rapidly in Cambodia, China, and India as it did in Africa 10 years ago, andwarned that unless steps are taken to reverse the trend, the incidence of
HIV/AIDS will rise to a destructive level. According to an estimate by theUnited Nations, 0.8 to 1.5 million people in China were infected by HIV at
the end of 2001 and the number may reach 10 million by 2010. India has
estimated the number of HIV carriers in the country to be 4 million, the second largest in the world after South Africa. An American study predicts thenumber of infected in India will reach 20 to 25 million by 2010.
Assistance Trends

The HIV/AIDS epidemic is causing serious problems in developing countries and many are preparing national plans to deal with them. However,international assistance from developed countries is still essential because
poor countries lack funds, technology, and human resources. Their efforts
include: (i) recognition that HIV/AIDS not just as a health care issue, butalso a challenge for development; (ii) assistance that is not narrowly
focused on HIV/AIDS, but also includes STDs and reproductive health; (iii)emphasis on social aspects including human rights, women, and discrimination; and (iv) emphasis on sub-Saharan Africa, although assistance is pro14
vided to a wide variety of countries.
The donor perspective about HIV/AIDS has expanded out of the healthcare sector to include political, economic, and social issues. As a futuretask, reporting systems need to be improved. There are more than a few
countries where data are reported more than one-and-a-half years late. The
DAC, the United Nations Population Fund (UNFPA), and the Netherlands
14. http://www.amsmed.or.jp/aijic/jica_jp03.htm

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International Assistance in the Health Care Sector

Interdisciplinary Demographic Institute (NIDI) are trying to establish acommon reporting method.
Another serious issue is lack of funds. Among the 22 DAC member
countries, 14 provide 80 percent of total HIV/AIDS funding in developing
countries. Public interest in the U.S. is on the rise, and the country is anespecially large donor in this area, accounting for about one-half of bilateral
ODA. In addition, we cannot ignore the interests of American pharmaceutical companies that manufacture AIDS drugs. The U.K. and Holland follow
the U.S. as the largest bilateral donors. Japan and Germany spend very little
in this area (Table 3-6).
Table 3-6. Bilateral donor funding for HIV/AIDS (1998)
Bilateral donor
Australia
Belgium
CanadaDenmark
FinlandGermanyJapan
Luxemburg
Holland
NorwaySwedenSwitzerland
U.K.
U.S.
Total

Expenditure(US$ million)

Share
(%)

12.2
5.2
14.8
7.8
1.5
15.0
14.0
2.0
21.5
14.9
15.2
2.1
26.3
147.3
300.0

4
2
5
3
<1
5
5
1
7
5
5
1
9
49
100

While multilateral donors provide 20 percent of total ODA in the area of
HIV/AIDS, 95 percent of it comes from UN agencies. The World Bank
share in this area is relatively small. About 80 percent of recipients are governments and NGOs. The share of HIV/AIDS spending in total bilateral
ODA by DAC member countries increased from 0.2 percent in 1987 to 0.7
percent in 1998, while the same share in multilateral ODA is declining.
About 35 percent of HIV/AIDS assistance is used globally, while 56.8 percent goes to sub-Saharan Africa, 26.5 percent to Asia and the Pacific, 13.8
percent to Latin America, 2.3 percent to Eastern Europe, and 0.5 percent to
Middle East and North Africa.
Despite assistance from developed countries and the urgent necessity for143CHAPTER 3

HIV prevention, there is simply not enough access to preventive measuresor aid money to turn back the tide in the developing world. According to
Access to HIV Prevention: Closing the Gap, published by the Global HIV
Prevention Working Group, less than one in five people at risk of HIV infection has access to an HIV prevention program.
Moreover, the annual funding for HIV prevention is US$ 3.8 billion lessthan the amount deemed necessary by 2005 (Global HIV Prevention
Working Group, 2003). In a report submitted to WHO, a research group at
Harvard University emphasized the need to significantly increase aid to thehealth care sector in light of the HIV/AIDS problem (Sachs et al., 2001).
The feasibility of this scenario is still totally unknown.
Efforts by International Organizations

WHO and UNAIDS
WHO announced its global strategy in the fight against HIV/AIDS in 1987.
It established the Global Program on AIDS (GPA) and promoted national
HIV/AIDS plans in developing countries. As a result, about 150 countries
are now either preparing or implementing medium-term plans.
UNAIDS was established in January 1996. Under the leadership of theUnited Nations, UNAIDS consolidated HIV/AIDS-related projects thatwere formerly implemented by WHO, UNICEF, UNDP, UNESCO,UNFPA, and the World Bank. UNAIDS is expected to coordinate donor
activities and promote more efficient HIV/AIDS activities.
The main role of UNAIDS is development of HIV/AIDS policies,
research, and technical development. To fulfill that role, UNAIDS has dispatched program advisors to about 50 countries and international teams tostrategic regions in addition to having employees at headquarters in Geneva.
Because its core activities are not financial assistance, as is the case for
WHO, there is an emphasis on coordinating with other donors, including
Japan.
The same year it was established, UNAIDS and WHO created a
Working Group on HIV/AIDS and STD, began a program called UNAIDSWHO Joint Global HIV/AIDS & STD Surveillance. The objective of thisWorking Group is to strengthen the international, inter-regional, and global
networks and improve surveillance of HIV/AIDS and STDs. To do so, it isconducting research with national HIV/AIDS programs, states, internationalorganizations, and experts; collecting the best available information;
improving the data quality; and promoting formation and implementation of144

International Assistance in the Health Care Sector

HIV/AIDS policies and projects at the national, regional, and global levels.
The United Nations Population Fund (UNFPA)At the International Conference on Population and Development in 1994,
UNFPA advocated a comprehensive strategy for the population problem.
Emphasis includes women's issues, looking at population assistance fromthe broad perspective of reproductive health and development, and collaboration with NGOs and other actors involved in the population problem.
UNFPA places a special emphasis on preventing HIV infections and is
working to incorporate prevention activities into reproductive health programs. More specifically, it emphasizes basic HIV/AIDS prevention andreducing HIV/AIDS infection risks through sex, mother-child transmission,and transmission through blood. UNFPA also attaches importance toimproving the status of women from a broad perspective. While its central
mission is to collaborate with other donors within the framework of
UNAIDS, it also provides direct assistance to individual countries throughthe National HIV/AIDS Control Program.
World Bank
The World Bank began HIV/AIDS prevention and control programs in 1986
when many countries were still skeptical about the epidemic. Its first
HIV/AIDS project was a family health project in Zimbabwe approved in
FY1987. In 1988, Thailand became the first Asian country to receive assistance. Initially, the Bank focused on reforming health care systems thatserve as the foundation for the implementation of HIV/AIDS programs
because country-level programs received abundant grant money from
WHO's Global Program on AIDS and bilateral donors. It began to assist
individual projects in FY1989 as the HIV/AIDS problem spread. At thesame time, the Bank became more active in policy analyses. In 1997, theBank published a report on HIV/AIDS (World Bank, 1997). According to
the Bank, the four keys to successful HIV/AIDS assistance are strong commitment by the government, simple project design, management capacity
building, and sufficient evaluation efforts.
HIV/AIDS needs to be tackled through a broad array of activities. Basedon the recognition that HIV/AIDS is a high priority development issue andnot just a health issue, the Bank is also providing comprehensive programassistance ranging from prevention and treatment to health and social development projects. Moreover, the Bank promotes political will and commit145

CHAPTER 3

ment at the top level, provides information through research activities, collaborates with local NGOs and other international organizations, and implements population projects and programs to control sexually transmitted
infections. It is involved in a project to provide drugs for STDs and
HIV/AIDS-related infectious diseases, development of awareness and condom distribution campaigns, and a research project to analyze socioeconomic impacts of HIV/AIDS in order to find cost-effective prevention and care.
The Bank launched the Multi-country HIV/AIDS Program (MAP) undera partnership with African governments in 2001 and provided US$ 500 million in interest-free IDA credits. The objective of MAP is to increase resources to prevent the spread of HIV/AIDS through a comprehensive andsector-crossing approach and provide access to prevention/treatment programs. The Bank's HIV/AIDS assistance in FY2002 was more than $US
300 million, including new loans to Benin, Burkina Faso, Burundi, Jamaica,
Madagascar, and Senegal, in addition to US$ 500 million for the second
stage of MAP.
Establishment of a New International Fund
The United Nations General Assembly in 2001 called for the establishmentof a global HIV/AIDS and health fund with a goal of accumulating US$ 1.3
billion. Later, this fund was renamed as the Global Fund to Fight AIDS,
Tuberculosis and Malaria with expanded target diseases. The fund wasorganized as an independent entity and not as a subordinate organization of
the World Bank or the United Nations. The European Union insisted itshould emphasize treatment, while the U.S. and Japan insisted it shouldemphasize prevention. As a result, a compromise adopted a policy of"emphasizing prevention which leads to treatment and care."In the G8 Summit held in Evian, France in June 2003, President Bush of
the United States announced a plan to contribute US$ 1 billion to this fundover the next five years. The European Union and France announced annual
contributions of 1 billion Euros and 150 million Euros, respectively. This
fund is effective and African countries view it favorably, but experts are
somewhat skeptical about the eventual success of this plan.
Efforts of Bilateral Donors

United States (USAID)
USAID is more actively involved in the issue of HIV/AIDS than other
donors. One reason is that it has become more difficult for the government
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International Assistance in the Health Care Sector

to provide assistance for reproductive health for religious and political reasons since President Bush took office. USAID maintains that its basic mission is long-term and sustainable development and not short-term remedies.
Its main strategy includes three elements: HIV/AIDS prevention programs
using effective measures to prevent infection; policy reform that reflectssocial, cultural, legal/regulatory, and economic conditions pertinent to
HIV/AIDS and other STDs; and development and experimentation withnew means to prevent infection and reduce the negative effects of widespread infection.
The first element includes promotion of safe sex through Information,
Education, and Communications(IEC); increasing the demand for, access
to, and the correct use of condoms; and controlling STDs by improving
diagnoses and treatment services and educating people about STDs. The
second element includes promotion of countermeasures that are coordinatedthrough multiple sectors at a higher policy level within the government,
consideration for funds and long-term sustainability of programs at all levels, and dealing with social prejudice against HIV carriers and those at riskof infection. USAID promotes research activities that assess the effectiveness of existing programs, activities to reduce the risk of HIV infection in
women, pilot projects and research activities to reduce the impact of
HIV/AIDS in severely afflicted areas, and activities to support the use of
public sanitation infrastructure and HIV/AIDS vaccines. The U.S. has a policy of not providing or distributing medicines that alleviate the effects of
HIV/AIDS and STDs. It also encourages host countries to bear a significant
portion of recurrent costs.
United Kingdom (DFID)
Traditionally the strong point of the U.K. in the health care sector has been
population, and it is not a stretch to say that its current HIV/AIDS assistanceis a direct extension of that tradition. In 1991, the Overseas Development
Administration (ODA) of the British government announced a population
initiative called Children by Choice not Chance. Since then, the ODA provided assistance based on an initiative to reduce unwanted pregnancies andensure that women participate in and benefit from a better family life, with afocus on HIV/AIDS.
DFID, which succeeded ODA in 1997, established an HIV/AIDS policy
strategy that included six elements: (i) find and support political leaders inthis area; (ii) improve organizational capacity of states; (iii) resolve poten147

CHAPTER 3

tial high risk including women's and children's rights; (iv) coordinate asmuch as possible with other areas, especially health, education, and livelihood; (v) support prevention and treatment programs; and (vi) support
knowledge development and evaluate project strategies of multilateral
donors. The HIV/AIDS strategy of DFID is unique in that it is not a combination of individual disease-specific strategies but is based on a more strategic and comprehensive approach.
DFID plans to spend £200 million over the next five years to fight infec15
tious diseases (TB, malaria, HIV/AIDS). Bilateral aid includes technicalcooperation in Zambia and support for the government's HIV/AIDS education activities. At the same time, it is extending its efforts from governmentled activities to NGOs and other local level activities for educational activities, including HIV/AIDS education. In South Africa, DFID is working withcommercial organizations on a multimedia campaign against HIV/AIDS,
rape, and other violence against women.16
Sweden (SIDA)
Sweden was the first country to provide direct family planning assistance,
including distribution of contraceptives, to developing countries in the
1950s. As the country began its bilateral aid programs in 1962, it madeefforts to establish the UNFPA and the International Planned Parenthood
Federation (IPPF). Since then, Sweden has been actively collaborating with
the United Nations. In the 1970s, Sweden provided US$ 35 million annuallyin aid in the population area. In the early 1980s, however, the program was
halted as a result of criticism that Sweden's assistance promoted sterilizationin India and Bangladesh. Its annual assistance in this area had declined to
US$ 16 million by 1984 but the International Conference on Population(Mexico City) provided momentum for a resurgence of population aid. In
1991, the Swedish International Development Cooperation Agency (SIDA)
spent US$ 42 million and declared population assistance as one of its priorities because it supports development in developing countries and helps themachieve economic and social equity. Within the area of population and
HIV/AIDS assistance, SIDA has a broad-based approach with a focus on
health care policy and sexual/reproductive health. It provides aid to eligible
countries (Angola, Chile, Ethiopia, India, Tanzania, Uganda, Zambia, and
15. http://www.dfid.gov.uk/
16. http://62.189.42.51/DFIDstage/AboutDFID/Education/themes/hiv/activities

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Zimbabwe) and cooperates with UN Agencies (WHO, UNDP, UNICEF,UNESCO), and international and Swedish NGOs. SIDA implements programs that consider development by improving the status of women.
Women, gender, and equality are essential elements of all its programs.
Japan
The Japanese government considers AIDS as a global challenge and is promoting the fight against it. In 1994 it launched the Global Issues Initiativeon Population and AIDS (GII) as a unique action plan to aggressively tackle
the problems of HIV/AIDS in developing countries. This comprehensive
approach combines direct population assistance, including family planningand support in the population area; indirect population assistance including
primary education, literacy education, and support to improve the status of
women; and HIV/AIDS efforts including dissemination of knowledge on
HIV/AIDS, inspection, and research. In 1995, the Overseas Medical
Cooperation Committee organized a special AIDS task force that completed
a report on the possibility of international cooperation in the area of AIDSin 1996 (JICA, 1996). The report listed six areas with high potential for
HIV/AIDS cooperation: (i) clarification of current status (examination
mechanisms, surveillance activities); (ii) treatment and home care for AIDS
patients/HIV-infected persons; (iii) safe supply of blood and blood products; (iv) infection prevention activities for at-risk groups; (v) AIDS education for local people, and (vi) support for HIV/AIDS research. Moreover,the government announced the Okinawa Infectious Diseases Initiative at the
Kyushu Okinawa Summit in July 2000 with a target of providing US$ 3 billion during the next five years to fight infectious diseases including
HIV/AIDS. The government is currently promoting multilateral cooperation
through WHO and UNAIDS and bilateral cooperation, and intends toexpand these activities.
At JICA, the Planning Department and the Environment, WID, andOther Global Issues Division are tackling this issue as coordinator of
HIV/AIDS-related activities. JICA's assistance in this area is mainly projecttechnical cooperation, provision of medical equipment and supplies, andtraining programs. The recipient countries are in Asia, Africa, and Latin
America. Its strategic development objectives include prevention and control of HIV/AIDS, care and support for HIV-infected and AIDS patients andtheir families, and implementation of effective, national-level countermeasures. For each development objective, medium-term targets are defined.
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The medium-term targets for the first objective are reduction of sexualtransmission risk, reduction of mother-child transmission risk, reduction of
infection risk through blood transfusions, reduction of infection risk among
drug users caused by contaminated needles, development and practicalapplication of effective vaccines, and effective anti-HIV medicines or antiretrovirals. The medium-term targets for the second objective are relief ofsuffering caused by physical symptoms, including AIDS-related opportunistic infections, and protection of the human rights of people living with
HIV/AIDS and their families. The medium-term targets for the third objective are planning appropriate measures at the national level, improved
administrative capability for measures against HIV/AIDS, and modificationof public finances for health care (JICA, 2002).
Development of AIDS Medicines in Developed Countries

Development of AIDS medications occurs mainly in developed countries.17
An HIV/AIDS treatment drug was developed in 1994 and announced at an
HIV/AIDS conference in 1995. In 1996, a type of medication called
HAART therapy was developed. It can prevent the onset of AIDS even if aperson is infected with HIV. However, the cost of HAART therapy is as
much as US$ 10,000 per person per year, and is out of reach for typical HIV
carriers in Africa.
On the other hand, Brazil and India are trying to produce generic AIDS
drugs domestically despite objections from the U.S.. These generic AIDS
drugs have virtually the same ingredients as drugs that are patented in the
U.S. and other countries, but pharmaceutical companies in Brazil and India
are selling them cheaply without paying patent fees. They claim this is justified because the drugs are being sold to developing countries and aid agencies. Especially in Brazil, generic drugs are sold domestically without problems because the government has approved unlicensed AIDS drugs.
According to WHO, the cost for these drugs distributed by Indian and otherpharmaceutical companies is only about \70,000 per year. At the 13th
International HIV/AIDS Conference in 2000, a Brazilian expert on manufacturing anti-AIDS drugs called on developing countries in Africa andother regions to promote technical transfer and information exchange for
production of these drugs.
In 1997, the South African government enacted exceptional rules to
17. This issue is discussed in detail by Yamagata (2003) on which this chapter is based.

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International Assistance in the Health Care Sector

restrict the application of patents under the TRIPS (trade-related aspects ofintellectual property rights) agreement in an attempt to import cheap,
Indian-made generic drugs. Alleging patent infringement, 39 pharmaceutical companies filed suit in South Africa and made this incident an international problem. The Brazilian government proposed to WHO a price database of AIDS drugs so that developing countries can purchase them at thelowest price, and otherwise tried to increase the export of its unlicensed
drugs, drawing criticism from pharmaceutical companies in developed
countries.
Against such a background, domestic and international NGOs pressured
pharmaceutical companies and won an announcement in May 2000 by fivecompanies based in the U.S., the U.K., Switzerland, and Germany to sell
AIDS treatment drugs to developing countries at one-fifth of their normal
prices. In April 2001, the suit in South Africa was settled out of court withterms favorable to the government. As a result, drugs made by Indian pharmaceutical companies and African companies that received technical assistance from Thailand and Brazil became available, and the annual cost of
HAART therapy declined from US$ 10,000 to a mostly universal level of
US$ 350. New movements followed, including Kenya's enactment of a new
industrial property law with provisions for parallel importing, and introduction of treatment programs using cheap AIDS drugs in Nigeria and othercountries. Moreover, the WTO (World Trade Organization) Ministerial
Conference in November 2001 declared that public health efforts should not
be hindered by intellectual property rights.
The problem has not been solved entirely, however, because pharmaceutical companies in developed countries would not be interested in developing drugs for developing countries if patents are not applied to their products. In fact, already some major pharmaceutical companies have publicly
admitted that they are now less motivated. But even at the lower cost of
US$ 350 per year, the therapy is still out of reach for the majority of HIV
carriers in developing countries where health insurance systems are notfully developed. Only 30,000 patients in Africa currently receive this treatment. Today, the World Bank is building a scheme to stimulate drug development in developed countries. The International AIDS Vaccine Initiative
provides funds for development of AIDS vaccines, but WHO and the WorldBank do not have authority to guide private pharmaceutical companies. We
cannot foresee that the Global Fund to Fight AIDS, Tuberculosis, andMalaria will move toward vaccine development. We need more active and151

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constructive discussions about the duration of patents and the ideal form ofcooperation between the public and private sectors with special attention topharmaceutical companies.

Conclusions
Three of the eight MDG goals are directly related to the health care sector, aclear indication of the increasing importance of the sector. One-third of
UNDP's Human Development Index (HDI) is represented by the value of
average life expectancy, which largely depends on the quality of the healthcare sector. In contrast, however, many donors have not focused sufficiently
in this area with the exception of specialized organizations such as WHO,but now with the existence of MDGs, donors can no longer overlook theimportance of this sector.
The trend of development assistance in the health care sector has gone
through significant changes under the initiatives of WHO, UNICEF, and theWorld Bank. Many problems need urgent international attention: the issueof PHC, the choice between 'vertical' and 'horizontal' approaches, aid coordination and sector reform, the fight against malaria and HIV/AIDS in
Africa and other regions, and the issue of public-private cooperation
between the governments of developing countries and private-sector stakeholders in developed countries, including pharmaceutical companies.
Finally, the author would like to stress that there is a growing expectation for Japan to play a more active role as health care issues are increasingly regarded as global challenges. Relatively speaking, Japan has focused on
physical projects in the health care sector such as hospital construction.
Even compared to other sectors, there is no denying that the lack ofJapanese experts is glaring in this sector. Japan places too much emphasison treatment in contrast to the American emphasis on prevention (Reich andMarui, 1989). Moreover, Japan needs to adapt to the recent trend of supporting health sector reform and using the private sector because we cannot
deny the impression that Japan has fallen behind the World Bank and DFID.
In the fight against HIV/AIDS, Japan should actively contribute to theefforts of WHO and the World Bank to build partnerships and establish
funds, especially because the Japanese government recognizes the issue as a
global problem. To strengthen Japan's role in light of the increasing importance of expert assistance from the international community, more crosssector collaboration and coordination is needed. An urgent task for the near
future, therefore, is to train not only health care workers but also experts in
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related areas. There is an urgent need to prepare a clear and firm strategy
that is in line with international trends of the health care sector and develop
the necessary human resources. These efforts will increase the visibility ofJapan's international contribution in this sector.

References
Global HIV Prevention Working Group. 2003. Access to HIV Prevention:
Closing the Gap.
IDC (International Development Center of Japan). 1999. Hoken Iryo
Kyouka no Jisshi Taisei Kyouka ni kansuru Cyousa [Study for the
Enhancement of the Healthcare Implementation System].
Japan Association for International Health. 2001. Kokusai Hoken Iryougaku[International Health Care Studies], Kyorin Syoin.
JICA (Japan International Cooperation Agency). 2002. Kaihatsu Kadai ni
taisuru Koukateki Apurochi: HIV/AIDS Taisaku [Approaches for
Systematic Planning of Development Projects: Anti-HIV/AIDS
Measures].
______. 1996. Kaigai Iryo Kyouryoku Iinkai Eizu Kyouryoku Senmon Bukai
Houkokusyo [Report of the Special Committee on Anti-AIDS
Cooperation of the Overseas Medical Cooperation Panel].
Kobayakawa Takatoshi. 1998. Kokusai Hoken Iryou Kyouryoku Nyumon[Introduction to International Health Care Cooperation]. Japan
International Cooperation Publishing.
Reich, M. R. and E. Marui (eds.) 1989. International Cooperation for
Health - Problems, Prospects, and Priorities. Aubern House.
Sachs, J. et al. 2001. Macroeconomics and Health: Investing in Health for
Economic Development. WHO.
Umenai Takusei. 2001. Kokusai Hoken gaku Kouza [International HealthStudies Course]. Jihou.
UNAIDS. 2002. AIDS Epidemic Update.
UNAIDS. 1999. Differences in HIV Spread in Four Sub-Saharan African
Cities.
World Bank. 1997. Confronting AIDS: Public Priorities in a Global
Epidemic.
WHO/UNICEF (World Health Organization/United Nations Children's
Fund. 2003. The Africa Malaria Report 2003.
Yamagata Tatsufumi. 2003. HIV/AIDS, Kekkaku, Mararia no Yobouyaku& Chiyouyaku Kaihatsu [Development of Preventive and Curative153

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Drugs for HIV/AIDS, Tuberculosis and Malaria HIV/AIDS]. In
Hirano, K. (ed.) Afurika Keizaigaku Sengen [Economics of Africa].
Institute of Developing Economies, Japan External Trade
Organization.

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Trends in Environmental Aid Policies

Trends in Environmental Aid Policies
Junko Ohara

Historical Perspective
The issues of global environment were first raised by a 1972 report published by the Club of Rome,1 The Limits to Growth (Meadows et al., 1972).
The report offered this conclusion on the future course of human society:If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, thelimits to growth on this planet will be reached sometime within the next
one hundred years. The most probable result will be a rather sudden
and uncontrollable decline in both population and industrial capacity.
This report had a tremendous impact on development discussions at thattime. In June 1972, the United Nations Conference on the Human Environment, the first-ever international conference on environmental issues, washeld in Stockholm. In December of the same year, the United Nations Environment Programme (UNEP) was established to provide information about
global environment problems. Interest by the international community on
global environment problems then waned as it dealt with oil shocks anddebt crises in developing countries. Global environment problems cameback in the spotlight in the late 1980s when destruction of the ozone layerover Antarctica began to be confirmed. Momentum build with publicationof a 1987 report by the World Commission on Environment and Develop2
ment (the Brundtland Commission ) entitled Our Common Future (World
Commission on Environment and Development, 1987). This report isfamous for popularizing the concept of sustainable development,3 which is

Ohara is a program officer at the International Development Research Institute,FASID
1. The Club of Rome is a private organization established in March 1970 as a legal entity in Switzerland.
Members include scientists, economists, planners, educators, and executives of many nationalities. When
The Limits to Growth was published, there were about 70 members from 25 countries and none held
public offices.
2. The World Commission on Environment and Development (the Brundtland Commission) was established in 1983 by the United Nations General Assembly with a mandate to explore the vision for the
global environment in the 21st century and prepare a strategy to realize it.
3. Sustainable development is defined as "development which meets the needs of the present without compromising the ability of future generations to meet their own needs" (World Commission on
Environment and Development, 1987, p. 66)

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based on the assumption that "poverty is a cause and a result of global environmental problems." The report explained the causes of global environment problems:Those who are poor and hungry will often destroy their immediate environment in order to survive: They will cut down forests; their livestock
will overgraze grasslands; they will overuse marginal land; and ingrowing numbers they will crowd into congested cities. The cumulative
effect of these changes is so far-reaching as to make poverty itself amajor global scourge.
Opinions of the Brundtland Commission on global environment problems were carried on by the World Bank in its World Development Report
1992: Development and the Environment, which encouraged preparationand implementation of a two-fold strategy to achieve both economic development and environmental improvements based on an assumption that "sustained and equitable economic growth alleviates poverty, and as a result,improves environmental protection." At the United Nations Conference on
Environment and Development (Rio Summit) in Rio de Janeiro in June
1992, governments made a public commitment to balance the environment
4
and development and adopted Agenda 21, a long-term action plan for global regeneration. Discussions on the connection between poverty and theenvironment continued after the Rio Summit.
Beginning in the early 1990s, the emphasis shifted from two-way
causality between poverty and environmental destruction (the poor are boththe cause and the victims of environmental destruction) to one-way causality (the poor are victims of environmental destruction). Behind this change
was the perception by the international community that poverty reduction is
the most important task in development assistance. The World Bank started
this trend in 1990 by making poverty reduction the theme of its development strategy. In 1996, the Development Assistance Committee (DAC) of
the Organization for Economic Cooperation and Development (OECD)

4. Agenda 21 includes 40 chapters, including poverty reduction, changes in consumption patterns, protection of human health, natural resource management, waste management, financial assistance, and technology transfer.
5. In May 1996, the DAC adopted the New Development Strategy (Shaping the 21st Century: The
Contribution of Development Cooperation) which established goals for the international community
toward the 21st century about poverty, education, health, and the environment. The New Development
Strategy contains eight goals: a reduction by one-half in the proportion of people living in extreme
poverty by 2015; prevalence of primary education in all countries by 2015; elimination of gender dispar-

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Trends in Environmental Aid Policies

adopted the New Development Strategy5 and four years later in 2000, theUnited Nations adopted Millennium Development Goals.6 As a result, theinternational community began to discuss development issues in all areas,
including the environment, from the perspective of reducing poverty.
At the Rio Summit, developed countries and developing countries
clashed hard over sharing responsibilities for global environment problems.
Developed countries insisted that "the global environment problems arecommon, global problems and the damage of global environmental degradation is equally shared by both developed and developing countries. So bothgroups of countries must tackle these problems together" and "If developing
countries give priority to economic development and neglect environmental
protection, they will in the near future be responsible for a majority of thepressure to the global environment and the speed of deterioration will
increase. Therefore, efforts of developing countries are important in protecting the global environment."
Developing countries countered with these arguments: "Since the global
environment problems of today are caused by the past economic and social
activities of developed countries, they are responsible for it. Therefore, it isabsurd to demand developing countries the same responsibility for the global environment problems as the developed countries. . . Economic development of developing countries must not be restricted on the grounds of global
environment problems which are attributable to past activities of developed
countries" and "Since developed countries achieved economic developmentin the past while causing large-scale environmental destruction, it is unfair
to force environmental protection measures onto countries who are now on
their way to economic development."
7
The Framework Convention on Climate Change, which was adopted at
the Rio Summit following these debates, states the principle of 'shared but

ity in primary and secondary education by 2005; a reduction by two-thirds in the mortality rate for
infants and children under 5 by 2015; a reduction by three-fourths in the maternal mortality rate by 2015;
access to reproductive health services for all individuals of appropriate ages no later than the year 2015;
the current implementation of national strategies for sustainable development in all countries by 2005;
and current trends in the loss of forest, water and other resources reversed by 2015. To achieve theseeight goals, the document concludes that it is essential for developed and developing countries to work
together, and emphasizes the importance of global partnerships (Ministry of Foreign Affairs, Japan,
Medium-Term Policy on Official Development Assistance / Notes). The Millennium Development
Goals, adopted by the United Nations General Assembly in 2000 are based on this New Development
Strategy.
6. Refer to the earlier paper in this book about the Millennium Development Goals.

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different responsibilities' of developed and developing countries for global
warming. The Framework Convention on Climate Change became effectivein March 1994, and beginning following year, the Conference of the Parties
to the United Nations Framework Convention on Climate Change (COP) is
held every year to augment deficiencies of the Convention and making it
legally binding. The Third Conference (COP3), held in Kyoto in December
8
1997, adopted the Kyoto Protocol as the first step against global warming.
The protocol set a specific goal for developed countries to reduce between
2008 and 2012 their total emission of greenhouse gases, including carbon
dioxide (CO2), by 5.2 percent compared to the year 1990. At the same time,
the protocol offered three provisions as supplemental mechanisms for eachcountry to achieve their respective numerical target by the deadline: Joint
Implementation (JI), 9 Clean Development Mechanism (CDM), 10 and
Emission Trading (ET).11 These three economic means are collectively
called as the Kyoto Mechanism. The COP5 in October 1999 set a goal of
making the Kyoto Protocol effective by 2002, the 10-year anniversary of the
Rio Summit.
At COP6 in November 2000, however, negotiations collapsed as theEuropean Union (EU) and the United States could not agree on implementation rules to reduce greenhouse gas emissions - the former supported bind-

7. Its objective is to stabilize the concentration of greenhouse gases in the atmosphere. The convention
states that developed countries recognize the importance of reducing the emissions of CO2 and othergreenhouse gases to a prior level by the end of the 1990s, and will implement policies and measures tocontrol emissions and protect sinks and reservoirs, and submit information about policies, measures, andexpected effects to be reviewed by the Conference of the Parties. During the Rio Summit, 155 countries
signed the convention (The Environment Agency Director-General's Secretariat Administration
Division, The Latest Environmental Keywords (published by the Economic Research Association),
Results of the United Nations Conference on Environment and Development).
8. The objective is for developed countries as a group to reduce six greenhouse gases (CO2, methane,
nitrous oxide, and the chlorofluorocarbons HFC, PFC, and SF6) (Japan, 6 percent; U.S., 7 percent; EU, 8
percent; Canada, 6 percent; Russia, 0 percent; Australia, 8 percent; New Zealand, 0 percent; andNorway, 1 percent). To achieve the reduction target, parties are allowed to count additional sinks andreservoirs of greenhouse gases such as forests (limited to changes in land use and afforestation and reforestations in 1990 and thereafter); use the Joint Implementation and Clean Development Mechanism inwhich developed countries can count the reduction in emissions realized by projects implemented withother developed countries and with developing countries; and engage in emission trading. The Global
Environment Facility (GEF), which will be discussed in detail in the next section, is recognized as thefinancing mechanism for the Kyoto Protocol.
9. A system that allows developed countries to implement projects designed to reduce greenhouse gas
emissions in other developed countries and be credited with some of the resultant reduction in emissions.
10. A system that allows developed countries to implement projects designed to reduce greenhouse gas
emissions in developing countries and be credited with some of the resultant reduction in emissions.
11. The Kyoto Protocol allows the trade of emission allotments between developed countries for which
numerical targets for reducing greenhouse gas emissions are established.

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Trends in Environmental Aid Policies

ing targets while the latter did not. The second meeting of COP6 wasplanned in July 2001, but in March 2001 the U.S. pulled out of the Kyoto
Protocol. The U.S. claimed that is was unfair because targets to reducegreenhouse gases were not imposed on developing countries, and that theProtocol would have a significant impact on American industries. Since
then the EU has led an international effort to make the Kyoto Protocol
effective without the U.S., but its effectiveness will inevitably be compromised if the U.S. - the largest consumer of oil that is also responsible forabout one-quarter of total greenhouse gas emissions - does not participate.
For this reason, the international community is still trying to persuade theU.S. to return to the Kyoto Protocol as soon as possible.
In October 2001 COP7 established administrative rules for the Kyoto
Mechanism and emphasized the importance of economic means in the fightagainst global warming. Currently, economic means such as the Clean
Development Mechanism and emissions trading are attracting attention as
being effective for sustainable reduction of greenhouse gas emissions. In
fact, the World Bank launched the Prototype Carbon Fund (PCF) to create amarket that aims to reduce greenhouse gas emissions and began its operation in April 2000. Solicitation for contributions to the PCF ended in 2002.
The PCF has since been replaced by the Community Development Carbon
Fund and the BioCarbon Fund (which will be discussed later).
The World Summit on Sustainable Development (WSSD, the Johannesburg Summit) held in September 2002 saw some progress, including new
12
numerical and time-bound targets to manage hazardous chemicals,
13
14
improve public health, recover marine resources, and protect biodiversi15
ty. Initial expectations for the Kyoto Protocol to be effective at the Summit were dashed because of the U.S. pull-out and delayed ratification by
Russia, despite ratification by the EU and Japan immediately before theSummit.16 The Summit adopted the Johannesburg Plan of Implementation,
but a majority of the content was nothing more than reconfirmation of pastinternational agreements, including Agenda 21, Millennium Development

12. Achieve, by 2020, that chemicals are used and produced in ways that lead to the minimization of significant adverse effects on human health and the environment.
13. Halve, by 2015, the percentage of people who lack access to basic sanitation facilities.
14. Maintain or restore stocks to levels that can produce the maximum sustainable yield with the aim ofachieving these goals for depleted stocks on an urgent basis and where possible not later than 2015.
15. Achieve, by 2010, a significant reduction in the current rate of loss of biological diversity. Provide newand additional financial and technical resources to developing countries to do so.

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Goals, Doha Ministerial Declaration adopted at the Fourth World Trade
Organization (WTO) Ministerial Conference in November 2001, and theMonterrey Consensus adopted at the United Nations International Conference on Financing for Development in March 2002.
Since the WSSD, the EU and Japan have continued their efforts to makethe Kyoto Protocol effective early. Russia finally ratified it in November
17
2004. With ratification by Russia, a heretofore unmet condition - that ratifying developed countries must account for at least 55 percent of total CO2
emissions for 1990 - has been met, the Protocol will become effective as
early as the beginning of 2005. The Kyoto Protocol will come into force asinternational law, which will be a significant step toward the prevention of
global warming. The position of the U.S. on the Protocol did not change
after Russia's ratification.
Since the Rio Summit in 1992, aid agencies have been actively promoting environmental assistance to developing countries. Specifically, they
support efforts by developing countries to deal with two kinds of environmental issues - global issues, including global warming, depletion of theozone layer, and loss of biodiversity; and regional environmental issues that
include air pollution, water pollution, and access to safe drinking water andsanitation services. Different donors have different priorities for these environmental issues depending on their development strategies. This chapter
analyzes trends in the environmental aid policies of major donors, and thenoffers an outlook and challenges for environmental aid policies of the international community.

16. The first condition for the Kyoto Protocol to go into effect is ratification by 55 or more signatories. The
second is that the CO2 emissions in 1990 by developing countries that have ratified it accounts for 55
percent of total emissions. As of September 2002, the first condition was met with ratification by the EU
and Japan, but the second condition was not met, primarily because the U.S., which had accounted for 36
percent of total CO2 emissions in 1990, did not ratify the Protocol. Meeting the second condition without
ratification by the U.S. required ratification by Russia, which accounted for 17 percent of total CO2
emissions in 1990. The Kyoto Protocol will become effective 90 days after both conditions are met.
17. Russia ratified the Kyoto Protocol because it determined that emissions trading would bring economic
benefits in light of the EU launch of Emissions Trading Scheme (ETS) in January 2005. After the collapse of the Soviet Union, Russia's CO2 emissions were reduced by about 30 percent compared to the1990 level. Russia intends to sell its surplus emissions rights in the EU and elsewhere. Russia is limiting
its participation in the Kyoto Protocol to the first stage from 2008 to 2012.

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Trends in the Environmental Aid Policies of Major Donors
World Bank

The World Bank has promoted mainstreaming environmental issues byintroducing safeguard policies for the environmental and social aspects of
its projects, supporting recipient countries in preparation of National
Environmental Action Plans (NEAPs), and incorporating environmental
objectives in its sector lending programs. The Bank has also been actively
involved in coping with threats to the global environment by playing therole of secretariat for financing mechanisms including the Global
Environmental Facility, the Multilateral Fund for the Implementation of the18
Montreal Protocol, and the Carbon Fund. However, its environmental
efforts have not achieved satisfactory results for these reasons - the Bank's
policies were beyond the implementing capacity of recipient countries;
environmental issues were still not considered important in the Bank's programs; and recipient countries were not sufficiently aware of the importanceof environmental issues. The Bank reflected on this experience andannounced a new Environment Strategy in July 2001 to improve the effectiveness of its environmental efforts (World Bank, 2001).
Environment Strategy
The Environment Strategy emphasized the necessity to construct aid projects based on levels of institutional development and environmental management capabilities of each recipient country. It also established a goal ofpromoting environmental improvements as a basic element of strategies andactions for development and reducing poverty. Since 1990, the Bank's mission is to reduce poverty within the framework of economic development.
The New Environment Strategy also stated that priority would be accorded
to regional environmental issues that were strongly correlated with poverty.
The Environment Strategy established these three objectives:
Improve Quality of Life. We will focus on three broad areas: Enhancing
livelihoods, preventing and reducing environmental health risks, and reducing people's vulnerability to environmental hazards. To enhance livelihoods, the Bank will help improve sustainable management and protectionof ecosystems and natural resources on which poor people depend heavily.

18. Established reduction schedules and other specific regulations toward the abolition of ozone depleting
substances including CFCs, halon, and carbon tetrachloride. It was adopted in 1987 based on the Vienna
Convention for the Protection of the Ozone Layer adopted in 1985.

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To prevent and reduce environmental health risks, interventions will focus
on cost-effective measures to reduce human exposure to air pollution,waterborne diseases, and toxic chemicals. To reduce people's vulnerability
to environmental hazards, the Bank will support upland and coastal resource
management, assess the impacts of natural disasters, and improve weather
forecasting and the dissemination of weather-related information.
Improve Quality of Growth. The Bank will promote better policy, regulatory, and institutional frameworks for sustainable environmental management; and harness the role of the private sector to become an engine for sustainable development.
Protect the Quality of regional and global commons.
In addressing global challenges, we will apply the following key principles:• Focus on the positive links between poverty reduction and environmental protection.
• Focus first on local environmental benefits and then build on those thatoverlap with regional and global benefits.
• Address the vulnerability and adaptation needs of developing countries.
• Facilitate transfer of financial resources to client countries to help meetthe costs of generating global and environmental benefits not matchedby national benefits.
• Stimulate markets for global environmental public goods.
The Environment Strategy stated that environmental issues must not betreated as a sector but should be incorporated into investments, programs,
sector strategies, and policy dialogs, and emphasized strengthening analytical and advisory activities, addressing environmental priorities throughproject and program design, and improving the safeguard system.
Moreover, it stated that sustainable development is a long-term goal, andthat its achievement requires concerted pursuit of economic prosperity,environmental quality, and social equity, and calls for behavioral changes
by individuals and organizations. The necessity for the following institutional reforms was stressed:• Enhance the Bank's accountability and incentives.
• Train environmental specialists to increase their influence on sector programs and country programs, and improve the environmental skills ofstaff who do not specialize in the environment.
• Restructure and increase the budget for improving safeguard and compliance systems, mainstreaming the environment in development, link162

Trends in Environmental Aid Policies••

ing corporate environmental priorities and global environment issues
with country programs, promoting cross-sector and cross-institutional
approaches and programs, and strengthening efforts to address subregional and regional environmental challenges.
Build partnerships with other development organizations, civil society,and the private sector to advance the Bank's objectives and use theBank's limited resources effectively.
Introduce a framework that will track Bank performance on the environment, monitor implementation of the strategy, and report regularly on
progress.

Carbon Fund
The World Bank began operating the Prototype Carbon Fund (PCF) in April
2000 (the operational period is until December 2012). The Kyoto Protocol,
adopted at COP3 in December 1997, set greenhouse gas reduction targets
for developed countries with specific numbers, and at the same time tried toincrease the flexibility of regulations by providing provisions for JI, CDM,
and ET because these targets are difficult to achieve with only domestic
efforts. The PCF represents an attempt to implement these flexibility measures by creating a market for reducing greenhouse gases (World BankTokyo Office, 2002).
The PCF is supported by contributions from governments and the private sector. Funds are invested in projects to reduce greenhouse gas emissions in developing and transition countries. Reductions in emissions created by the projects are verified and certified by a third party and returned as
Certified Emission Reductions (CERs) to contributors based on their contribution ratios (Fig. 3-5). Six governments and 17 corporations participate in
the PCF (Table. 3-7). Japan is represented by the government and eight corporations, providing more than one-third of total funding (US$ 180 million).
Developed countries can partner with developing and transition countries that are not bound by numerical targets to implement greenhouse gas
reduction projects and obtain the resultant reduction as CERs and use themas their own emission quotas. The cost of greenhouse gas reduction is morethan $US 50 per ton of carbon in developed countries, but there are many
19
opportunities in developing countries to do the same for US$ 5 to $15. For
this reason, developed countries can obtain emission reductions cheaply by
19. World Bank News Release No. 2000/176/S

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participating in the PCF and then use them to achieve the reduction targets
set out by the Kyoto Protocol. On the other hand, developing and transition
countries can profit from selling potentially large emission reductions todeveloped countries and obtain technologies to address global warming at
the same time.
Figure 3-5. The Carbon FundContributors

Contribution

Carbon Fund

Investment

Funds
Projects
Manage CERs

Developed countries
groverments,
corporations
Certified
Emissions
Reductions(CERs)Developing& Transition
countries
Projects

Third Party
CERs

Verify & certify
emission reductions

Reducedemissions

Source: prepared by the author

Table 3-7. Corporations and governments participating in the
Prototype Carbon Fund
Company

SectorCountry

Governments

BP Amoco
Chubu Electric
Chugoku Electric
Deutche Bank
Electrabel
FortumGaz de France
Kyushu Electric
Mitsubishi Corp.
Mitsui & Co.
Norsk Hydro
RaboBank
RWE
Shikoku Electric
Statoil
Tohoku ElectricTokyo Electric

Petroleum
Power
Power
Finance
EnergyEnergyEnergyPower
Trading
TradingPetroleum
FinancePower
PowerPetroleum
Power
Power

U.K.
Japan
Japan
Germany
Belgium
Japan
France
Japan
Japan
Japan
NorwayNetherlands
GermanyJapan
NorwayJapan
Japan

CanadaFinland
NorwaySwedenNetherlandsJapan(through JBIC)

Source: World Bank Tokyo Office (2002)

164

Trends in Environmental Aid Policies

The solicitation for contributions to the PCF ended in 2002. The PCF
was replaced by the Community Development Carbon Fund and the
BioCarbon Fund in September 2002 and November 2003, respectively.
Contributors determined their participation based on the project selection
criteria of each fund. These two funds were created because the benefits ofcarbon emission trading did not reach the poorest areas of developing countries and to demonstrate the importance of: (i) using the Kyoto Mechanism
for regional development of the least developed countries, and (ii) the effectiveness of the Kyoto Mechanism for carbon sequestration via forests andplants. These two areas were difficult for private corporations to reach; they20
are the main actors in creating carbon emission rights.
The Community Development Carbon Fund was announced during
WSSD and began operation in July 2003. Its objective is to provide funds tosmall projects in developing countries and projects in rural areas to reducegreenhouse gases. The BioCarbon Fund deals with projects related to managing ecosystems and soil including forests and farmland. After the implementation rules21 for afforestation as the absorption CDM were adopted at
COP9 in December 2003, the fund became operational in May 2004 withcapital of US$ 1.5 million. Compared to developed countries, developing
countries use less energy - the main source of carbon emissions - and therefore it is more difficult for them to reduce carbon emissions by controllingenergy consumption. Projects for absorbing greenhouse gases and immobilizing carbon through plants, however, are more likely to be implemented in22
developing countries. The BioCarbon Fund is effectively promoting emissions trading in developing countries and providing associated financial andtechnological benefits.
Both the Community Development Carbon Fund and the BioCarbon
Fund have a fund-raising target of US$ 100 million. Tables 3-8 and 3-9
show the participation status of each fund.
20. Explanation by Mr. Yugo Nakamura, who is in charge of the World Bank's carbon finance businesses,
provided to the author through e-mail.
21. (i) Fixed-term credits were adopted in light of the impermanence of earned credits; (ii) additions of projects were specified with similar descriptions with the emission source CDM; (iii) small-scale sinks
CDM were accepted; (iv) examples of items to be included by participants' socioeconomic and environmental impact assessment were provided; and (v) the end of 1989 was set as the base year for reforestation, the same as domestic forests in the Annex I countries, and other rules were balanced with the rulesof the emission source CDM (Ministry of Foreign Affairs, Japan, Summary and Evaluation of the Ninth
Conference of the Parties to the United Nations Framework Convention on Climate Change (COP9),
http://www.mofa.go.jp/mofaj/gaiko/kankyo/kiko/cop9/cop9_gh.html ).
22. It established reduction schedules and other specific regulations toward abolition of ozone depleting substances, including CFCs, halon, and carbon tetrachloride. It was adopted in 1987 based on the Vienna
Convention for the Protection of the Ozone Layer adopted in 1985.

165

CHAPTER 3

Table 3-8. Corporations and governments participating in theCommunity Development Carbon Fund
Company

SectorCountry

Governments

BASF

ChemicalGermany

Austria
Canada
Italy
Netherlands

Daiwa Securities SMBC
Finance
Principal Investments
ENDESA
Idemitsu Kosan
KfW
Nippon Oil Corp.
Okinawa Electric
Swiss ReJapan

EnergyPetroleum
Development agency
Petroleum
Power
Insurance

Spain
Japan
Germany
Japan
Japan
Switzerland

Source: Website of the Community Development Carbon Fund, http://carbonfinance.org/cdcf/

Table 3-9. Corporations and governments participating in the BioCarbon Fund
Company

SectorCountry

Governments

French Development Agency

International
development

FranceCanadaItaly

Eco-Carbone as representativeof Lesley Investments

Project
development

FranceOkinawa ElectricTokyo Electric

Power
Power

Japan
Japan

Source: Website of the BioCarbon Fund, http://carbonfinance.org/biocarbon/

Global Environment Facility (GEF)

The GEF is a grant mechanism to help pay for the efforts of developing
countries to conserve and improve the global environment.23 The Arche
Summit in July 1989 emphasized the "urgent necessity to protect the environment for future generations." The Joint Development Committee of theWorld Bank and the International Monetary Fund (IMF), meeting in September of the same year, considered establishing a facility to support theefforts of developing countries to address global environment problems.
The GEF was first established in May 1991 in a pilot phase that lasted until
June 1994. Based on its three-year pilot phase and discussions at the Rio
Summit in 1992, in March 1994 the Joint Development Committee discussed reorganizing and increasing the capital of the GEF, and agreed on abasic framework and funding for the first phase (GEF-1) from July 1994 toJune 1998 (approximately US$ 2,022 million). Earlier, the Montreal Proto23. The GEF is discussed as a separate entity because it is co-administered by three implementing agencies the World Bank, UNDP, and UNEP.

166

Trends in Environmental Aid Policies

col was adopted in 1987 and the Framework Convention on Climate
Change and the Convention on Biological Diversity was signed at the Rio
Summit in 1992. 24
The GEF is administered by its three implementing agencies, and its
trust fund was established within the World Bank. The allocation of GEF
funds for FY 2000 was US$ 276.7 million (58 percent) to the World Bank,
US$ 176.1 million (37 percent) to the United Nations Development
25
Programme (UNDP), and US$ 26 million (5 percent) to UNEP. Each
implementing agency has unique comparative advantages - the World Bankis mainly in charge of investment projects; UNDP focuses on technicalcooperation including the development of human resources and organizations to address global environment problems; and UNEP mainly supports
the Science and Technology Advisory Panel which appraises all GEF projects and advises on GEF policies. As of November 2004, there were 176
GEF member countries, and the Council, its central decision-making body,
includes 32 members - 16 from developing countries, 14 from developed
countries, and two from transition countries.
Projects that have been appraised and approved by the Council are implemented under a partnership with one of the three implementing agencies(UNDP, 2001a). Until the second GEF Assembly in October 2002, GEF
support for developing country efforts to address global environment problems was limited to four areas - climate change, biodiversity, international
waters, and the ozone layer. The second Assembly added two new areas land degradation and persistent organic pollutants. GEF activities in climatechange and biodiversity include acting as the funding mechanism for the
Framework Convention on Climate Change and the Convention on Biological Diversity, respectively. Tables 3-10 and 3-11 show the funding breakdown by thematic and geographical areas, respectively, from 1991 to 2003.

24. Its objectives are protection of biodiversity, sustainable use of biodiversity elements, and fair and equitable distribution of profits generated by the use of genetic resources, including preparation of national
strategies and plans, listing regions and species important for domestic environmental conservation,
establishing conservation areas, guaranteeing access to genetic resources, technology transfer, and financial assistance. It was signed by 157 countries during the Rio Summit (Energy Conservation Center,
Japan, Results of the United Nations Conference on Environment and Development.
http://www.eccj.or.jp/summary/environment/02.html).
25. Institute for Global Environmental Strategies, 2001, p. 43 http://www.iges.or.jp/gef/report2.pdf

167

CHAPTER 3

Table 3-10. GEF funding by thematicarea, 1991 to 2003
Thematic area

Funding('000 US$)

Share
(%)

Biodiversity
Climate change

1,638.7
1,590.9

International waters
Ozone layer

Table 3-11. GEF funding by geographical area, 1991 to 2003
Geographic area

Funding('000 US$)

Share
(%)

37.1
36.0

Asia

1,196.7

27.1

Latin America,
Caribbean

1,006.1

22.8

633.0
172.0

14.3
3.9

Africa

904.5

20.5

Europe, Central
Asia

752.3

17.0

Persistent organic
pollutants

86.3

2.0

Land degradation
Multiple areas
Total

19.2
278.2
4,418.3

0.4
6.3
100.0

93.6
465.0
4,418.2

2.1
10.5
100.0

Regional
GlobalTotal

Source: GEF Annual Report 2003, p. 14

Source: GEF Annual Report 2003, p. 14

United Nations Development Programme (UNDP)

UNDP advocates sustainable human development as the principle for development and focuses on energy and the environment as one of its priority
areas. UNDP insists that energy and the environment are the foundation ofsustainable development, and that the current state in which poor people
suffer significantly from environmental degradation and lack of access tosafe and affordable energy is a global problem that cannot be addressed by
one country. These problems are closely linked to climate change, loss of
biodiversity, and destruction of the ozone layer. UNDP helps strengthen
each country's capacity to address environmental issues at the global, national, and community levels by sharing best practices and providing innovative policy advice.26 Capacity 2015 is a program designed to enhance theenvironmental capacity of UNDP. Capacity 2015 is registered in the Type II
Partnership Initiatives (Commitments) announced at WSSD;27 its implementation period is January 2003 to January 2015.

26. UNDP website. http://www.undp.org/energy/index.html
27. Type II Partnership Initiatives (Commitments) is a document that summarizes specific plans to be undertaken collaboratively by various actors including governments, international organizations, NGOs, andcorporations to reduce poverty and conserve the environment (FASID, 2002).

168

Trends in Environmental Aid Policies

Capacity 2015 succeeded Capacity 21,28 a trust fund whose objective
was to improve national capacity to address environmental problems for theultimate goal of implementing Agenda 21. Capacity 2015 aims to build thecapacity of developing and transition countries at the regional level towardachieving the Millennium Development Goals in addition to implementation of Agenda 21 (Fig. 3-6). It is designed to function as a platform that
includes partnerships, networks, funds, and regional cooperation for capaci29
ty development programs. It principles include:• Local and national actors need to achieve ownership, define their own
needs, and implement their own solutions. Capacity development is an
ongoing process of transformation.
• Urgent short-term poverty concerns and longer-term sustainability issues
require carefully integrated responses.
• Civic engagement and sound participatory processes are key elements inthe design, implementation, and monitoring of social, economic, andenvironmental policies and practices.
• The approach should be universal but flexible, allowing for different
emphases in response to varying sustainable development priorities
among different communities, countries, and regions.
• Work should be through partnerships and strategic alliances, emphasizing the key role of networking in knowledge acquisition.
• Capacity development must include the development of the necessary
enabling environments at all levels.
• Existing capacities need to be developed, not replaced.
• Cultural identities and values need to be recognized and respected.
Capacity 2015 has also adopted the following approaches that have been
proven effective through experience in Capacity 21, the GEF Small
Grants Program, and other capacity development programs:• Address local capacity development needs and tie them to national economic, social, and environmental policies and processes.

28. Capacity 21 was created in 1992, immediately after the Rio Summit that adopted Agenda 21. In the 10
years before it was reformed into Capacity 2015, about US$ 85 million was spent and projects tostrengthen environmental capacity were implemented in more than 75 developing and transition countries (UNDP, 2001a). Japan's contribution to Capacity 21 was 36 percent of all contributions; US$85
million (see UNDP Web site http://www.undp.or.jp/environment/).
29. UNDP Web site http://www.undp.org/wssd/docs/2015Brief.doc

169

CHAPTER 3

Figure 3-6. Capacity 2015
Capacity2015 - capacity developement to benefit from globalization and meet theMillennium Development Goals to achieve sustainable development

Local
sustainable
development

Sustainable
development
strategies

Multilateralenvironmental
agreements

Small island
developing
statesLearning and knowledge

Networking

Learning

Funding

Capaticy development platform built on:
Capacity development principle
Lessons of Capacity 21
Global Environment Facility / Small Grants Programand other innovative approaches to capacity developmant for SD

Source: UNDP, 2002, p.9

•

•

•

Help local groups and their supporting local and national governments,
the private sector, and civil society organizations to overcome capacity
constraints to achieve economic, social, and environmental sustainability.
Promote local, national, regional, and global partnerships among public
and private sectors and the major groups of civil society, giving eachnew opportunity to use their respective strengths and resources and learn
from each another.
Ensure strong synergies among all relevant capacity-development initiatives, particularly those related to multilateral environmental treaties,
poverty reduction strategies, and sustainable development strategies.

United Nations Environment Program (UNEP)

Following the United Nations Conference on the Human Environment,
UNEP was established in 1972 to provide information about the environ170

Trends in Environmental Aid Policies

ment. UNEP provides information on global environment problems by periodically publishing the Global Environment Outlook. Portions of the third
edition published in February 2002 (UNEP, 2002a), cover the state of theenvironment and policy responses, 1972-2002, human vulnerability to environmental change, outlook 2002-2032, and options for action. Below is abrief summary of its content (FASID, 2002 and Global Environment Centre
Foundation, 2002).
In many areas, the state of the environment is much more fragile anddegraded than it was in 1972. The world can now be categorized by four
major divides -Environmental, Policy, Vulnerability, and the Lifestyle. The
four gaps are a serious threat to sustainable development. The poor tend tohave a lower capacity to cope with environmental changes and are therefore
very vulnerable to environmental threats. To address vulnerabilities of thepoor to environmental changes, these policies need to be implemented:• Reducing Vulnerability. There is a large and widening vulnerability
gap between well-off people who have better coping capacity and are
becoming gradually less vulnerable, and the poor who grow increasingly
vulnerable. It is vital to the sustainable development effort that this gap
is addressed, as well as vulnerability itself. For the most significant
improvements, priority should go to policies that reduce the vulnerability of the poor as part of general strategies to reduce poverty.
• Adapting to Threats. Such adaptations might include both physicaladjustments or technical measures (such as constructing a higher seawall) and changing behavior, economic activities, and social organization in order to be more compatible with existing or emerging conditionsor threats.
• Early Warning. Many actions can be taken to protect life and property
if warning is received in time.
It is also important to assess and measure vulnerability. Both people andenvironmental systems can be assessed for vulnerability. An assessment
should identify the location of vulnerable populations, threats to their wellbeing, the extent of their vulnerability, risks to the environmental capacity
to provide goods and services, and preventive steps that can improve environmental conditions and reduce negative effects of humans on the environment.
Over the next 30 years, much of the environmental change that will
occur has already been set in motion, and by the same token, many ofeffects of environmentally relevant policies put into place over the next 30
171

CHAPTER 3

years will not be apparent until long afterward. Under this circumstance,
options for future actions include:• Rethink environmental institutions because they need to adapt to newroles and partnerships to fulfill present obligations and confront emerging environmental challenges.
• Strengthen the policy cycle so that it becomes more rigorous, systematic, integrated, and able to develop policies that are better attuned to specific localities and situations.
• Provide an enhanced international policy framework to overcome thefragmentation and duplication inherent in the present system.
• Use trade more effectively for sustainable development to capitalize on
new opportunities provided by trade liberalization.
• Harness technology for the environment and manage the associated risks
to maximize the potential of new technologies to deliver substantial
environmental and social gains.
• Adjust and coordinate policy instruments, including legal frameworks
and measures such as valuing environmental goods and services, toensure that markets work to promote sustainable development and voluntary initiatives that will develop appropriate packages which work
more effectively for the environment.
• Monitor policy performance to improve levels of implementation,
enforcement, and compliance.
• Re-define and share roles and responsibilities among local, regional, andglobal levels to provide efficient solutions for managing complex situations at different scales.
U.S. Agency for International Development (USAID)The U.S. Agency for International Development (USAID), the bilateral aid
agency of the United States, sees global environment problems from theperspective of U.S. national interests based on the recognition that "not only
the U.S. is directly and adversely affected by global climate changes, loss of
biodiversity, spread of pollutants, use of toxic chemicals, and decline of fishstocks, but conflicts over natural resources such as land, water and foreststhat could escalate into regional conflicts pose a significant threat to thesecurity of the U.S." The USAID environment programs help reduce thepotential for conflict by encouraging equitable access to natural resources
and the benefits those resources provide. On the economic front, growing
numbers of American businesses, from producers of 'green technologies' to172

Trends in Environmental Aid Policies

large sectors of the U.S. tourism industry to food processors, all profit fromsound environmental management in developing countries. USAID helps
these countries strengthen their environmental protection and natural
resource management capacity while linking program benefits to the U.S.
economy. Programs are designed to align with agency-level objectives(USAID, 2003, p.69-70):• Sustainable management of natural resources• Conservation of biological diversity• Environmentally sound and efficient energy use• Sustainable urbanization• Reductions in the threat of global climate change
The Agency's programs and approaches vary by environmental challenge and regional priority. For example, programs in the Latin America
and Caribbean and Africa regions emphasize biological diversity and natural resource management as well as urban environmental problems. In the
Asia and Near East regions, urban environmental problems are of particularconcern. In the Europe and Eurasia region, programs concentrate on policy
issues and strengthening environmental standards. In FY 2003, USAID allocated US$ 757 million for programs related to protection of the global environment, which represented about 8 percent of the total budget (US$ 9,994
30
million).
The USAID FY 2003 Performance and Accountability Report reflects
President Bush's policy of establishing measurable goals before providing
aid. Performance in the environmental area for FY 2002 is reported basedon 74 strategic objectives and a context indicator - hectares of land underimproved management - established for the environment sector. The reportconcluded that of the 74 strategic objectives, 55 met or exceeded their targets, two did not meet targets, and 17 were not required to report because
they had been established less than a year ago. The area under improved
management during FY 2002 (67,874,766 ha) exceeded the planned target(66,457,474 ha) (USAID, 2003, p. 17).
One element of USAID environmental assistance that attracts our attention is the Debt-for-Nature Swap. Under this scheme, the U.S. government
and international NGOs assume the external debt of a developing country in
30. The program area that receives the most funding is economic growth and agricultural development (US$3,703 million, 37 percent) followed by stabilization of world population and protection of human health(US$ 2,163. million, 22 percent) ,and saving lives with humanitarian assistance (US$ 2,067 million, 20
percent) (USAID, 2003, p. 43).

173

CHAPTER 3

return for the country's commitment to implement nature conservation policies such as setting up conservation areas. This mechanism converts external debt to a nature conservation fund. The number of debt-for-nature swaps
has increased every year since the enactment of the Tropical Forest
Conservation Act (TFCA) of 1998 in the U.S. Within three years, debt-fornature swaps were implemented in Bangladesh, Belize, El Salvador, Peru,
and the Philippines, providing a total of more than US$ 60 million for conservation of tropical rainforests in these countries (USAID, 2003, p. 74).
More recently, the U.S. government contributed US$ 5 million and the
Nature Conservancy donated US$ 1.16 million. The Panamanian government then agreed to convert its external debt of US$ 10 million to a nature
conservation fund to protect the Chagres River watershed, which includes
Chagres National Park. The government is supposed to pay US$ 5.6 million
over the next 14 years to Fundacion Natura (a Panama NGO), which will
manage the conservation area. It has also agreed to contribute US$ 5 million
to the established fund so that investments in this area will continue even31
after the term of the agreement expires.
The debt-for-nature swap was developed because developing countries
are putting more pressure the entire environment because of their accumulated debt. While it can achieve debt reduction and nature conservation at
the same time, some serious problems have occurred; entrusting NGOs tomanage conservation areas has led to indigenous people being chased away
and stripped of their rights to the land and resources.
United Kingdom Department for International Development (DFID)

In a paper on international development (British Government, 2000), theBritish government publicly pledged concrete efforts to address global environment problems:• Use Rio + 10 to endorse the International Development Targets andreinforce progress toward sustainable development.
• Deliver its Kyoto target and move beyond it toward its goal of reducing
the U.K.'s CO2 emissions by 20 percent by 2010.
• Work with developing countries and the IMF and World Bank to better
integrate environmental sustainability into poverty reduction strategies.
• Help least-developed countries to benefit from the Clean Development
Mechanism and consider further ways to improve developing country
31. USAID, 2003, p. 74. Nature Conservancy website, http://www.tnc.or.jp/doc/k/k400_030710.htm

174Trends in Environmental Aid Policies

access to clean and sustainable energy sources in light of the report of
the G8 task force on Renewable Energy.
• Work with businesses to increase their opportunities to be environmentally responsible.
• Help least-developed countries benefit from multilateral environmental
agreements by helping them participate more effectively in negotiations.
• Press for a 50 percent increase in resources for the third replenishmentof the Global Environment Facility from 2002 to 2006.
Following these policy commitments, DFID, the British aid agency,
focused on the environmental issues that seem to be strongly correlated withpoverty and listed some actions as important lessons learned from developing countries that were addressing environmental issues that adversely
32
affect the poor.
• Integrate poverty and environmental issues into national plans, including
poverty reduction strategies.
• Address poverty and environmental issues in the implementation of policies, programs, and projects in priority sectors such as health, transportation, energy, and agriculture.
• Protect and expand environmental assets of the poor, including land,
forests, fishery resources, and access to water supply.
• Improve access of the poor to environmental technologies.
• Eliminate corruption in developing and developed countries that leads toillegal exploitation of natural resources and gives priorities to large projects that increase supply of water and energy rather than their efficientuse.
• Reform subsidy systems that have adverse effects on the environment.
• Evaluate the environment in terms of monetary values.
Since Clare Short was appointed Secretary of State for International
Development in 1997, DFID has placed poverty reduction at the core of its
development strategy and has examined its environmental efforts from theperspective of poverty reduction. Hilary Benn replaced Clare Short in2003. Recently, DFID launched its Public Service Agreement (PSA) as a
medium-term policy for 2003-2006 to achieve the MDGs by 2015. The
2003-2006 PSA states that its overall goal is to "Eliminate poverty in poorer
countries in particular through achievement by 2015 of the Millennium
Development Goals."
32. DFID website, http://www.dfid.gov.uk/AboutDFID/files/epd/epd_main.htm

175CHAPTER 3

Under that overarching goal, it specifies five objectives - (i) reducepoverty in sub-Saharan Africa; (ii) reduce poverty in Asia; (iii) reducepoverty in Europe, Central Asia, Latin America, the Caribbean, the Middle
East, and North Africa; (iv) increase the impact of key multilateral agencies
in reducing poverty and effectively responding to conflict and humanitariancrises; and (v) develop evidence-based, innovative approaches to international development. Five corresponding targets were also specified: (i)33progress toward the MDGs in 16 key countries; (ii) progress toward the34
MDGs in four key countries; (iii) improved effectiveness of international
systems; (iv) secure agreements by 2005 to a significant reduction in tradebarriers leading to improved trading opportunities for developing countries;and (v) increase the proportion of DFID bilateral programs for low income
countries from 78 percent to 90 percent and achieve a sustained increase in
the index of DFID bilateral projects evaluated as successful.
More detailed, numerical targets were established under these five targets, but they are mainly concerned with the proportion of people living inpoverty, primary school enrollment, the ratio of girls to boys enrolled in primary school, under-5 mortality rates, prevalence rates of HIV infection inpregnant and parturient women, proportion of births assisted by skilled birthattendants, and the proportion of DFID bilateral program going to low
income countries. In the 2003-2006 PSA, there are no objectives, targets,and performance indicators related to the environment. This indicates that
DFID's current focus is to achieve the MDGs by 2015, especially the goal ofhalving of the proportion of people living in poverty, and that its assistanceconcentrates assistance on education and health. An environment policy
division that existed within the DFID in 2002 no longer exists. Currently,
DFID address environmental issues by incorporating environmental policies
into its poverty reduction strategies rather than addressing them separately.
Japan

Since the Rio Summit in 1992, Japan has actively addressed global environment problems. At the Summit, Japan announced that it would increase its
aid in the environment sector from ¥900 billion to ¥1 trillion over five years
beginning in 1992. Eventually, it provided more than its target - ¥1,440 bil-

33. Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Lesotho, Malawi, Mozambique, Nigeria,
Rwanda, Sierra Leone, South Africa, Sudan, Tanzania, Uganda, Zambia, and Zimbabwe.
34. Bangladesh, China, India, and Pakistan.

176

Trends in Environmental Aid Policies

lion - over the five years until 1996. The breakdown was ¥189 billion in
grants, ¥1,037 billion in loans, ¥108 billion in technical cooperation, and¥108 billion in contributions to international organizations (JICA, 2001, p.
136). From 1996 to 2002, aid to the environment sector was 25 percent to30 percent of total aid, with the exception of 1997 (Table 3-12). Total environmental aid during 2002 was 35 percent for Japan, while that of the U.S.
was only 8 percent (in FY 2003, the environment budget was US$ 757 million while the total budget was US$ 9,994 million). Another characteristicof Japan's environmental assistance is that loans are a high percentage of aid
awarded in the environmental sector (Table 3-12).
Table 3-12. Japan's aid to the environment sector, 1996 to 2002 (billion yen)
FY

Grantsa

LoansaTeechnicalcooperationb

Multilateralc

Total aid

Percent of
total aid

1996
1997
1998
1999
2000
2001
2002

30.07
36.46
28.99
29.37
24.42
24.20
25.26

386.47162.34328.09464.45386.06198.89340.57

25.34
30.07
30.42
28.25
28.43
32.44
26.93

15.38
15.81
26.31
13.60
13.61
15.79
12.61

463.2
244.7
413.8
535.7
452.5
271.3
405.4

27
15
26
36
32
23
35

a. Grant and loan amounts are based on Exchanges of Notes.
b. Technical cooperation figures are based on actual expenditures by JICA.
c. Multilateral aid is based on budgets and includes contributions to international organizations.
Source: Ministry of Foreign Affairs, Japan, 2002, p. 84; Ministry of Foreign Affairs, Japan, 2004, Annex
Figure IV-31

At the United Nations General Assembly Special Session on
Environment and Development five years after the 1992 Rio Summit, Japanannounced the Initiatives for Sustainable Development toward the 21stCentury (ISD) to further expand its environmental assistance. The Initiative
summarized the three principles of Japanese environmental assistance - (i)global human security, (ii) ownership, and (iii) sustainable development and six action plans focused on: (i) air and water pollution and waste disposal, (ii) global warming, (iii) nature conservation and afforestation, (iv)'fresh water' problems, (v) public awareness and strategy building, and (vi)promotion of strategic research for sustainable development.
In August 2002, Japan announced the Environmental Conservation
Initiative for Sustainable Development (EcoISD), an extension of the ISD tofurther expand its environmental assistance. Since then, Japan has been pro177

CHAPTER 3

moting its environmental assistance based on the EcoISD. The EcoISD has
three principles: (i) human security, (ii) ownership and partnership, and (iii)pursuit of environmental conservation and development and five basic policies: (i) capacity development in environment, (ii) active integration ofenvironmental considerations, (iii) Japan's leading role, (iv) cooperation
under a broad and comprehensive framework, and (v) application ofJapanese experience and scientific knowledge. Based on these basic poli35
cies, action plans are in these priority areas:• Global Warming. Raise awareness that global warming threatens to
spoil sustainable development, disseminate appropriate technologies ascountermeasures, and enhance the capacity to address this issue fromscientific, social, and systemic perspectives.
• Pollution Control. Support measures to control pollution and improveliving standards (air and water pollution and waste management) in
urban areas, mainly in the Asian regions in which economies are rapidly
growing.
• Fresh Water. Support implementation of water supply and sewage systems that are appropriate for the target country's urban and rural areas, aswell as to promote cooperation for water resource management andwater quality control.
• Conservation of the Natural Environment. Support developing countries in their management of nature reserves, forest-related issues, prevention of desertification, and natural resource management with consideration for efforts to eradicate poverty.
36
The initiative also lists these new efforts by Japan:• Training. Human resource development for 5,000 people in the environment field over a five-year period beginning in FY 2002.
• Loans. Provision of yen loans with the most concessional terms for
projects in environment fields to provide incentives to developing countries to resolve global environmental issues.
• Grants. More grants to promote efforts to improve the global environment.
• Collaboration. Promote of wide-ranging collaboration with international organizations.
35. Ministry of Foreign Affairs, Japan website,
http://www.mofa.go.jp/mofaj/gaiko/oda/seisaku/bunya/kankyo/wssd_gai.html
36. Ministry of Foreign Affairs, Japan website,
http://www.mofa.go.jp/mofaj/gaiko/oda/seisaku/bunya/kankyo/wssd_gai.html.

178

Trends in Environmental Aid Policies•

Evaluation. Improve methods for ex-post evaluation of Japan's environmental ODA.
Table 3-13 shows the implementation status of the EcoISD for FY 2002.
Japanese environmental assistance covers a wide range of issues, from global problems including global warming and loss of biodiversity to local problems including waste management, air pollution, industrial pollution, andwater supply and sewerage systems. Other characteristics include Japan's
focus on Asia and building the environmental capacity of developing countries through training and human resource development.
In December 1997 when COP3 was held in Kyoto, Japan launched the
Kyoto Initiative on global warming. The Kyoto Initiative is the basic policy
for Japan's assistance in the area of global warming. The initiative includes
three pillars (Ministry of Foreign Affairs, Japan, 1997, p. 138):• Capacity Building. Over the five-year period beginning in FY 1998,
Japan will train 3,000 people in developing countries in fields related to
global warming.
• Loans. Japan will grant ODA loans with the most concessional terms
available internationally to fund projects designed to combat global
warming (0.75 percent annual interest rate, 40-year repayment period).
Table 3-13. Implementation status of the EcoISD for FY 2002
Action plan

Implementation status FY 2002a

Global warming • Laos: Project for Rehabilitation of the Nam Ngum I Hydropower Station (G)• Vietnam: Project for Afforestation on the Coastal Sandy Area in Southern
Central Viet Nam (G)• Indonesia: Muara Karang Gas Power Plant Project (L)• China: Afforestation and Vegetation Cover Project (Gansu, Inner Mongolia) (L)• Indonesia: Forest Fire Prevention Management Project 2 (TCP)• Energy Conservation Center (Turkey, Iran) (TCP)• Technologies for Prevention of Global Warming (T)• Measures against Global Warming Course (T)• Vietnam: Renewable Energy Master Plan in the Northern Part of the Socialist
Republic of Vietnam (D)Measuresagainstenvironmental
degradation• Vietnam: Project for Supply of Equipment for Waste Management in Hanoi
City (G)• Bangladesh: Project for Mitigation of Arsenic Contamination (G)• Nicaragua: Projects for Provision of Garbage Tracks in Nine Cities (Gr)
• China: Environmental Improvement Project (Henan, Anhui) (L)• Vietnam: Ho Chi Minh City Water Environment Improvement Project (II) (L)• Environment Center (Indonesia, China, Chile, Mexico, Egypt) (TCP)• Argentina: Industrial Pollution Prevention (TCP)• Acid Deposition Monitoring Network in East Asia Training (T)• Malaysia: Study on Land Fill Safety for Garbage Dumps (D)• Cambodia: Study on the Solid Waste Management in the Municipality ofPhnom Penh (D)179

CHAPTER 3• Honduras: Tegucigalpa Water Supply Rehabilitation Project (G)Addressing
water problems • Tanzania: Project for Rural Drinking Water Supply in Hanang, Singida Rural,
Manyoni and Igunga Districts (G)• India: Yamuna Action Plan Project (L)• Tunisia: Rural Water Supply Project (II) (L)• Syria: Project for Establishment of Water Resources Information Center (TCP)• Morocco: Project for Rural Water Supply (TC)• India: Integrated Pollution Abatement and River Basin Management Project for
the Ganges Basin (D)• East Timor, Cambodia, Vietnam: Living Environment Project (construction ofwells) (NGO)• Myanmar: Project for Secure Water Supply in the Central Dry Zone (JNGO)• Sierra Leone: Bandajuma Liberian Refugee Camp Water Supply andSanitation Project (JNGO)
Conservationof naturalenvironment• Indonesia: Project for Rehabilitation of the National Park Degraded by Forest
Fire (G)• Senegal: Coastal Region Afforestation Project (G)• India: Rajastan Forestry and Biodiversity Project (L)• Indonesia: Biodiversity Conservation Project (II) (TCP)• Belau: International Coral Reef Center (TCP)• Sustainable Mangrove Ecosystem Management Technology (T)• Iran: Anzari Wetland Ecosystem Conservation Project (D)• The Philippines, China, Ecuador, Chad, Nepal: Environmental Conservation
Project (afforestation) (NGO)• Uganda: Kalinzu Forest Environment Education Center Construction Project(JNGO)• Fiji: Promotion of Environmental Education through Afforestation by Local
Youth (JNGO)

a. (G): general project grants, (Gr): grassroots grants, (L): loans, (TCP): technical cooperation project, (T): JICA training, (TC): other technical cooperation, (D): development study, (NGO): NGO
project subsidy, (JNGO): grants to support Japanese NGO
Source: Ministry of Foreign Affairs, Japan, 2004, p. 141

In FY 2002, about 1,700 people received training in fields related to
global warming. Ten projects were granted loans with the most concessional conditions for a total of ¥187.5 billion (on the basis of Exchange ofNotes) (Ministry of Foreign Affairs, Japan, 2004, pp. 138-139).
In August 1999 the Japanese government announced its Medium-Term
Policy on Official Development Assistance which aimed to improve the efficiency and effectiveness of Japanese aid for the next five years. This policy also considers environmental conservation as a top priority: "Through its
own experiences, Japan has learned much about developing technologies forpollution control to achieve economic growth while preserving the environment. Both Japan's experiences and technologies can play a significant rolein promoting social and economic development and in achieving sustainable
development in developing countries. Japan will support the environmental
programs and efforts of developing countries and assist in the enhancementof their environmental capacities. Moreover, cooperation and collaboration
180

Trends in Environmental Aid Policies

with local governments and NGOs on issues regarding environmental conservation will be of vital importance."
The policy states that Japan will actively support environmental programs in accordance with ISD and the Kyoto Initiative and that Japan will
pay special attention to projects related to environmental conservation
through ODA loans on concessional terms.
Agencies such as JICA and JBIC are also strengthening their social andenvironmental considerations when considering Japanese ODA. JICA
revised its Guidelines for Environmental Considerations that were introduced in 1990 and completed new JICA Guidelines for Environmental andSocial Considerations in March 2004 and began enforcing them in April
2004 (JICA, 2004). JBIC integrated two Guidelines for Environmental
Considerations - each designed for its international financial operations andoverseas economic cooperation operations - and created the Japan Bank forInternational Cooperation Guidelines for Confirmation of Environmental
and Social Considerations in April 2002 and began enforcing them in
October 2003 (JBIC, 2002).

Challenges for Environmental Aid Policies
Features of donor environmental aid policies that we have examined
include:• Emphasize support for local environmental issues that focus on improving quality of life for the poor from the perspective of poverty reduction,
exemplified by the environment strategies of the World Bank and DFID.
• Use market mechanisms to reduce greenhouse gas emissions in transition and developing countries, exemplified by the PCF, Community
Development Carbon Fund, and BioCarbon Fund of the World Bank.
• Provide financial support for efforts by transition and developing countries to address global environmental issues including global warming,
destruction of the ozone layer, and loss of biodiversity, exemplified by
GEF.
• Support for improving the capacity of developing countries to addressenvironmental problems, exemplified by the Capacity 2015 of UNDP
and Japan.
• Set goals and objectives for efforts on environmental conservation indeveloping countries and provide results-oriented support, exemplified
by USAID.
• Provide support by converting external debt of developing countries into181

CHAPTER 3

nature conservation funds, exemplified by the USAID debt-for-nature
swap.
Based on this summary of donor environmental aid policies, several
points about the future of environmental assistance bare discussion.
Millennium Development Goals. The most important task of development
assistance in the international community right now is to achieve the MDGs
by 2015. Poverty reduction will remain the main objective of the international development strategy, and within environmental aid policies the international community will emphasize support for local environmental issues,
including air pollution, water pollution, and natural disasters that target thepoor. Developing countries are also more interested in local environmental
issues that directly affect their lives rather than invisible global environmental issues.
An overemphasis on poverty reduction, however, has led to an emphasison the MDGs that are directly related to improving the capacity of the poor,such as education and healthcare. We can see this tendency in the DFIDPSA 2003-2006. There is a tendency to see environmental issues from theperspective of poverty reduction; as a result, there is a degree of disregard
for the environmental issues. In fact, there is not a connection to poverty inall environmental issues, so there is a limit to resolving environmental
issues from the perspective of poverty reduction. It is necessary to not dwellon the connection to poverty and rather focus on environmental issues
themselves.
Kyoto Protocol. The Protocol will become effective early in 2005 and theEU will launch its intra-regional Emissions Trading Scheme (ETS) in
January 2005, realizing a CO2 emission trading market.
According to one estimate, the size of EU CO2 emission trading market
will reach 10 billion euros.37 Following the EU, Canada and Japan plan tocreate similar markets. The interest in international markets for trading
emissions is growing. When the Kyoto Protocol becomes effective, developed countries that have signed the protocol will have an obligation toachieve its targets for reducing greenhouse gases, so there will be active
trading of greenhouse gas emission rights. But at the same time, the reduction targets of the Protocol are extremely difficult to achieve with domestic(and intra-regional) efforts alone, thus there will be an active effort to
reduce emissions through the CDM and JI mechanisms as well.
37. Asahi Shimbun, November 4, 2004, morning edition, p. 4

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Trends in Environmental Aid Policies

According to a report published by the World Bank at COP9 in
December 2003, State and Trends of the Carbon Market 2003, the amountof traded greenhouse gas emission rights increased more than five-fold from13 million tons in 2001 to 70 million tons in 2003 (World Bank, 2003). The
value of carbon emission rights is estimated to reach US$ 10 billion by38
2007. Initially (from 1996 to 2000), greenhouse gas emissions were tradedamong developed countries, but the situation is rapidly changing. The shareof emission reductions by relevant projects in transition and developing
countries increased from 38 percent in 2001 to 60 percent in 2002 to 91 percent in 2003 (from January to September) (World Bank, 2003, p. 13). When
we look at countries in which these projects were implemented, most are in
Latin America and Asia, but there are few African countries and few leastdeveloped countries in Asia. The World Bank's Community Development
Carbon Fund and BioCarbon Fund were developed to deal with these problems. The two funds will grow in importance as developing countries try torealize sustainable development through the CDM.
Many developing countries are reluctant to address global environment
problems because addressing global warming by reducing the emissions ofgreenhouse gases, for example, represents a significant burden to developing. For the time being, use of the CDM is probably the most effective andrealistic means to reduce greenhouse gas emissions in developing countries.
Developing Country Debt. Accumulated debt and poverty are restricting
investments in the environment. The causal linkage between poverty andenvironmental destruction - the idea that the former causes the latter - is nolonger emphasized. Even if the direct adverse effect of poverty on the environment is small, there is an indirect link; because these countries are poorand have accumulated debt, rapid economic growth becomes the mosturgent priority and they cannot afford to care for the environment. We cannot say that reduction of accumulated debt and poverty will directly
increase investments for the environment, but there is no doubt that the former is a necessary condition for the latter. In this sense, the USAID debtfor-nature swap is a well thought-out mechanism. Various adverse effects ofthe debt-for-nature swap have been reported, including usurpation of rights
of indigenous people who live in conservation areas, but we should notrenounce the mechanism itself. Rather, we should try to resolve incidental
38. World Bank press release, December 4, 2003, Carbon Market Doubles, But Poor Countries Bypassed
According to World Bank Report183

CHAPTER 3

problems during implementation. Possible measures include preliminary
surveys for social considerations. When involuntary relocation of indigenous people cannot be avoided, the administrator should first obtain theirconsent and provide compensation for the land and resources they will lose
due to the relocation and help them secure alternative livelihoods.
These three points about environmental assistance suggest ideas about
the future of Japanese assistance.
Greenhouse Gases. Japan should reduce greenhouse gas emissions byusing the CDM. Realistically, it is impossible for Japan to achieve its target
under the Kyoto Protocol (6 percent reduction from the 1990 level in thefive years from 2008 to 2012) by domestic polices alone because Japaneseindustries are strongly opposed to introduction of environmental taxation.
There are, however, many opportunities in developing countries to reducegreenhouse gas emissions at a low cost, so if Japan uses the CDM and
implements emission reduction projects in developing countries, it cancount those reductions toward its own reduction target.
The Japanese government and Japanese companies should also consider
participating in the World Bank's Community Development Carbon Fundand BioCarbon Fund.
39
In recent years the concept of corporate social responsibility has beenemphasized. By using the CDM, corporations can reduce greenhouse gas
emissions and at the same time enjoy the reputation of contributing to thesustainable development of developing countries. Considering that Japanese
corporations cannot expect significant reduction in greenhouse gas emissions by their own activities, they should actively try to reduce emissions indeveloping countries, for example, by providing Japanese energy-saving
technologies.
In light of various opportunities to reduce greenhouse gas emissions,developed countries and their corporations will have to answer not only
how much, but also where and how they have reduced greenhouse gases.
Environmental Assistance. Japan gives priority to environmental assistance in its development assistance strategy. Aid to the environment sector
in 2002 was 34.9 percent of total assistance. Japanese environmental assistance covers various issues from global to local, and special emphasis is

39. Contemporary societies demand corporations be responsible not only to their shareholders, but also toother stakeholders including employees, consumers, and local communities. For this reason, corporations
are being evaluated not only by profits, but also from the perspective of social responsibility.

184Trends in Environmental Aid Policies

placed on building the capacity of developing countries to address these
problems. Japan's continuing policy of emphasizing the environmental sector while the international community emphasizes poverty reduction toachieve the MDGs and accords priority to education and healthcare assistance is valuable when advocating for importance of environmental assistance to the international community.
Japan does not dwell on the connection with poverty. It has adopted apolicy to first focus on environmental issues, but also deals with poverty
while addressing environmental issues, which provides assistance with anemphasis on resolving environmental problems. Aid agencies in other countries should emulate Japan's such policy orientation with their environmental assistance. There is room for improvement as well. Japan can establish
goals and indicators for each activity and provide results-oriented assistancelike USAID in order to improve the effectiveness and efficiency of its aid.
As in the example of the USAID debt-for-nature swap, introduction of amechanism to reduce the external debt of developing countries and use themoney for environmental protection in these countries is worth considering.
Donors are implementing policies to cope with global environment
problems, but the current level of action is hardly enough to stop the degradation of the environment. This can be clearly seen by comparing the report
40(IPCC, 1990) of the Intergovernmental Panel on Climate Change (IPCC)
which stated that "the global CO2 emissions must be reduced by 60 percent
in order to stabilize the concentration of greenhouse gases in the atmosphere41
at the 1990 level" to the reduction target for all developed countries in
Kyoto Protocol (5.2 percent).
The IPCC's Third Assessment Report (April 2001) predicted thatbetween 1990 and 2100, the average temperature of the earth will rise by
1.4 to 5.8 degrees centigrade and the sea level will rise 9 to 88 centimeters

40. An intergovernmental organization with the objective of gathering and evaluating the latest scientific,
technical, and socioeconomic knowledge on global warming and advising governments. It was established in 1998 by the UNDP and the World Meteorological Organization (WMO).
41. The report states that stabilizing the concentration in the atmosphere at the level at that time (1990)
requires these reductions in the emissions of greenhouse gases: carbon dioxide >60, methane 15-20 percent, nitrous oxide 70-80 percent, CFC-11 70-75 percent, CFC-12 75-85 percent, HCFC-22 40-50 percent. Carbon dioxide, CFC and nitrous oxide are removed from the atmosphere only slowly, so it takes
several decades to several centuries for their concentration in the atmosphere to fully respond to changes
in emissions. Therefore, the earlier the reduction, the more effective it will be at stabilizing the concentration at a certain level. Conversely, the longer we continue emissions at current levels, the larger therequired future reduction (Japanese translation "IPCC Global Warming Report: Summary of the Reportof the Intergovernmental Panel on Climate Change" p. 47-49)

185

CHAPTER 3(IPCC, 2001). The rise in temperature will worsen the problems of waterand food shortages, and the endemic area of malaria and other tropicalinfectious diseases will expand to include temperate latitudes. In the worst
case scenario, Northern China, Korea, and western Japan may be included
42
in the malaria risk area by 2100. The rise in sea level will also expose
islands and coastal regions to socioeconomic risks including submersion ofresidential areas and loss of fishery resources from changes in coastal ecology. If the sea level rises by one meter, low countries such as Bangladesh andthe Maldives will lose a majority of their soil. If the current trend continues,
we will suffer the worst consequences - conflicts over water and food will
intensify, the endemic area of tropical infectious diseases with high mortality rates will expand, and land submersion will create a massive number ofrefugees.
To prevent such tragedies, how can we address global environment
problems effectively? First, we need to raise the awareness of every personin the world about global environmental crises. Thorough environmental
education should be provided world-wide. Heightened awareness about
global environment problems will strengthen efforts in various sectors (consumer, industrial, transportation) and levels (local, state, global) and will
eventually lead to significant improvements. Also, people in developed
countries must control excessive consumption, and at the same time cooperate with developing countries to solve their poverty problems so that people
in developing countries can afford to turn their eyes to environmental
issues.

References
British Government. 2000. Eliminating World Poverty: Making Globalisation
Work for the Poor. White Paper on International Development.
Energy Conservation Center, Japan. Results of the United Nations
Conference on Environment and Development.
http://www.eccj.or.jp/summary/environment/02.html
FASID. 2002. Kaihatsu-Enjo no Atarashii Chouryu: Bunken-Syoukai [New
Trend of Development Assistance: Literary Review], No. 13.
http://dakis.fasid.or.jp/report/reference.html.
GEF (Global Environment Facility). 2003. Annual Report.
______. 2002. Summary of Negotiations on the Third Replenishment of the
42. Ministry of the Environment website, http://www.env.go.jp/earth/cop3/ondan/eikyou5.html

186

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GEF Trust Fund. Nov. 5.
Institute for Global Environment Strategies. 2001. Kaihatsu Tojyokoku ni
okeru Chikyu Kankyo Hozen ni kansuru Shikin Mekanizumu no
Genjyo to Cyousa [Study of Current Status of Financial Mechanisms
for Global Environmental Conservation in Developing Countries].
IPCC. 2001. Third Assessment Report - Climate Change 2001.
______. 1990. First Assessment Report 1990.
JBIC. 2002. Kankyou Syakai Hairyo Kakunin no tameno Kokusai
Kyouryoku Ginko Gaidorain [JBIC Guidelines for Confirmation ofEnvironmental and Social Considerations].
JICA. 2004. JICA Kankyo Syakai Hairyo Gaidorain [JICA Guidelines forEnvironmental and Social Considerations].
______. 2001. Dai 2 ji Kankyo Bunya betsu Enjyo Kenkyukai Houkokusyo[The Second Study on Development Assistance for the Environment].
Institute for International Cooperation.
Meadows, Donella H., D. L. Meadows, J. Randers and W. W. Behrens.
1972. The Limit to the Growth. New York: Universe Books.
Ministry of Foreign Affairs of Japan. 2004. Seifu Kaihatsu Enjyo (ODA)
Hakusyo 2003 nendo ban [White Paper on Official Development
Assistance 2003].
______. 2002. Seifu Kaihatsu Enjyo (ODA) Hakusyo 2001 nendo ban[White Paper on Official Development Assistance 2001].
______. 1997. 21 Seiki ni Muketa Kankyo Kaihatsu Sien Kousou (ISD)
Kyoto Inishiatibu" [Initiatives for Sustainable Development (ISD)
Toward the 21st Century], http://www.mofa.go.jp/mofaj/gaiko/kankyo/kiko/cop3/kyoto2.html
Secretariat for the Director General of the Environment Agency (eds). 1995.
Saishin Kankyou Kiwad, Dai 2 han [Latest Keywords on the Environment,
Second Edition], Economic Research Association.
UNDP. 2002. Capacity 2015 Local Results: A Global Challenge.
______. 2001a. Capacity 2015: Developing Capacities for Sustainable
Communities.
______. 2001b. UNDP Gaidobukku: Chikyu Kankyo Facirityi (GEF)[UNDP Guidebook: Global Environment Facility (GEF)], a leaflet.
UNEP. 2002a. Global Environment Outlook 3.
______. 2002b. Chikyu Kankyo Gaikyo 3 no Gaiyo [Summary of Global
Environment Outlook 3], Global Environment Center Foundation.
USAID. 2003. A Fiscal Year 2003 Performance and Accountability Report.
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CHAPTER 3World Bank. 2003. State and Trends of the Carbon Market 2003______. 2001. Making Sustainable Commitments: An Environment Strategy
for the World Bank.
World Bank Tokyo Office. 2002. Tansokikin nit suite [The Prototype
Carbon Fund], a leaflet.
World Commission on Environment and Development. 1987. Our Common
Future. Oxford and New York: Oxford University Press.

188

Water-Related Issues and International Development

Water-Related Issues and International
Development
Koichiro Ishimori

Water and Development
We cannot ignore the importance of water when thinking about the development of poor countries. About 70 percent of the human body is water, and a
70-kg adult male needs to consume about 2.5 liters of water daily to survive. We must understand that water is absolutely essential for humans froma physiological perspective before considering any development issues.
Water is important for the development of poor countries for several reasons. Although each developing country is unique, growth of the agriculture
sector is generally more effective at reducing poverty than growth of othersectors, especially in countries with small income discrepancies (Timmer,
1997). A water supply that helps stabilize or expand agricultural production
1
is important for agriculture-related economic activities. Women often havethe considerable burden of securing water for domestic use, which limits
economic activities that could increase household income and limits schooling opportunities for girls (Third World Water Forum Secretariat, 2002).
Water pollution and lack of sanitation are also problems. Other data fromthis source are alarming: A child dies every eight seconds from water-related illnesses and 80 percent of diseases in developing countries are caused
by unsanitary water. Water is extracted from major aquifers on almost allcontinents at a rate faster than it can be replenished, which in some circumstances can cause land subsidence. Some large dams built in developing
countries have forced relocation of entire villages and led to environmental
problems. The problem of too much water - floods -has been overshadowedby the problem of too little water, but floods also deserve attention. They
are responsible for one-third of economic losses and more than one-half offatalities caused by natural disasters, and are especially severe in the Asian

Ishimori is evaluation officer, Project Development Department, Japan Bank for International Cooperation.
The opinions expressed in this paper are those of the author and not JBIC.
1. 85 percent of water removed from its source in all developing countries is used for agriculture, while 6
percent is used for domestic purposes, and 9 percent for industry. (International Water Management
Institute, 2001 (Water for Rural Development)) In Japan, water usage in 1999 was 66 percent agriculture, 19 percent domestic, and 15 percent industrial. (Land and Water Bureau, Ministry of Land,
Infrastructure and Transport, 2002)

189

CHAPTER 3

monsoon region.2

Global Efforts to Tackle Water Issues
What are the efforts of the international community to deal with suchdiverse water issues? It was only 30 years ago when the world's attention
first turned to water problems at the 1972 United Nations Conference on the
Human Environment in Stockholm.3 This conference, popularly known as
the Earth Summit, paved the way for the first intergovernmental conference
on water, the United Nations Water Conference in 1977. Participants at thisconference discussed not only conservation of water resources, but also
many issues related to their use and development and adopted the Mar delPlata Action Plan.4 The following year the World Health Organization(WHO) began to implement projects to supply safe water and sanitation to
the world's population (JICA, 2002). These initiatives contributed to the1980 UN General Assembly resolution that designated the 10 years from1981 to 1990 as the International Decade for Water Supply and Sanitationand vowed to achieve the goal of Water for All by 1990.5
The International Conference on Water and the Environment held in
Dublin in early 1992 claimed that urgent actions were needed to curb overuse and water pollution, and to solve the problem of droughts and floods(JICA, 2002). The conference also adopted the Dublin Statement on Water

2, World Water Vision, Vision Report (http://watervision.cdinet.com/visioncontents.html). When looking
at world water problems, floods have not been adequately discussed (JICA, 2002). For this reason,
Japanese representatives are planning to emphasize the importance of dealing with the problem of too
much water at the Third World Water Forum, which will be held in Kyoto, Osaka and Shiga in March2002.
3. Because the Earth Summit focused on environmental pollution, conservation of water resources was discussed from that perspective as well. Principle 2 of the Declaration of the United Nations Conference on
the Human Environment states: The natural resources of the earth, including the air, water, land, floraand fauna and especially representative samples of natural ecosystems, must be safeguarded for the benefit of present and future generations through careful planning or management, as appropriate. See
http://www.unep.org/Documents/Default.asp?DocumentID=97&ArticleID=1503 for the original document.
4. At the United Nations Water Conference, the First Committee discussed: (i) general examination ofwater resources, (ii) water use and its efficiency, and (iii) the environment and health. The Second
Committee considered: (i) planning, management, and institutional issues; (ii) education, training, andresearch; (iii) regional cooperation; and (iv) international cooperation. Participants also considered, creating a fund for water resource development and establishing an international cooperation organization,
but neither idea materialized. Instead, they decided to strengthen existing organizations (Environment
Agency, 1977, Chapter 8, Section 2).
5. Although this goal was not achieved by 1990, the 10-year campaign greatly enhanced internationalawareness of the significant effects that insufficient water supplies have on the people in developing
countries.

190

Water-Related Issues and International Development

and Sustainable Development 6 for the United Nations Conference on
Environment and Development (the Rio Summit), which was to be held
later the same year. The Dublin Statement was influential because it transformed the conventional concepts of water supplies and sanitation. For
example, the supply-driven approach to development exemplified by theInternational Decade for Water Supply and Sanitation was replaced by ademand-driven approach based on the principle of water as an economic
good. Before the Dublin Statement, the issue of water supplies was discussed from a perspective of health and sanitation, but ever since has been
7viewed as a critical element of poverty reduction.
World leaders gathered a few months later at the Rio Summit and adopted Agenda 21, which included an action program on Protection of the
Quality and Supply of Freshwater Resources (Chapter 18).8 Against such abackground, international organizations began to compile water-related
information. In 1995 the World Bank produced a video program, Earth
Faces Water Crisis, and two years later, the UN World MeteorologicalOrganization published a report called Comprehensive Assessment of theFreshwater Resources of the World.
By 1996 there was an increasing recognition that water-related efforts
since the Rio Summit were inadequate when compared to other issues suchas global warming (JICA, 2002). It also became clear that many water-related international organizations existed in different areas of specialization, but
their work was not at all coordinated. This situation led to the creation of
two umbrella organizations in 1996.9 One is the Global Water Partnershipestablished primarily by the government of Sweden, the World Bank, andUNDP. This organization provides support for practical action plans inwater management, as well as networking to share information and build
partnerships. The other umbrella organization is the World Water Council,
organized under the leadership of the International Water Resources
Association10 and headquartered in Marseilles, France, which provides
6. The Dublin Statement emphasizes actions based on the following four principles: (i) the 'finitude' offresh water resources, (ii) participatory approaches for water development and management, (iii)
women's role in the provision, management, and safeguarding of water, and (iv) water as an economic
good. See http://www.wmo.ch/web/homs/documents/english/icwedece.html.
7. On the other hand, some have pointed out that the Dublin Statement is nothing but empty rhetoric fordeveloping countries (Biswas, 2004).
8. http://www.un.org/esa/sustdev/agenda21chapter18.htm for the original.
9. Nakamura, 2000, http://www.jiid.or.jp/j/ARDEC/ardec18/p16.pdf
10. Other participating organizations include the International Commission on Irrigation and Drainage,
International Water and Sanitation Centre, Water Supply and Sanitation Collaborative Council, theWorld Conservation Union, and International Water Management Institute.

191

CHAPTER 3

information and policy recommendations about global water crises. In 1997
the World Water Council held the first World Water Forum during which
participants decided to prepare World Water Vision for the 21st century.
11
The actual World Water Vision was adopted during the second World
Water Forum held in the Netherlands in 2000.
The Millennium Assembly of the United Nations adopted the Millennium Development Goals in September 2000. The importance of safe watersupplies was recognized under the three of these goals - reducing child mortality, improving maternal health, and ensuring environmental sustainability.12
More recently, the World Summit on Sustainable Development was heldin 2002 in Johannesburg, South Africa. This summit reconfirmed one of thetargets set for the Millennium Development Goal to "halve by 2015 the proportion of people without sustainable access to safe drinking water" andadopted a resolution to "halve by 2015 the proportion of people without
access to basic sanitation (sewage facilities, etc)." The summit also produced a commitment to develop integrated water resources management
13
and water efficiency plans by 2005.
The Third World Water Forum was held in Kyoto, Osaka and Shiga inMarch 2003. The preparatory secretariat received 442 water-related actionplans that were compiled as the Portfolio of Water Actions.14 As many as
337 sessions were held during the forum to discuss what was necessary torealize the World Water Vision and achieve the Millennium Development
Goals. The Ministerial Conference held as a part of the forum issued a
Ministerial Declaration with 29 items. This declaration specifically recognized the importance of paying adequate attention to poverty and gender, as
well as to good governance, capacity building, and finance.15
11. The World Water Vision has a motto of From Vision to Action. http://watervision.cdinet.com/commreport.htm
12. According to the Secretariat of the Third Water Forum, the importance of clean water is suggested in thetwo goals of reducing child mortality and improving maternal health. The importance of a clean watersupply is explicitly mentioned in relation to the goal of ensuring environmental sustainability.
http://www.worldbank.or.jp/03agenda/05mdg/mdg_top.html for details.
13. http://www.johannesburgsummit.org/html/documents/summit_docs/2009_keyoutcomes_commitments.doc
14. Overall, many submitted water actions were related to 'water resources management and benefit sharing'and 'safe drinking water and sanitation'. Compared to other regions, Asian countries had more projects
related to 'water for food and rural development' and 'disaster mitigation and risk management', while
European countries and international organizations had more projects on 'water resources management
and benefit sharing'. African countries had more projects related to 'safe drinking water and sanitation'.
http://www.world.water-forum3.com/jp/mc/pwadata/index.html
15. http://www.world.water-forum3.com/jp/mc/md_final.pdf

192Water-Related Issues and International Development

In March 2004, exactly a year after the World Water Forum, United
Nations Secretary-General Kofi Annan created the Advisory Board on
Water and Sanitation to raise awareness of water and sanitation issues, help
mobilize funds for water and sanitation projects, and encourage new partnerships. A month later, the twelfth session of the UN Commission on
Sustainable Development focused on water, sanitation, and human settlements as priority themes for 2004-2005, and reviewed progress in theseareas in relation to implementation of Agenda 21, the Millennium
Development Goals, and the Johannesburg Plan of Implementation. During
the thirteenth session, to be held in 2005, the Commission plans to decideon specific actions to further enhance efforts in these areas.

Trends in Water-Related Aid
There have been several international resolutions about water-related issues
during the past 30 years. Let us now turn to what developed countries andinternational organizations have and have not done in response to these resolutions. This section analyzes water-related projects supported by bilateral
aid agencies of developed countries and international organizations.16 The
author used the Creditor Reporting System (CRS) data compiled by theDevelopment Assistance Committee (DAC) of the Organization for
Economic Cooperation and Development (OECD).17 Under the CRS, waterrelated projects fall under the categories of Water Supply and Sanitation andAgricultural Water Resources.18 For quantitative analysis of Water Supply
and Sanitation projects, the author used the number of these projects.19

16. Developed countries and international organizations include 22 member countries of OECD/DAC:
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan,
Luxemburg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United
Kingdom, United States, European Commission, Asian Development Bank (ADB), Inter-American
Development Bank (IDB), African Development Bank (AfDB),and International Development
Association (IDA) of the World Bank Group.
17. This analysis covers a period from 1973 when OECD/DAC began collecting data for all development
projects undertaken by member countries and organizations, to 2000, the latest year for which complete
data were available at the time of writing.
18. According to the CRS categorization, Agricultural Water Resources (Code 31140) refers to irrigation,
reservoirs, hydraulic structures, and ground water exploitation for agricultural use.
19. While it was possible to use the 'cost' of water supply and sanitation projects in the quantitative analysis,
the author decided that comparing project cost was inappropriate because it varied greatly among different types of projects (for example, between human rights- or gender-related projects and nuclear power
plant or airport construction projects). Instead, the author decided to use the number of projects, but the
number of projects does not necessarily indicate the impact of projects.

193

CHAPTER 3

Water Supply and Sanitation Projects
Only 71 Water Supply and Sanitation projects were implemented during
1973, a year after the Earth Summit, which represented only 3.5 percent of a
total of 1,983 projects. After 1975, however, the share of Water Supply andSanitation projects increased to more than 4 percent. The share was 4.6 percent in 1977 when the UN Water Conference adopted the Mar del Plata
Action Plan and 4.5 percent the following year. Not a single Water Supply
and Sanitation project was implemented between 1973 and 1979 for Water
Resources Protection, which was the main focus of the Earth Summit andthe UN Water Conference. About 54 percent of all Water Supply andSanitation projects were in the sub-category of Water Resources Policy and
20
Administrative Management, while about 30 percent were Water Supply
21(large and small systems) projects. The countries and organizations that
supported most Water Supply and Sanitation projects from 1973 to 1979
were Canada (116 projects), Germany (81), the United Kingdom (59),France (57), and the European Commission (44). During the same period
the World Bank Group as a whole provided assistance to 87 water-related
projects. The annual number of World Bank projects increased from nine in1973 to 21 in 1979 (Garn and Alfonso, 1988).

1400
1200
1000
800
600
400
200
0

7
6
5
4
3
2
1
0

Percent of total projects

Number of projects

1973

1974

1975

1976

1977

1978

1979

Percent

Number of projects

Figure 3-7 Change in number of Water Supply and Sanitation projects,1973-1980

1980

20. According to the CRS categorization, Water Resources Policy and Administrative Management (Code14010) refers to water sector policy, planning and programs, water legislation and management, institution capacity building and advice, water supply assessments and studies, groundwater, water quality andwatershed studies, and hydrogeology.
21. According to the CRS categorization, Water Supply and Sanitation - Large Systems (Code 14020) refers
to water desalination plants; intake, storage, treatment, pumping stations, conveyance, and distribution
systems; sewerage; and domestic and industrial waste water treatment plants. Water Supply andSanitation - Small Systems (Code 14030) refers to water supply and sanitation through low-cost technologies such as handpumps, spring catchment, gravity-fed systems, rain water collection, storage tanks,
small distribution systems, latrines, small-bore sewers, and on-site disposal (septic tanks).

194

Water-Related Issues and International Development

Next we turn to the International Decade for Water Supply andSanitation from 1981 to 1990, declared under a 1980 UN General Assembly
resolution. The number of Water Supply and Sanitation projects was 176 in
1981, increased to 245 in 1986, and 309 in 1990. The share of these projects
in all aid projects, however, was essentially flat during these years because
the number of projects in other categories increased as well. The share wasa little over 4 percent until 1988, but declined in 1989.

1400
1200
1000
800
600
400
200
0

7
6
5
4
3
2
1
0

Number of projects

Percent of total projects

1981

1982

1983

1984

1985

1986

1987

1988

1989

Percent

Number of projects

Figure 3-8 Change in number of Water Supply and Sanitation projects,1981-1990

1990

The average share during this decade was about 4.2 percent, little different from the 4.1 percent average between 1973 and 1979, which suggeststhat the resolution for the International Decade for Water Supply andSanitation kept the share of these projects at the level of the 1970s, but did
not have enough impact to increase it. Projects during this decade had two
distinct characteristics. First, the share of Water Supply (large and small
systems) projects among all projects between 1981 and 1990 was about 45
percent, a significant increase from about 30 percent during the previous
seven years. This was because the International Decade for Water Supply
and Sanitation focused largely on water supply. Accordingly, the share of
Water Resources Policy and Administrative Management projects
decreased from about 54 percent between 1973 and 1979 to about 44 percent between 1981 and 1990. Second, projects to protect water resources,
which were scarce during the 1970s were also scarce even in the 1980s, perhaps because of the emphasis on water supplies discussed earlier.
22
The first Water Resources Protection projects were two implemented

22. According to the CRS categorization, Water Resources Protection (Code 14015) refers to inland surface
waters (rivers, lakes, etc), conservation and rehabilitation of ground water, prevention of water contamination from agro-chemicals, and industrial effluents.

195

CHAPTER 3

by Sweden in 1988, but the numbers remained small - four in 1989
(Canada, one and Sweden, three) and four in 1990 (Denmark, one andSweden, three). Countries that had the most Water Supply and Sanitation
projects between 1980 and 1990 were France (366), the Netherlands (262),
Germany (228), Japan (195), and Canada (175). The World Bank Group asa whole had 129 projects during the same period. The annual number ofwater-related projects undertaken by the World Bank Group was mostly
constant from 1980 to 1987, but trended lower after that with five projects
in 1988 and 10 in 1989 (Garn and Alfonso, 1988, 1990).
During the decade following the International Decade for Water Supply
and Sanitation (1991 to 2000), the share of Water Supply and Sanitation
projects among all aid projects was about 3.6 percent, lower than the 4.1
percent between 1973 and 1979 and 4.2 percent between 1980 and 1990.
The annual share was less than 4 percent during each year of the decade
except 1993, when it recovered to 4.2 percent, perhaps due to effects fromthe Dublin Conference and Rio Summit held in the previous year.
1400
1200
1000
800
600
400
200
0

7
6
5
4
3
2
1
0

Number of projects

Percent of total projects
1991

1992

1993

1994

1995

1996

1997

1998

1999

Percent

Number of projects

Figure 3-9 Change in number of Water Supply and Sanitation projects,1991-2000

2000

This decline of share among all projects was a result of several factors.
First, Canada and the European Commission - which ranked first and fifth
in the number of water-related projects implemented during the 1973-79
period, respectively - failed to implement more of such projects during the
1990s, although their numbers did not decline. The top five countries that
implemented the most Water Supply and Sanitation projects between 1991
and 2000 were Sweden (784), the Netherlands (673), France (664), theUnited Kingdom (631), and Germany (585). The World Bank Group supported 118 projects during the same period and its annual average decreased
from 12.9 in 1980 to 11.8 in 1990. Second was the recent diversification ofaid projects. According to the CRS of OECD/DAC, there were about 84
areas or fields of aid in 1973, but the number increased to about 180 by
196

Water-Related Issues and International Development

2000. Third was aid fatigue experienced by aid agencies, partly due to therealization that the International Decade for Water Supply and Sanitation"saw some progress but billions of people still lacked access" [to water].23
Although Water Supply and Sanitation projects stagnated in general, Spainand the UK increased the number of their projects dramatically starting in241997 or 1998 (Table 3-14).
Table 3-14. Number of Water Supply and Sanitation projects implemented bymajor donors
Year

Sweden Netherlands France

UK

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

22
60
47
68
76
62
65
166
135
83

6
60
22
29
43
45
35
112
94
185

42
46
68
52
71
56
76
124
70
68

25
27
44
74
81
77
68
115
96
57

Germany Spain
24
27
30
43
39
30
72
73
117
130

1
1
5
0
3
2
85
101
100
107

Japan CanadaEC

Ireland

WB

24
35
48
57
49
51
58
61
35
33

11
21
56
22
34
29
14
37
19
34

NA
NA
NA
NA
NA
NA
NA
NA
NA
104

10
11
13
10
12
11
13
13
11
14

7
23
11
29
30
43
49
43
86
36

Source: OECD/DAC (2001; 2002), World Bank Annual Reports (1990 to 2000)

Next we will examine changes in the content of water-related projects
from 1991 to 2000. The share of Water Supply (large and small systems)
projects increased from about 45 percent during the 1980s to about 58 percent because water supply was considered important in Agenda 21 andother policy declarations even after the International Decade for Water
Supply and Sanitation. On the other hand, Water Resources Policy and
Administration Management projects which had the largest share during the1970s were on the decline, with its share down from 54 percent during the1970s to about 28 percent. Water Resources Protection projects were still
scarce, with a share of about 3 percent of all Water Supply and Sanitation
projects.
Japan was by far the most prominent donor during the same period
23. Around 1990, bilateral aid agencies, international organizations, and scholars began to believe that thisdismal situation was due to an approach based on supply-driven aid consultations and government-centered aid programs, and shifted to a new, demand-based approach with more active participation of theprivate sector and civic societies (Overseas Development Institute, 2002).
24. Spain's rapid increase was probably a result of the government's commitment toward the Copenhagen
Declaration on Social Development while the UK was influenced by Clair Short who became Secretaryof State for International Development in 1997.

197

CHAPTER 3(Table 3-15), although it is not supporting as many projects. Japan has provided far more aid than even the World Bank every year since 1993 with the
exception of 1999.25 Sweden and the Netherlands implemented the mostprojects during this period, but their dollar amounts were much smaller thanother countries. Spain and the United Kingdom drastically increased theirprojects during the latter half of the 1990s, and the UK increase in dollar
amounts was especially remarkable.
Table 3-15. Major donor aid for Water Supply and Sanitation projects (US$ million)
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

Sweden Netherlands France
58
52
43
34
30
59
17
71
45
28

45
55
156
64
107
92
100
115
61
46

188
130
196
258
261
400
233
156
205
156

UK
30
197
22
19
36
65
58
227
221
182

Germany Spain
240
291
218
472
457
346
557
429
271
356

28
34
49
0
37
19
18
28
56
78

Japan CanadaEC

Ireland

WB

302
718
1,422
1,240
1,181
1,731
1,501
1,082
725
1,791

18
53
119
17
30
27
9
120
67
139

NA
NA
NA
NA
NA
NA
NA
NA
NA
6

1,225
911
1,153
975
981
609
682
552
1,052
903

32
45
2
24
13
33
27
15
19
34

Source: OECD/DAC (2001; 2002);, World Bank Annual Report (1992, 1994, 1995, 1996, 1999, 2000)

Agricultural Water Resources Projects
In 1973 only 16 Agricultural Water Resources projects were implemented,
about 0.8 percent of all aid projects (1,983). This share did not change muchand remained at 1 percent in 1974 and 1975. The number of projects in thiscategory increased in 1976 and their share of all projects (2,512) increased
as well to about 1.5 percent. This rising trend continued partly due to the
Mar del Plata Action Plan that was adopted in 1997 by the UN Water
Conference.26 In 1979, 61 such projects were implemented and were 2 percent of all aid projects. Overall, 252 Agricultural Water Resources projects
were implemented between 1973 and 1979 and were 1.47 percent of all aid
projects (17,076). The top three donors involved in these projects wereFrance (41 projects), IDA (39), and Germany (23).

25. One of the reasons Japan is so prominent in aid amounts is that Japan has always emphasized infrastructure building in its aid programs.
26. Agricultural Water Resources are specifically mentioned in a section entitled Agricultural Water Use
beginning on page 70.

198

Water-Related Issues and International Development

140
120
100
80
60
40
20
0

2.5
Number of Projects

2
1.5
1

Percent

Number of projects

Figure 3-10 Change in number of Agricultural Water Resources projects,19731979

0.5Percent of total projects
1973

1974

1975

1976

1977

1978

1979

0

Next we turn to the 1980s. The increasing trend that began in the late1970s continued in 1980 during which 73 Agricultural Water Resources
projects were implemented, about 2.2 percent of all aid projects (3,302).
The annual number of such projects has stagnated since then. After reaching
99 in 1983, the number of projects declined to 78 in 1989, a level close tothat of 1980. As a result, the share of Agricultural Water Resources projects(815) in all aid projects (55,353) during the decade was 1.47 percent, identical to that of the preceding decade. One reason for this stagnation was thatduring the 1980s - the International Decade for Water Supply and Sanitation- donor contributions in the area of water were concentrated in Water
Supply and Sanitation. Meanwhile, there was a change in the top threedonors in the field of agricultural water. France again topped this ranking
with 146 projects, but the second position was taken by the United States(117), followed by the Netherlands (93).

2.5

140
120
100
80
60
40
20
0

Percent of total projects

2
1.5
1

Percent

Number of projects

Figure 3-11 Change in number of Agricultural Water Resources projects,19801989

0.5
Number of Projects
0
1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

199

CHAPTER 3

140
120
100
80
60
40
20
0

2.5
Number of projects

2
1.5
Percent of total projects

1

Percent

Number of projects

Figure 3-12 Change in number of Agricultural Water Resources projects,19902000

0.5
01990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1200

The decline continued into the 1990s. In 1990 there were only 48 projects in the category, or about 0.6 percent of all aid projects (7,832). Even in
1993, after the Dublin Conference and Rio Summit, the number of projects
was 81 or 0.7 percent of all aid projects (10,982). The Global Water
Partnership and World Water Council in 1996 and the first World Water
Forum in 1997 did not have much impact on Agricultural Water Resources
projects. Ninety-six such projects were implemented in 1999, which was thelowest share, about 0.3 percent among all aid projects (31,665). Due to thistrend, the share of these projects (854) of all aid projects (171,837) during
the 1990s fell to just 0.49 percent, about 1 percent lower than the previous
two decades.
This decline in share is because the number of all aid projects almost
quadrupled during the 1990s, while the number of Agricultural Water
Resources projects essentially stayed the same as the 1980s. The sluggish
growth of Agricultural Water Resources projects can be attributed to several
factors: a declining number of new, viable irrigation facility construction
projects; increasing costs of expanding existing irrigation facilities; anddeclining agricultural prices. This decade saw a significant change in the
ranking of major donors involved in Agricultural Water Resources projects(Table 3-16). Japan and the Netherlands gained a huge lead by implementing 142 and 141 projects, respectively. France kept the top position in the
1970s and 1980s, but supported only 49 such projects in the 1990s. Japan
rapidly increased the number of Agricultural Water Resources projects
beginning in 1988 and implemented at least 10 projects each year with anaverage of 14 each year throughout the 1990s. The Netherlands also had an
average of 14 projects each year beginning in 1986, although its annual
numbers fluctuated.
Japan's increase in the 1990s can be attributed to the characteristics of its
200

Water-Related Issues and International Development

ODA - the so-called request-based principle and an emphasis on economic
infrastructure. The number of Agricultural Water Resources projects undertaken by Japan fell to five in 2000 for reasons we will discuss later. Anothernew trend was the emergence of Spain and the UK in 1997 and 1998. The
aid amount from major donors (Table 3-17, including loans) reveals thatJapan provided much more aid in dollar amounts than the Netherlands,
although these top two countries supported almost the same number ofAgricultural Water Resources projects from 1990 to 2000. This fact is27
indicative of the difference in aid philosophy between the two countries.
In 2000, aid from France supported the largest number of projects in the
1970s and 1980s but declined to one-seventh of the emerging UK and thesame level as Spain.
Table 3-16. Number of Agricultural Water Resources projects implemented bymajor donors, 1990-2000
Year

IDA

FranceGermany

US

Netherlands

Japan

Spain

UK

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

2
6
1
0
4
5
0
4
2
7
5

3
10
4
3
3
8
6
4
5
3
8

6
3
1
7
3
4
9
5
5
6
10

6
9
3
4
0
0
1
0
0
1
0

6
16
21
22
8
14
11
9
24
10
10

10
14
12
11
11
15
25
16
18
10
5

2
0
0
0
0
0
0
20
39
15
15

1
1
10
2
8
4
1
7
11
11
24

Source: OECD/DAC (2001, 2002)

Table 3-17. Major donor aid for Agricultural Water Resources projects (US$ million)
Year

IDA

FranceGermany

US

Netherlands

Japan

Spain

UK

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000

197
346
54
0
332
469
0
238
95
254
123

13
48
11
26
2
88
8
12
37
20
2

28
17
4
112
19
34
125
39
40
16
13

49
40
51
25
0
0
0.2
0
0
20
0

43
25
21
24
39
19
29
19
5
9
12

198
320
327
57
302
309
870
372
390
138
36

23
0
0
0
0
0
0
2
1
1
2

6
0.4
58
0.7
4
2
1
3
4
3
14

Source: OECD/DAC (2001, 2002)

27. Japanese aid from 1990 to 2000 was concentrated, in comparison to that of the Netherlands, on largescale infrastructure projects. Japan's aid was one-half loans and one-half grants, while all of theNetherlands' aid was grants.

201

CHAPTER 3

Challenges
Bilateral donors, international organizations, and academic societies have
implemented many aid projects and realized significant achievements. One
such achievement was that 2.4 billion people gained access to safe water28
during the last 20 years, but about 1.2 billion people have yet to secure
safe water. This number is projected to grow to 2.7 billion in 2025 (Nikkei
National Geographic, 2002). Amid this gloomy projection, the financial outlook for water-related investments is so bleak that discussions by international aid agencies and academic groups since early 1990 have focused on
financial problems and how to establish sustainable financing mechanisms(Overseas Development Institute, 2002).
According to the World Water Vision prepared in 2000, the investment
needed for water was US$ 70-80 billion in 1995, a figure projected to reach
US$ 180 billion by 2025, of which US$ 75 billion is estimated for watersupplies and sanitation only (Table 3-18). Domestic public sectors and foreign ODA provided 74 to 77 percent of water-related investment needs in
1995, but this figure is projected to decline to about 23 percent in 2025
(Table 3-19) (World Bank, 2002). Based on these figures, about 77 percent
of investment needs in 2025 - US$ 180 billion - must be financed bydomestic and foreign private investors.
Table 3-18. Global water-related investment needs, 1995 and 2025 (US$ billion)
Sector1995

2025

Agriculture
Environment and industry
Water supply and sanitation
Total

30~35
10-15
30
70-80

30
75
75
180

Source: World Bank (2002)

Table 3-19. Composition of global water-related investments, 1995 and 2025 (US$ billion)
Investment source
Domestic
Public sector
Private corporations
Foreign
Donor agencies
Private investors
Total

1995

2025

45-50
12-15

30
90

9
4
70-80

12
48
180

Source: World Bank (2002)

28. http://watervision.cdinet.com/pdfs/commission/cchpt2.pdf

202Water-Related Issues and International Development

Such private sector-centered development will be problematic, especially for water supplies and sanitation. According to the World Bank, there arelarge regional disparities in private investments for water supplies and sani29
tation - they are virtually nonexistent in South Asia where water resources
are especially scarce and only US$ 250 million in Africa (Overseas
Development Institute, 2002). There are also diverse and significant problems associated with privatization itself.30 Assuming that this situation continues and international aid organizations try to increase supplies of safe
water to achieve three of the Millennium Development Goals - reducing
child mortality, improving maternal health, and ensuring environmental sus31
tainability - they will have to focus on areas where private investments arevery limited, populations are large, and water resources are especiallyscarce, such as northwestern India and Pakistan, western and northern
China, and Africa, especially sub-Saharan Africa.32
Under such circumstances, Japan and the United States jointly
announced the Clean Water for People initiative in June 2001.33 The Japan29. The World Bank's definition of South Asia includes India, Pakistan, Bhutan, Nepal, and Sri Lanka, but
the author's understanding is that South Asia here refers to northwestern India and Pakistan.
30. An example is privatization in Cochabamba, Bolivia. Under pressure from the World Bank, the government agreed to privatize the water service of Cochabamba in 1999. Aguas Del Tunari, a subsidiary ofUS-based Bechtel Corporation, would run the system. The company trebled water rates soon after it took
over and city residents began a protest that turned violent and caused hundreds of injuries. The Bolivian
government took this incident seriously and decided to re-nationalize the water service and canceled thecontract with Aguas Del Tunari. Bechtel Corporation sued the government for US$ 25 million. For
details, see "Company seeks compensation after Bolivians force re-nationalization" (http://www.brettonwoodsproject.org/topic/privatesector/p2703boliviarenat.html).
31. Within the international community, many are beginning to think that achievement of the Millennium
Development Goals should be measured in individual countries. This trend is probably influenced by arecognition that world-wide achievement is difficult, although the author believes the original intent wasworld-wide achievement.
32. The Water Poverty Index: International Comparisons, developed by the World Water Council and Keel
University's Centre for Ecology & Hydrology, is useful to identify high-priority countries.
33. Under this initiative, the United States will provide more than US$ 970 million over the next three years
to improve access to water and sanitation, promote watershed management and proper hygiene practices,
and increase the productivity of water. In addition to grant support, the U.S. will provide local currency
investment guarantees to encourage private investments in water services. Examples include the West
Africa Water Initiative (WAWI), the Community Water and Sanitation Facility, and the Development
Credit Authority program. Japan has provided more than 40 million people with access to safe drinking
water and sanitation during the past five years. These efforts will continue in the future. The Japan
Initiative aims at improving access to safe and stable water and sanitary sewage systems - (i) In a country or region where water supply coverage is relatively low, Japan will focus its efforts on sustainablesupplies of safe drinking water. Japan will also implement model projects on water resource development, including ground water development. (ii) In a country or region where water supply coverage isrelatively higher, Japan will support capacity-building for water resources management by establishing
an autonomous committee on water resource management and creating models for public participation,with women playing a key role. (iii) In populated urban areas that face low coverage of sewerage systems, Japan will support their development. (International Development Journal, 2002) Japan will imple-

203

CHAPTER 3

France Water Sector Cooperation was announced in March 2003.34 Despite
these efforts, however, the trend in international aid will remain unkind to
India, Pakistan, Bangladesh, China, and sub-Saharan Africa. For example,
the U.S. - Japan's partner in the Clean Water for People initiative - hasannounced a policy to increase its aid through the Millennium Challenge
Account. Based on a results-oriented approach, distribution from thisaccount is limited to countries that show strong commitments to good governance, human resource development in health and education, and soundeconomic policies. Other international aid organizations such as the WorldBank are beginning to lean toward a results-oriented approach as well.
When we consider these circumstances, India, Pakistan, Bangladesh, China,
35and sub-Saharan Africa - which do not receive high marks in governance may remain hard-pressed to obtain water-related assistance. This is a serious dilemma because these countries have large populations and severe
problems, and are therefore critical to achieving the Millennium Development Goals.

Future Role of Japanese Aid
Water-related problems are rapidly increasing their scope and becoming
more diverse. It would be ideal if Japanese aid can deal with all of them, butwith realistic aid policies, Japan should focus on areas based on trends andcharacteristics of international aid, its own experience, and the comparativeadvantages that come with such experience.
Problems of too much water will remain lower in priority than those of
too little water for a while, and Japan should concentrate more on the latterfrom the perspective of global aid coordination. Japan's experience andment its grant and loan aid as well as technical cooperation for this purpose in close cooperation withlocal municipalities, NGOs, and the business sector. (Website of the Ministry of Foreign Affairs(http://www.mofa.go.jp/mofaj/gaiko/kankyo/wssd/clearw.html).)
34. Japan and France have identified the following activities as part of their initial collaborative efforts: (i)Development of the Senegal River Basin, focusing on water resource management as well as improved
productivity of water for agricultural uses. (ii) Consultation and information exchange about the salinityof aquifers in Djibouti, aiming to increase water sources in the country. (iii) Create a master plan followed by feasibility studies of water supplies in Vientiane, Laos.
http://www.mofa.go.jp/region/europe/france/w_coop0303.html.
35. USAID lists elimination of corruption, protection of human rights, and rule of law as factors to improvegovernance. According to Global Corruption Report 2001 by Transparency International, corruption ratings of India, Pakistan and Bangladesh are 2.7, 2.3, and 0.4, respectively. These ratings are quite low ona scale of 10. China and most African nations also have very low corruption ratings. (http://www.globalcorruptionreport.org/download/data_and_research.pdf.) In terms of human rights, Pakistan, China, andmany African countries have not signed or ratified several international human rights covenants andhave some problems (UNDP, 2002).

204

Water-Related Issues and International Development

comparative advantages from previous water-related aid should be used toshape future contributions.
Japan implemented 35 Water Supply and Sanitation projects during the1970s. Among them, 31 were either in the sub-category of Water Resources
Policy and Administration Management (16) or River Development (15).
During the 1980s, most projects - 108 out of 194 - were concentrated on
Water Resources Policy and Administration Management. Although someemphasis was placed on Water Supply and Sanitation (small systems) as
well as on Water Resources Policy and Administration Management from1990 to 1992, Water Supply and Sanitation (large systems) projects overwhelmed others beginning in 1993 or 1994. In 2000, 31 of 33 projects werein the Water Supply and Sanitation (large systems) category.
Japan's recent experience and comparative advantages are in Water Resources Policy and Administration Management and Water Supply and Sanitation (large systems) projects. Japan is a pioneer in Agricultural Water Resources projects because it has been involved in such projects since theearly 1970s along with the IDA, France, and Germany. In the 1980s, Japan
climbed to the number four position in number of projects, and became
number one in the 1990s. Japan should continue its specialization in thesethree areas - Water Resources Policy and Administration Management,
Water Supply and Sanitation (large systems), and Agricultural Water Resources - because they are consistent with Japan's Medium-Term Policy on
36
Official Development Assistance, which was announced in August 1999.
What contributions can Japan make in Water Resources Policy and
Administration Management projects? The author believes that Japan
should emphasize social systems and regulations related to water resource
protection and water supplies. Recently some countries recognized andbegan trading water rights to improve the efficiency of water use and ultimately conserve finite water resources.37 This is a beginning framework in

36. This policy lists seven priority issues and sectors. One is Support for Poverty Alleviation Programs andSocial Development, under which the government stated "As access to safe water constitutes a vital element in supporting human health, the scarcity of water resources could conceivably result in increased
tensions in the future. For this reason, assistance for water resource development and the management
and use of existing water resources has become increasingly important." Under another priority issue,
Support for Economic and Social Infrastructure, the government declared that "Japan will continue toprovide assistance for the development of social and economic infrastructure in developing countries.
These projects will target such sectors as transportation, communication, electric power generation, andriver and irrigation facilities, and efforts will be designed to correspond to the conditions and needs ofindividual countries."205

CHAPTER 3

which markets determine the allocation and pattern of water use, and it islikely that such markets will expand in the future. Current transactions aremostly limited within a country, but they will probably lead to internationaltransactions. In the past, disputes over the water in international rivers often
38
escalated to armed conflicts between nations. In the future we may be able
to resolve these disputes by more peaceful means. There is no guarantee,
however, that forceful solutions will not be chosen because "the cost of war
and cost of water rights development are not sufficiently investigated."39.
Market mechanisms may reinforce the general tendency of water to flow
only to where the money is, and for this reason, some degree of government
intervention will be important in deciding water supplies and allocations.40
Policy assistance for efficient water use, water resource protection, andestablishment of water rights transactions41 that can aid peaceful resolutionof disputes is extremely important, as well as support for the construction ofsocial and regulatory systems to protect the disadvantaged from ill effects ofmarket-driven water supplies. Japan should push for active policy dialogues
about user fees and cost recovery of urban and industrial water(OECD/DAC, 1999).
The World Bank has recently shifted its attention from policy dialogue
and education to infrastructure loans aimed at water sector reform, but there
are still very few Water Resources Policy and Administration Management
projects undertaken by international aid organizations. Efforts in these projects would enhance the contribution of Japanese development aid.
What contributions Japan can make in Water Supply and Sanitation(large systems) projects? The OECD/DAC insists that Japan should implement Water Supply and Sanitation projects in rural, poor areas based on its

37. Examples include Chile, Mexico, several states in Australia, and Colorado in the United States. See
Tradable Property Rights to Water of the Public Policy for the Private Sector series http://www.worldbank.org/html/fpd/notes/34/thobani34.html
38. There is a detailed history of disputes over international rivers in Third Water Forum Secretariat, 2002,
Chapter 7. For a description of disputes, see Elhance (1999).
39. An interview with Professor Mikiyasu Nakayama of Tokyo University of Agriculture and Technology.
40. Government intervention may also be important from the perspective of national security. Since the terrorist attacks on September 11, 2001, the concept of national security has expanded to include cleanwater that is vital to human life. In this light, governments may seek more direct control of water supply
systems.
41. Water rights have long been traded in Japan, but "transfer of rights is hindered by turf wars between
administrative agencies and their desire to increase construction in their own jurisdiction" (Nakanishi,
1994). Based on lessons from such negative experience, Japan can provide effective advice on waterrights trading to developing countries.

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Water-Related Issues and International Development

expressed goal in the ODA Charter to reduce the number of people suffering from poverty (OECD/DAC, 1999). In reality, Japan's recent projects
have been concentrated on construction of large-scale water supplies andsewerage facilities in urban areas (OECD/DAC, 1999). It is unproductive todebate which is better - small projects in rural areas or large projects inurban areas. Both are necessary and important. Recent experience of Japanin Water Supply and Sanitation projects is overwhelmingly concentrated on
construction of large facilities in urban areas. In this sense, possible areas
for Japanese water-related aid include technical assistance or facility construction of water supplies, sewerage, and wastewater treatment in urban
42
areas, especially in countries where demand for safe water is very high.
Japanese desalination technologies43 are among the best in the world,44
creating opportunities for contributions in this area. Demand for safe wateris great in sub-Saharan Africa and other countries. Trends in international
aid are becoming unkind to these countries, although they are very important to achieving the three Millennium Development Goals of reducing
child mortality, improving maternal health, and ensuring environmental sustainability because of their large populations, scarce water resources, andwater-related health and sanitation problems.45 Despite these trends, however, aid to sub-Saharan Africa is an important part of Japanese diplomacy, as
represented by the Tokyo International Conference on African Development(TICAD).46 Projects to construct water supply facilities in sub-Saharan

42. The importance of infrastructure building is stressed in paragraph 17 of the Ministerial Declaration of
the Third Water Forum as well. The World Bank continues to value Japan's technical cooperation andaid for infrastructure building (Ueda, 2003). Assistance for wastewater treatment should include not only
the so-called end-of-pipe technologies exemplified by sewerage facilities but also factories in industries
that consume a lot of water (paper, pulp, food, chemicals, textiles, etc.). Japan has considerable experience and good technologies for wastewater treatment in such industries, so there is a lot of room forJapanese contributions in this area.
43. A seawater desalination plant is being constructed in Fukuoka, Japan, with planned completion in 2005.
Seawater collection pipes are buried under the sea floor to reduce environmental impact to surrounding
areas. Using the reverse osmosis method, this plant will produce up to 50,000 cubic meters of freshwater
per day, with an improved recovery ratio (ratio of freshwater to the original seawater) of 60 percent versus a conventional 40 percent.
44. Japanese companies have installed more than 20 percent (in capacity) of desalination plants in the world(Nihon Keizai Shimbun, 2002). The largest seawater desalination plant in the world, built by Toray
Industries, Inc., began operation in Trinidad and Tobago in April, 2002.
45. Population growth in sub-Saharan Africa is the fastest in the world, with a current population of about
600 million (JICA, 2002). There are 33 countries in the world in which daily water supplies are less thanthe minimum 20 liters per day, and 22 are located in sub-Saharan Africa. The Sahel - a semi-arid regionin sub-Saharan Africa - has serious water supply issues because of water-borne diseases such as guinea
worm, malaria, typhoid, and dysentery.

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Africa are worthwhile, not only because they contribute to achievement of
the Millennium Development Goals, but also because they serve the diplomatic interests of Japan.
Finally, let us consider Agricultural Water Resources projects. Although
it is against the trends of other major donors except the Netherlands, Japan
should continue to actively support these projects, including construction ofirrigation facilities. As stated at the beginning of this paper, growth of the
agricultural sector is more conducive to poverty reduction than that of othersectors. Although the extent of this effect is different in every developing
country, it is especially true in countries where income discrepancies are
small. For this reason, projects aimed at stabilizing or increasing agricultural production such as construction of irrigation facilities are very important
for agriculture-centered economic activities. Also, considering the low efficiency of irrigation water use in developing countries as a whole, improved
efficiency will reduce the amount of agricultural water needed for irrigation,and thus contribute to meeting some of the rapidly growing demand forindustrial and domestic water.
It may serve Japan well to shift its focus from Asia to Africa in this area.
As mentioned earlier, Japanese contributions to Agricultural Water
Resources projects were quite significant, especially in the 1990s. However,
irrigation-related projects in Asia are not feasible these days, either financed
through loans or grants. This is especially true if such a project is designed
to increase the production of crops that are likely to be exported to Japan inhigh volumes. This recent trend is reflected in OECD's CRS - the number ofAgricultural Water Resources projects funded by Japan declined sharply in
2000, reversing its trend in the 1990s because of concern by the Liberal
Democratic Party or the Ministry of Agriculture, Forestry and Fisheries thatcheap imports from Asia may threaten Japanese farmers. In this sense, irrigation projects in Africa might be more feasible because the region is farther away from Japan and has fewer crops that are likely to be exported toJapan on a large scale. Agricultural Water Resources projects in Africa
should be promoted aggressively because increased food production

46. In the Second Tokyo International Conference on African Development (TICAD II) held in 1998, theJapanese government committed to provide approximately \90 billion of grant aid over the next five
years. By October 2000 about \9.5 billion of aid had been provided for water supplies (Ministry ofForeign Affairs, 2001). The importance of water-related efforts is going to be stressed again in TICAD
III, which is scheduled in October, 2003 (JICA, 2003).

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Water-Related Issues and International Development

through such projects will be very important to achieving the Millennium
Development Goals.47

References
Biswas, Asit. K. 2004. From Mar del Plata to Kyoto: an analysis of global
water policy dialogue. Global Environmental Change 14:81-88.
Elsevier Ltd.
Cosgrove, William J. and Frank R. Rijsberman. 2000. World Water Vision:
Making Water Everybody's Business. Earthscan Publications.
http://www.worldwatercouncil.org/Vision/cce1f838f03d073dc125688
c0063870f.shtml.
Elhance, Arun P. 1999. Hydropolitics in the Third World - Conflict andCooperation in International River Basins. United States Institute ofPeace.
Environment Agency of Japan. 1977. Syouwa 52 nenndo ban Kankyo
Hakusyo [Showa FY 52 Environment Report]
Garn, Harvey A. and Zavala, Alfonso. 1990. FY90 Annual Sector Review
Water Supply and Sanitation. General Operational Review. WorldBank______. 1988. FY88 Annual Sector Review Water Supply and Sanitation.
General Operational Review. World Bank.
International Development Journal. 2002. Yohanesuburugu Samitto wo
Oete [After the Johannesburg Summit], Kokusai Kaihatsu Janaru[International Development Journal], November.
International Water Management Institute. 2001. Water for Rural
Development.
JICA. 2003. Frontier. February.
_______. 2002. Mizu Bunya Enjyo Kenkyukai Houkokusyo [Study for
Assistance in the Water Sector].
Land and Water Bureau, Ministry of Land, Infrastructure and Transport.
2002. Heisei 14 nendo Nihon no Mizu Shigen [FY Heisei 14, Japan's
Water Resources].
Ministry of Foreign Affairs of Japan. 2001. Wagakuni no Seifu Kaihatsu

47. Under the Japan-France Water Sector Cooperation initiative, announced in March 2003, Japan andFrance plan to join forces, among others, to increase the productivity of agricultural water in the Senegal
River Basin.

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Enjyo (ODA) Hakusyo 2000 [Japan's Official Development
Assistance, Annual Report 2000].
Molden, David, Upali Amarasinghe, and Intizar Hussain. 2001. Water for
Rural Development: Background Paper on Water for Rural
Development Prepared for the World Bank. Working Paper 32.
International Water Management Institute. http://www.iwmi.cgiar.org/pubs/working/WOR32.pdf.
Nakanishi Ritsuko. 1994. Mizu no Kankyo Senryaku [Environmental
Strategy in the Area of Water], Iwanami Syoten].
Nakamura Ryota. 2000. Saikin no Mizu ni Kansuru Kokusaiteki na Ugoki
no Takamari [Growing Moves regarding Water Issues], ARDEC
18:16-17. Overseas Agricultural and Rural Development Center.
Nikkei National Geographic. 2002. National Geographic Nihon ban[National Geographic, Japan]. September.
Nihon Keizai Shimbun. 2002. Seminar Mizu No Jidai Ga Kita [The Era ofWater Has Arrived]. December 11. Nihon Keizai Shimbun
OECD. 2002.International Development Statistics: 2002 edition.
_______. 2001.International Development Statistics: 2001 edition.
OECD/DAC. 1999. DAC Development Cooperation Review Series, Japan.
Overseas Development Institute. 2002. ODI Briefing Paper, July 2002.
Timmer C.P. 1997. How Well Do the Poor Connect to the Growth Process?
Consulting Assistance on Economic Reform II Discussion Paper No.
17. Harvard Institute for International Development (HIID).
Third Water Forum Secretariat. 2002. Sekai no Mizu to Nihon [World Water
and Japan].
Thobani Mateen. 1995. Tradable Property Rights to Water. The Public
Policy for the Private Sector. February. World Bank.
Transparency International. 2001. Global Corruption Report 2001.
Ueda Satoshi. 2003. Mizu Bunya deno Paatonashipp no Kadai to Nihon ni
Kitaisuru mono - Washinton DC no Shiten [Challenges to Partnerships
and Expectations for Japan in the Area of Water - From the Viewpointof Washington, DC], Kokusai Kaihatsu Janaru [International
Development Journal]. March.
UNDP. 2002. Human Development Report 2002, Oxford University Press.
World Bank. 2002. Bridging Troubled Waters - Assessing the World Bank
Water Resources Strategy. World Bank.
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Water-Related Issues and International Development_______. 1996. World Bank Annual Report.
_______. 1995. World Bank Annual Report.
_______. 1994. World Bank Annual Report.
_______. 1992. World Bank Annual Report.

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Defining and Promoting Governance
Masanori Kondo
Governance is becoming an increasingly important issue in development
assistance. The Bush administration in the U.S. has made improved governance a prerequisite for a country to be eligible for increased aid. SecretaryGeneral Kofi Annan believes it is the most important issue related to poverty reduction in developing countries (UNDP, 2002). International organizations such as the World Bank, as well as bilateral donor agencies in developed countries, are directing more aid to countries that exhibit 'good' governance. What is this concept called governance? How is it influencing development aid? What are recent aid trends in the field of governance? What is
expected of Japan? This paper aims to answer these questions.
We will first clarify the general concept of governance and discuss its
importance from three perspectives: international affairs, development aid,
and economics. Next we will look at the philosophy and governance-related
activities of the World Bank and the United Nations Development Program(UNDP) as representatives of multilateral aid organizations, followed by an
examination of the same issues for the U.S. and the United Kingdom as representatives of bilateral donors. The final section discusses a desirable
future course for Japanese aid directed toward improving governance, basedon the international trends and the actions of other donors.
What Is Governance?

Use of the term 'governance' is recent and its definition is not set in stone.
The term is ambiguous because the concept includes both political and economic governance, and interpretations differ based on the emphasis accorded each aspect. Political governance includes various elements of democracy such as separation of powers, free elections, rule of law, freedom of themedia, and respect for human rights. Economic governance includes fiscal
balance, government spending, tariff rates, performance of public enterprises, size of non-performing loans, decentralization, government efficiency,transparency, and degree of corruption. Donors interpret governance inKondo is assistant professor at International Christian University. This paper was originally written in April
2003 based on the author's research as a Japan International Cooperation Agency (JICA) visiting researcher
for the fiscal year 2002. This paper was written in April 2003.

212

Defining and Promoting Governancemany ways, often based on whether or not they agree that multilateralorganizations should be involved in political issues,1 the extent to whichbilateral donors can interfere with the domestic affairs of recipient countries, and whether donors should use coercion to force democratization.
In addition to the elements of political and economic governance, someobservers have introduced a third element. The World Bank calls it 'institutional governance', but others use 'civic governance' (Mahbub ul Haq
Human Development Centre, 1999) or 'administrative governance'(Ohshiba,1994). This paper does not analyze in detail how this third element is different from political and economic governance, but we need torealize that the concept of governance includes many elements, and donor
definitions vary. Broadly speaking, international financial institutions suchas the World Bank have a narrow interpretation of governance and exclude
political governance. Bilateral donors have a slightly broader interpretationand include political governance. The United Nations agencies such as
UNDP are in between. There are differences among bilateral donors as well.
For example, the U.S. Agency for International Development (USAID)
regards governance as almost synonymous with democratization, while the
U.K. Department for International Development (DFID) sees it as a broader
concept that includes civic participation to reduce poverty.
This paper deals with governance in the areas of politics, public administration, or civic societies, commonly referred to as 'good governance', andnot with 'corporate governance' which is frequently used in relation to
fraudulent practices of some major U.S. companies such as Enron. The difference, however, may not be large or fundamental given that governance of
public corporations is included in 'good governance'.
Why Governance Is Emphasized

The development assistance community recently began to emphasize governance when the World Bank used the term 'good governance' officially forthe first time in 1989 in relation to its assistance to African countries. It is
important to note that the term governance was a compromise in a debate
between the U.S. and other countries - led by the Scandinavian nations that had been going on for several years. The U.S., with an expressed priority of democratization for developing countries, gave up using that term out
1. The European Bank for Reconstruction and Development (EBRD) is the only multilateral aid organization that refers to 'multiparty democracy' in its establishing agreement.

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of consideration for the Scandinavian countries that opposed that idea.
Instead, the U.S. tried to popularize the term governance and thereby promote democratization in developing countries through development aid.
The official use of the term 'governance' by the Bank in 1989 can also beseen as its first step, albeit an indirect one, to become involved in political
governance, which was not allowed by its Articles of Agreement.
The term 'governance' came into use in development during the 1990s in
the midst of a changing world.
Cold War Ends. The end of the Cold War led to international recognition
that a market economy is the most desirable governing system. During theCold War, even corrupt, dictatorial governments could receive aid if
deemed necessary to contain communism. The end of the Cold Warchanged the situation and democratization and governance were selected asa new standard of value judgment.
Democratization. Also important was progress toward democratization in
Latin America and Southeast Asia from the 1980s to the 1990s. In particular, the Asian economic crisis in 1997 popularized the notion that developmental dictatorship is not sustainable in the long run, and contributed tostrengthening international recognition that democratization is important.
There are, of course, many criticisms of uniform imposition of Westernstyle democracy on developing countries, but it is safe to say that the importance of democratization is now widely recognized.
Good Institutions. Historical reviews of international development aid illuminated the importance of good institutions. A wave of market and economic liberalization began in the 1980s as exemplified by structural adjustment
programs of the International Monetary Fund (IMF) and World Bank, butsuch programs were not producing satisfactory results. Prodded by thisrecognition, the World Bank began research on aid assessment and published Assessing Aid in 1988, which concluded that effectiveness depends
on good policies and good institutions. The basic notion is: We must construct good institutions before planning good policies because even good
policies will be ineffective in a country without good institutions. This
recognition was shared by other donors and led to an emphasis on governance in international aid.
Donor Introspection. Donors looked at themselves. As the influence of
civil societies and NGOs increased, the responsibilities of donors and recipients were called into question. A prime example was a case in Indonesia
where internal World Bank documents were disclosed in a newspaper. It
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Defining and Promoting Governancebecame public knowledge that 20 to 30 percent of aid was diverted into thewrong hands, and NGOs and civil societies questioned the accountability ofdonors.2 In the former Zaire and other countries, NGOs have gone to court
to question whether a new administration is responsible for repaying a debt
as a result of aid to corrupt dictators. Voices demanding accountability andtransparency for donors are getting louder. In response to these developments, the British DFID acknowledged that by providing aid to developing
countries with poor governance, donors should recognize that their actions
have political consequences in the countries they support (DFID, 2001).
Terrorism. Terrorist attacks against the U.S. on September 11, 2001
changed the world. Observers still debate whether these attacks, organizedfrom Afghanistan, were a direct result of poverty. But the logic that countries with weak governance can be a breeding ground for terrorism is widely
accepted, and this logic now has significant influence on governance-related
assistance from the U.S. and other developed countries. Against this background, President George W. Bush announced before the Monterrey
Conference in 2002 that the U.S. would increase its development aid by
US$ 5 billion during the next three years. He said this increase was contingent upon good governance, which could also contribute to reducing poverty and the fight against terrorism. In addition, the subsequent conflicts with
Iraq and North Korea further impressed the importance of governance on
the international society. From the 1950s to the 1980s the focus of international aid shifted from projects to programs and policies. Beginning in the
1990s and on into the 21st century, the focus has shifted to institutions andgovernance.
Academic Progress in Economics

As the international situation changed, there was some progress in the studyof governance in the field of economics. Mainstream research by economists analyzed effects of governmental regulations on economic activities
and decision-making mechanisms in political processes. Examples of theformer include rent-seeking analyses by neoclassical economists such as A.
Krueger and J. Bhagwati since the 1970s and research by development
scholars such as R. Bates and R. Wade.
These two schools concluded that government regulations lead to ineffi2. There is a detailed research by Kuroiwa of the Japan External Trade Organization Institute ofDeveloping Economies (IDE-JETRO).

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cient use of resources, but their philosophies are quite different. While theformer focused on government failures, the latter did not dispute the role ofgovernment but instead attributed the problem to unequal power such as theinfluence of special interest groups on government regulations.
The third school that analyzed political decision-making mechanisms
includes M. Olson, J. Buchanan, G. Tullock, who established the public
choice theory. Their interests lie in what kinds of decisions are made in asociety comprised of different members and not in what kinds of effects
these decisions have on economic activities.
There is a relatively new research field called 'political economics'.
Political economists seek to analyze inefficient resource allocations as aresult of government pursuit of its own interests. We can find academic
progress in that they use more rigorous tools of economics than those usedby neoclassical economists such as Krueger and Bhagwati. Research in thisnew field includes macroeconomics (A. Allesina, A. Drazen, T. Persson, D.
Rodrik, G. Tabellini) and trade (G. Grossman, E. Helpman). The progressof game theory has aided A. Dixit, J. Tirole, J. Wilson and others in theirdevelopment of the general theory of bureaucratic systems. They see public
officials as agents who should serve their clients - the general public - andtry to elaborate their theory on issues such as how interest groups change
officials' incentives. In addition, the issue of corruption is being researchedby P. Mauro, S. Rose-Ackerman, A. Shleifer, V. Tanzi, R. Vishny, and others.
We note, however, that not all of these theories are designed to analyze
governance in developing countries. For example, the theory of macroeconomic policy is largely premised on an American-style democracy based ona two-party system. It is doubtful that this theory can be used to analyze
governance in developing countries which are still fledging democracies
where elections are dishonest, laws are not properly enforced, or freedom ofspeech is not fully ensured. The economic theory of this school often goesbeyond analyzing lobbying that surrounds official regulations and perceives
the government itself as an interest group. If this line of thinking sees governments that receive development aid as sinister organizations by nature,by logical extension it may conclude that aid itself is meaningless.
Empirical research using cross-country data is probably more useful forpractitioners of development aid. This research adds democracy and governance as explaining variables of cross-country data based on the growth theory which was re-energized in the mid-1980s. It aims to clarify the correla216

Defining and Promoting Governancetion between democracy, governance, and economic growth. Several
researchers have analyzed correlations between variables: democracy andeconomic growth by R. Barro, political factors and economic growth by A.
Allesina, governance and aid effectiveness by a World Bank research groupheaded by D. Dollar, and governance and economic development by aWorld Bank Institute (WBI) research group headed by D. Kaufmann.

Multilateral Aid Organizations
World Bank

Philosophy Toward Governance
Since the World Bank is explicitly prohibited by its Articles of Agreement
to "interfere in the political affairs of any member"3 in the area of governance, the Bank has focused not on political system reforms but on economic reforms such as improved administrative efficiency and public finance. It
is difficult for the Bank, at least officially, to curtail its aid because 'good'
governance deteriorates. This has caused conflicts over co-financing withbilateral donors that at one time wanted to stop their aid to dictatorial governments such as Kenya. The Bank's thinking toward governance became
more varied beginning in 1989 when it officially used the term for the firsttime in the context of its aid to Africa.
In 1992 the Bank issued a strategy paper on governance and defined it as"the manner in which power is exercised in the management of a country's
economic and social resources for development" (World Bank, 1992).
When the Bank began to deal with governance more aggressively there wassome backlash, mainly from Scandinavian countries, but the Bank continued on its course because of U.S. influence. It is said that the personalefforts of a vice president during 1995-96 was quite influential as well.
Unable to change its Articles of Agreement, the Bank changed their interpretations. It ensured compliance with its Articles by insisting that it would
not require improved governance for 'political' reasons but would emphasize
good governance for an 'economic' reason because it would contribute tobetter resource allocation. In this way the Bank established a rationale forwider intervention in the area of governance.

3. Article IV, Section 10, Political Activity Prohibited of the IBRD Articles of Agreement prohibits the
Bank from making loan decisions based on the political character of the recipient country.

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In the mid-1990s, incorporation of governance into its activities becamea central issue. One indication was that Assessing Aid emphasized the relationship between aid effectiveness and governance. The Bank prepared ananti-corruption strategy in 1998 and strategies for public sector reform andstrengthening governance in 2000. The World Development Report 2002,
subtitled Building Institutions for Markets, featured Bank efforts toward
governance up to that time. The report insisted that while complicated legal
systems, corrupt judiciary, biased financial systems, and complex recording
systems are hurting the poor and hindering development in many countries,
quite a few countries are achieving income growth and reducing poverty byreforming such systems in accordance with the demands of residents andconstructing new institutions. The chief economist of the Bank, N. Stern,said, "Without effective institutions, poor people and poor countries are4
excluded from the benefits of markets".
Meanwhile, the demands on the Bank are shifting as more and moredeveloping countries ask for policy advice in deregulation, introduction ofprivate sector initiatives in public services, and capacity building in the public sector (Kusakabe, 2002). Consequently the Bank's budget for supporting
5
institution building to improve governance doubled in the four years from1997 and reached US$ 4.5 billion in 2001.
The Bank lists three priority areas in its governance policies - public
sector reform, decentralization, and improved legal systems. The first area
includes reforming civil service systems, improving financial/budgetary/tax
management, rationalizing/privatizing state enterprises, and reforming public services. Decentralization is considered important to ensure accountability. The third area includes enacting/improving laws and improving judicial
procedures. Bank support for governance is very diverse. The following
sub-sections describe the Bank's efforts in the area of governance and areorganized by topics.
Country Studies and Fund Allocation
As a part of its support to improve governance in developing countries, in1999 the World Bank began to implement country-by-country studies
designed to help improve governance and understand structural causes of

4. http://econ.worldbank.org/wdr/subpage.php?sp=2391
5. It includes the budget for public sector management programs in addition to programs whose core project is institution building.

218

Defining and Promoting Governancecorruption. Called Analytic and Advisory Activities (AAA), they include
seven reviews: Institutional and Governance Review (IGR), Public
Expenditure Review (PER), Country Procurement Assessment Review(CPAR), Country Financial Accountability Assessment (CFAA), Social and
Structural Review (SSR), Anti Corruption Diagnostic Survey, and Surveyof Public Officials (Table 3-20). The Bank has taken a position to rigorously monitor the extent of improved governance in developing countries basedon these reviews.
Table 3-20 Framework for World Bank analytic and advisory activities
Activity

Purpose

IGR - Institutional andGovernance Reviews

An analytical framework for governance management and performanceof public agencies that focuses on policy-making processes, provisionof public services, and transparency.

PER - Public Expenditure A traditional method to analyze public sector management. Mainly
Review
focuses on budget structures and budgeting processes but also covers
general public sector problems (such as decentralization and organizational reform) in each country.
CPAR - Country
Procurement
Assessment Review

Analyzes the soundness of public sector procurement structures
including legislative framework, organizational capacity, and discrepancies between official and actual procedures.

CFAA - Country Financial Analyzes the financial management system and finance/accounting
Accountability
environment for the public and private sectors. The objective is toAssessment
enhance financial management and risk management capabilities ofborrowers.
SSR - Social and
Structural Review

Assesses medium-term structural problems and forecasts the level offuture growth and poverty reduction.

Anti-corruption diagnostic Uses analytical tools to discern corruption of citizens, private compasurvey
nies, and policy-makers. Measures the cost of corruption and quality of
public services and the business environment and categorizes vulnerabilities of the public sector. The purpose is to have discussions of survey results with government agencies, the private sector, and representatives of civil society and to increase awareness of organizational
reforms.
Survey of public officials A survey of conditions of and incentives for public services.

One of the reasons the Bank began these studies was to increase its
emphasis on governance in country-by-country fund allocations. In 1999 theBank mandated that every Country Assistance Strategy (CAS) consider
governance issues, and IDA fund allocations also began to be influenced by
the quality of governance. A review of CAS for during 2001 and 2002
revealed that about 80 percent discussed corruption and governance andtwo-thirds were clearly centered around's governance. These CAS distin219

CHAPTER 3

guished countries with a commitment to reform from those without andplanned different activities accordingly. According to its public sector
reform strategy published in 2000, the Bank aggressively supports public
sector management reforms in countries that have shown a clear commitment. In countries without a commitment, it assists capacity building andprevention of corruption. The assessment of governance in country-bycountry fund allocations is based on a country's macroeconomic indicators,
including the poverty situation, quality of governance, and progress of past
Bank-assisted projects. The assessment of governance is based on a somewhat subjective rating by the staff, which is in turn based on the country
studies mentioned above. Governance indicators being developed by the
Bank itself are not yet used.
Structural Adjustment Loans
Recently it has become important for the Bank to not only consider governance in deciding country fund allocations, but also to use the so-called
Structural Adjustment Loans (SALs) to support improved governance inrecipient countries from a macro perspective. As with conventional SALs,
these SALs provide financial aid without construction of infrastructure on
the condition that the recipient government implements reforms. But unlike
conventional SALs provided in emergency situations such as foreign currency crises and rapid inflation - often implemented along with macroeconomic stabilization policies such as devaluing local currency - these governance SALs are solely for administrative reform.
These governance-related structural adjustments focus mainly on government spending; components include minimizing fiscal risks, helping
establish legal credibility, and fiscal monitoring. Because it is easier forrecipient governments to receive funds than implement reforms with 'normal' SALs, these new SALs are divided into more tranches than usual - four
to five - and there is a greater need to watch monitor the recipient government, which makes it necessary to increase local staff. Having more local
staff, however, inevitably becomes a problem as the local government
learns the internal workings and philosophy of the aid organization and it
becomes easier to find excuses when reforms fail. These programs require
highly sophisticated management and administrative skills.
In India, one of the largest recipients of Bank aid, this kind of SAL
accounted for about 10 percent of new loans over the past three years. These
SALs are provided not to central governments but rather to provincial gov220

Defining and Promoting Governanceernments. The Bank chooses provinces that are eager for reform and shoulders the temporary fiscal cost of improving governance. For example, thegovernment of Uttar Pradesh agreed to receive a loan on the condition thatit reduce the number of its employees by two percent each year. One
remaining question is what to do with the so-called poor performing countries where governance is poor, leaders do not show commitment toreforms, and there is an enormous number of poor people. The Bank's
answer to this question will be explained in a section that deals with DFIDof the United Kingdom.
Efforts to Eradicate Corruption
One of World Bank's priorities in the area of governance is eradication ofcorruption. Its first anti-corruption program was a workshop in Uganda heldin 1994, and the Bank began full-fledged efforts when the President
announced its intent to tackle corruption in member countries at the 1996
World Bank-IMF Meeting. A Bank report categorized its anti-corruption
strategies and activities since 1997 - minimizing irregularities and corruption in Bank projects, helping countries that promote anti-corruption measures, mainstreaming a concern for corruption in Bank activities, and highlighting international efforts to combat corruption (World Bank, 2000).
Interest in controlling corruption is rapidly growing inside the Bank. To
control irregularities and corruption in procurement, financial management,
and audits, the Bank established a special internal committee (Committee ofSponsoring Organizations of the Treadway Commission) in 1997. In FY99
it implemented an anti-corruption action plan for all employees to enhanceawareness. Now the Bank is trying to coordinate with other programs andorganizations to combat corruption.
Currently more than 30 countries receive Bank assistance to promoteanti-corruption measures. Examples include tax reform in Latvia; judicial
reforms in Albania, Guatemala and Morocco; and administrative/civil service reforms in Bolivia and Tanzania. In addition, the World Bank Institute(WBI) has held seminars and training courses for lawmakers, public officials, auditors, media employees, and NGOs in 35 countries. This particular
activity is based on a strategy to combine capacity-building, governance,
and the fight against corruption with the concept that improved governanceand anti-corruption programs depend on knowledge, information, politicalleadership, and will. Africa is considered most important in this area. The
Bank has already implemented training programs and prepared country
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action plans for Benin, Ethiopia, Kenya, Ghana, Malawi, Tanzania, andUganda.
An interesting experiment supports special administrative zones inIndonesia, Venezuela, and Russia. The concept is to draw from the experience of 'special economic zones' in China and other countries and establish'special governance zones'. Admitting that a comprehensive and systematic
governance reform is difficult in these countries, this project attempts toselect a limited number of municipalities with good governance and lesscorruption, try out a small-scale anti-corruption strategy, and if successful,apply it to other regions. Harvard University and research institutions fromeach of these three countries are cooperating. There are some remaining
issues, however, such as whether the experience of a special governancezone is applicable to other regions and to what extent corruption can beeradicated.
It is also important for the Bank to promote international efforts to combat corruption. Together with regional development banks such as ADB, theBank has established a joint working group for policy coordination andinformation sharing. The group is strengthening ties with UNDP, WTO,
EU, bilateral donors, and NGOs, including human rights groups. In addition, its staff is advocating for eradicating corruption by attending international conferences and using the media. Cooperation between the Bank andother donors in governance and institution-building covers many areas,
including controlling corruption, civil service reform, decentralization, judicial/legislative reform, taxation/government administration, management ofpublic spending, legislatures, and the media.
Improving Judicial Systems
After corruption, improving judicial systems is probably the most importantarea of the Bank's technical assistance. For example, there was a successfulprogram in Bangladesh that helped simplify judicial procedures and construct a system of alternative conflict resolution based on social norms. Poor
people in Bangladesh used to have very limited access to the judicial system, but the establishment of small claims courts shortened the average trial
period from three years to two months and increased access to court andenhanced transparency of the system. Similar projects have been implemented in El Salvador, Thailand, and Uganda. In these countries, poor people who could not pay high costs or read court documents can now use thejudicial system.
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Defining and Promoting GovernanceIndirectly related to improving judicial systems, the Bank is also supporting establishment of ombudsman systems. In Peru, the Bank lobbied foran ombudsman's office in cooperation with local NGOs. Through this program the Bank provided technical assistance and implemented training programs to strengthen the organization and public relations of the ombudsman
system; evaluate the budgeting process, local governments, and pension
plans; regulate and manage public services: and increase efforts to help thepoor and aged. The Bank cites progress in decentralization of services,
coordination between the state and civil societies, formation of civil societies, and monitoring state activities as achievements from this program.
The Bank's activities in the area of governance are aggressive and diverse,
ranging from country studies and fund allocation decisions to structuraladjustment loans and various technical assistance projects.
Attempts to Create Governance Indicators
A group of WBI researchers led by D. Kaufmann researched many aspectsof governance, including the relationship between corruption and development. Especially important is their attempt to create governance indicators.
In 1999 they published two papers: Governance Matters and Aggregating
Governance Indicators. They define governance as the traditions and institutions by which authority in a country is exercised (Kaufmann et al., 1999).
Based on more than 300 governance measures compiled from various
sources, they constructed six aggregate indicators corresponding to six fundamental governance concepts - accountability, political stability, government effectiveness, regulatory quality, rule of law, and corruption. They
then used cross-country data to verify the correlation between the six indicators and other data such as income, education, and health.
It became clear, however, that these indicators were unusable in actual
Bank operations due to problems of transparency, political acceptability,
and continuous collection of data. Consequently, alternative governanceindicators were considered in informal meetings of the OECD/DAC andother forums from 1999 to early 2001. A project to create the so-called 'second generation' indicators was launched by researchers of the World Bankand OECD/DAC with a financial assistance from the British government.
These indicators are designed to measure governance performance otherthan that related to politics, especially administrative efficiency, in accordance with the Articles of Agreement of the World Bank. The project wants
to avoid the problems associated with the indicators developed by223

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Kaufmann et al. (1999) Researchers are still working on the second generation indicators, but at present they are far from complete.
Causal Relationships. The causal relationship between the indicators anddevelopment has not been proven beyond doubt, although there has beensome progress from previous research. Correlations with the first generation
indicators are weak and those with other indicators including those specified
in the Millennium Development Goals (MDGs) have not been satisfactorily
tested. The DAC believes that researchers need to overhaul the value system
and analysis framework with the MDGs in mind. Also, the second generation indicators do not directly deal with participatory government and otherrelated issues. For this reason it has been pointed out that the Bank needs tocooperate with other organizations that directly deal with democratization,
participatory government, and human rights. Donors have noted the importance of using the indicators to measure the success of aid in the future.
Appropriate Indicators. Selection of appropriate indicators is still problematic. For example, even those within the DAC are reluctant to see thetime required for a telephone installation as a sub-indicator of governance.
The salary level of public officials relative to the private sector cannot be
used without studying how it is linked to performance. There is one indicator of corruption in the second generation group, but contrary to the original
intent, it is not quite objective because it is based on questionnaires.
Currently the DAC is re-selecting the sub-indicators that will be the basis of
the second generation indicators. It is expected to take another year or so tofinish this task.
Spreading the Word. A more important issue is that these second generation indicators are barely known outside the relevant Bank departments, letalone outside the Bank. Although these indicators seem to be concentrated
on the concept of government effectiveness, simplifying them should beconsidered to make them more understandable to the public, as well as integrating them into the human development index. Indicators should also be
reinforced by case studies. Reinforcements that are desirable but not yet
implemented include ex-post evaluations of fiscal aid projects designed to
improve governance, case studies where governance is hindering development, learning from successes and failures of past development projects,
and ex-post evaluations of technical assistance projects in countries withpoor governance.
Within the second-generation indicators project, researchers are reviewing the sub-indicators that will be the basis of the new indicators. There is224

Defining and Promoting Governancean additional plan to create a 'menu of indicators' which is a matrix of countries (on the y axis) and sub-indicators (on the x axis). It is noteworthy that
researchers are reconstructing the indicators in such a way that a country's
problems are revealed on the matrix, rather than covering all countries in atime series or ranking them with one comprehensive indicator.
United Nations Development Program (UNDP)

Philosophy Toward Governance
It is not a stretch to say that governance is the most important area of assistance for UNDP. During the five years since 1992 when the emphasis on
governance became stronger, the fund allocated for governance aid grewalmost four-fold. About a one-half of all programs implemented by UNDP
from 1992 to 1996 were in governance. Governance topped the list of six
priority areas specified by UNDP (the other areas are poverty reduction,
conflict prevention and post-conflict reconstruction; environmental protection and sustainable energy development; information and communication
technologies (ICTs); and HIV/AIDS. The largest recipients of UNDP governance aid are in Africa, and most aid is in the area of fiscal and public sector management. This area accounts for about one-half of UNDP aid toLatin America and about 20 percent to the Asia and Pacific region.
UNDP mentioned its serious efforts in governance for the first time in
the 1994 report, Initiatives for Change. Such initiatives are essential to realize development with an emphasis on priority areas such as poverty,
women, and the environment. The 1997 UNDP paper, Reconceptualising
Governance, defined governance as "the exercise of political, economic andadministrative authority to manage a nation's affairs". It argued that soundgovernance requires public resources and problems to be managed effectively, efficiently, and in response to the needs of society, which in turnrequires public participation, accountability, and transparency. In the same
year, UNDP published Governance for Sustainable Human Development
and added an interpretation that its efforts in governance should contributeto sustainable human development. This paper emphasized the aspects of
empowerment, employment, fairness, and the environment in the development process. With the 1997 publication of Corruption and Good
Governance, the year provided a fresh reminder about the importance of
UNDP efforts toward good governance.

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Implementation Structure
In 1995 UNDP created the Management Development and Governance
Division (MDGD) to control the entire framework of governance. The
MDGD aims to develop governance assistance programs, strengthen assistance for controlling corruption, and enhance the roles of UNDP governance-related divisions in relation to other UN agencies and bilateral
donors.
UNDP established a Thematic Trust Fund (TTF) for democratic governance in response to growing requests for policy advice and technical assistance in governance. This fund was established as a part of UNDP's strategic plan that includes the latest Global Cooperation Framework (GCF) to
provide support and coordination at the national, regional, and global levels.
This fund is capable of quick disbursements but recipients are limited to theleast-developed countries and countries in conflict.
UNDP opened the Democratic Governance Centre in Oslo in May 2002
6
to promote the importance of governance in the UN system. The OsloCentre gathers governance-related information from UNDP headquarters
and 135 country offices. Based on such information the Centre makes suggestions about UNDP governance policies, provides policy assistancethrough country offices, publicly promotes the importance of governance,
forms networks with specialized agencies and research organizations, andcirculates internationally the lessons learned in individual countries. Thiskind of international effort is appropriate for UNDP because its budget israther limited. However, we need to carefully monitor the future level ofcooperation between the World Bank and major bilateral donors.
Support for Democratization
Democratization is an important area for UNDP. In the past it has aggressively promoted capacity building of political parties and civil society
organizations, empowerment of women in lawmaking, and education oflawmakers and legislative employees.
Legislative Systems. As an example of strengthening legislative systems,
UNDP provided technical assistance and trained lawmakers in East Timor
when the new constitution was being drafted. In Niger, it taught inexperienced lawmakers how to improve communication with citizens through thecivil society and mass media. In Peru it constructed an intranet, database,
6. http://www.undp.org/governance/oslocentre.htm

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Defining and Promoting Governanceand e-mail system that connected all legislative offices to make it easier forlawmakers to find past data and cases when they are drafting new bills. In
Tajikistan, UNDP supported the legislature in drafting a new constitution
after a civil war and educated representatives of political parties about theirroles and functions in a democratic society. In Cambodia, Laos, andVietnam, it advised government employees and representatives about legislative processes. In Mongolia it provided assistance in drafting an anticorruption law and established a new labor law with participation of labor
unions.
Elections. In the field of election assistance, UNDP is trying to establish
independent election administration systems, improve election
planning/monitoring/budgeting, and promote citizen/voter education. In
Sierra Leone, for example, it played a leading role in a 2002 election byorganizing the national election committee, educating voters, and supporting election inspectors and political parties. It also provided assistance in anelection in East Timor, including monitoring, information technology support, capacity building for the election committee, and voter education.
Access to Information. UNDP is trying to improve access to information
by supporting mechanisms that ensure freedom of speech, improve media
education and professionalism, and enhance the role of women in the
media, among others. In Indonesia, for example, it tried to improve thetransparency of legislative discussions by establishing a media center in thelegislature and promoting disclosure of information about proceedings anddecisions. In Mozambique it carried out an education program on journalism and management and administration of mass media. It also provided
related equipment in an attempt to strengthen the independent broadcast andprint media.
Judiciary. UNDP is involved in raising citizen awareness about reforms,
simplifying judicial systems, enhancing access to legal services for the poor,disseminating information about the judiciary, constructing alternative andinformal mechanisms for conflict resolution, and promoting human rights
and international human rights standards. In Nicaragua, for example, it supported the national committee to help restore citizen confidence in the judiciary.
Support for Decentralization
UNDP recently increased the number of its projects that support decentralization. In 2001, 253 such projects were implemented in 95 countries. They
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were categorized into decentralization policies between the central and local
governments, assistance to local governments, partnerships between local
authorities and civil society organizations, and assistance to the society.
Projects included technical assistance for decentralization policies, support
for local elections, capacity building for local government officials, promoting NGO participation in policy making/development processes andimproving the transparency of such processes, and support to organize thepoor in the Arab region augmented with capacity development for citizens
and women's participation. Successful examples include capacity development for government officials in Ethiopia and India, and workshops in local
communities in Ecuador.
UNDP is also supporting administrative reforms as a means to reducepoverty through participatory processes. In Uganda, for example, it implemented a program to promote democratic governance to reduce poverty that
attempted to involve residents in community development. A project inPapua New Guinea sought to strengthen national and local planning. In
Honduras, regional development projects were prioritized with the participation of residents. With cooperation of the mayor, every item from tourism
promotion to improving the transparency of public funds was discussed.
UNDP is positioning this pilot project as a model for decentralization in
Latin America and plans to replicate it in other countries.
UNDP has an assistance scheme called Local Initiative Facility for
Urban Environment (LIFE). This is a mechanism to promote dialogue
among local governments, people with low incomes, the private sector, andNGOs to tackle urban poverty and improve quality of life. A small fund of
about US$ 50,000 is given directly to NGOs to promote policy dialogues.
This scheme was implemented in 12 countries at the community, regional,
and country levels.
Improved Public Administration and Civil Service
As with the World Bank, UNDP believes it is important in public sector
management to create an environment where markets function. In this area,
UNDP initially focused on three issues - organizational/administrativereform, personnel training, and improved management/administrative
capacity. For this reason, its assistance centered on reviewing the functions
and institutions of government ministries, designing new organizations, andreviewing and reforming personnel management/evaluation, recruiting,compensation/safety net, and promotion systems. These reforms were228

Defining and Promoting Governanceimplemented separately in a rather ad hoc manner. Facing the limit of thisapproach, UNDP reviewed its efforts in public sector management andshifted to a more flexible and dynamic approach. Now most UNDP aid inthis area is a combination of economic/fiscal management, civil service
reform, and aid coordination. So far UNDP has provided such assistance to
90 countries.
In reforming the civil service, UNDP believes that education of public
officials and the private sector is also important, and it is trying to downsize
personnel to reduce budget deficits and at the same time improve their abilities. There are various requirements in this area, including decentralizationof government services, improved performance, promotion of private sector
participation, increased salary levels, and introduction of performancebased promotion/pay systems. UNDP supports the promotion of a professional and neutral civil service, functional reviews from the viewpoint ofadministrative reform, improved civil service transparency and accountability, training of public officials, and use of ICTs.
Differences Between UNDP and Other Donors
Aid in the field of governance varies among UNDP and other donors suchas the World Bank, ADB, the U.S., and U.K.. One major difference is that
UNDP does not actively link the recipient's level of governance to the fundallocation to that country (or that province within a country). Because
UNDP financial resources are much smaller than those of the World Bank
and ADB, it aims to implement pilot projects in selected poor areas and use
successful examples to influence policies and lay the foundation for future
development.
UNDP is not trying to create original governance indicators, although it
uses its own human development index and various indices by Freedom
House and Transparency International, etc. Such philosophical differences
between UNDP and other organizations stem not only from the differencein financial resources, but also from differences between loans and grants
and the differences of opinion between developed and developing countries.
UNDP does not have the same influence for improving governance as thefinancially powerful World Bank, but it has a role in the debate about what
to do with the so-called poor performers. Major donors - including theWorld Bank and even the U.K. - are avoiding countries with poor governance and high poverty rates, thus UNDP's role may become even more
substantial.
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Bilateral Aid Organizations
United States (USAID)

Philosophy Toward Governance
The U.S. has significantly influenced the recent emphasis on governance.
After the Cold War era, the purpose of U.S. development assistance has
been to expand capitalism through democratization. And as mentioned at
the beginning of this paper, the international events of the 1980s and 1990s
worked in favor of the U.S. In his inaugural address, President George W.
Bush said, "Our democratic faith is more than the creed of our country . . ."He emphasized the necessity to tackle interrelated and complex issues suchas ethnic conflicts, the environment, population growth, and low growth.
The 9/11 terrorist attacks in 2001 led to an even stronger emphasis on
the importance of democratization and improved governance. In the same
year, the U.S. government reorganized its strategic objectives into four elements - the rule of law, political processes including elections, civil society,and governance support. It emphasized that a sustainable democracy is supported by democratic institutions, free and open markets, informed and educated people, a strong civil society, a multiparty system, participation by citizens, peaceful conflict resolution, and good relationships between the stateand society. The new policy stated the first condition to provide aid to adeveloping country was good governance (White House, 2002). The importance of governance was also emphasized in the National Security Strategyof the United States of America (the so-called 'Bush Doctrine') which proposed a 50 percent increase in development aid with the assumption that aid
will focus on countries that have implemented pro-democracy reforms.
Implementation Structure
Democratization has been a constant in U.S. development assistance.
Partially because the term 'governance' was relatively new, USAID did notestablish a specialized division for governance until 1994. Following an
increase in the importance of governance support, the Center for
Democracy and Governance was reorganized into the Office of Democracy
and Governance in November 2001. This division's role is to assist USAID
field missions, exercise technical leadership, and implement and manage
programs effectively and strategically. It has a close relationship with the
U.S. State Department and National Security Council. Bilateral aid from the
U.S. - both financial and technical - is implemented by USAID after consultation with the State Department. The Treasury Department deals with inter230

Defining and Promoting Governancenational development finance organizations, while the State Department
deals with the UN specialized agencies. Close coordination between the
Office of Democracy and Governance and the State Department indicates
how important democratization programs are to U.S. diplomatic policy
goals.
The Office of Democracy and Governance attaches a high value tocooperation and alliance with outside NGOs and private companies. By
having a cooperative relationship with experienced organizations, the office
is trying to increase the speed and effectiveness of USAID assistance. These
organizations include NGOs such as the International Foundation forElection Systems, Asia Foundation, Freedom House, and the National
Center for State Courts, as well as democracy advocate groups supported bypolitical parties or Congress such as the International Republican Instituteand National Democratic Institute for International Affairs. One significant
characteristic of U.S. assistance is that more than 30 percent of its bilateral
aid is provided through such private organizations and NGOs. In addition tothese cooperative relationships, USAID also emphasizes partnerships withinternational organizations.
The Office of Democracy and Governance is not, however, free of organizational problems. The first problem is that the State Department usually
demands short-term results while USAID takes a more long-term approachto development. This leads to inconsistent political objectives in USAID
programs. A second problem stems from insufficient resources of thisoffice, which necessitates collaborative projects with several funds. In suchcases, efforts to combat corruption, human rights violations, and conflict
prevention tend to be limited because the staff must produce results withlimited resources. A third problem occurs when leaders of recipient countries do not commit to good governance and democratization. In such cases
USAID would support local governments but they cannot avoid the question about how the support is linked to policies of the central government.
Support for Democracy
The U.S. focuses its efforts to promote democracy on four distinct but related goals - establishing the rule of law, supporting elections, strengthening
civil society, and improving governance.7 It should be noted that several
other donors support democratization as a part of an effort to improve gov7. http://www.usaid.gov/democracy/

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ernance, but it is the opposite for the U.S. - it supports good governance as away to promote democracy in developing countries. The U.S. attaches
greater importance to democratization than to governance. In the following
paragraphs we will look at the philosophy and activities of USAID for eachof its four main goals.
Rule of Law. If the rule of law is weak, individual human rights and minority rights are not guaranteed and ultimately it makes democratic reforms
more difficult and threatens sustainable development. Rule of law makes it
possible for civil society to mature, free elections to be held, and fair judicial proceedings upheld. USAID efforts to strengthen legal systems fallunder three inter-connected priority areas - supporting legal reforms,
improving the administration of justice, and increasing citizen access to justice. The agency attaches special importance to these efforts because civil
and commercial codes that respect private property and contracts are key
ingredients to develop market-based economies.
Election Assistance. Different activities are chosen depending on the governing system of the recipient country. In a post-conflict situation where thestate has not built a legitimate political base, USAID quickly provides assistance to train election commissions, poll watchers, and international election observers, and implement voter education so that elections can be held.
For countries where elections are held but administrative capabilities are
weak, organizational bases for political parties are weak, or voters lackinformation and understanding of voting and elections, USAID supports
capacity-building by assisting election planning and implementation, political party development, and voter education.
Strengthening Civil Society. This goal is considered especially importantin countries with fragile democratic traditions. In these countries, USAID
supports independent civil society organizations such as civic educationgroups, women's rights organizations, labor unions, media groups, bar associations, environmental activist groups, and human rights monitoring organizations. Among them, USAID puts the strongest effort into the organization of labor unions.
Good Governance. We must first recognize that for USAID, 'governance'is almost synonymous with transparent and efficient government, and thisnarrow interpretation is only a part of its larger effort to promote democracy. USAID activities in this area include promotion of public sector
accountability, transparency, and efficiency. USAID encourages more transparent and accountable government institutions in five areas - integrity of232

Defining and Promoting Governancethe government, democratic decentralization, legislative strengthening,
civil-military relations, and effective policy implementation.
Activities in Asia
USAID lists decentralization and globalization, new opportunities, and theimportance of South Asia as future issues in Asia. In the area of decentralization, USAID has achieved good results in the Philippines, Bangladesh,
Nepal, and Indonesia, but also recognizes that decentralization entails somerisks. Rather than controlling corruption, decentralization may spread corruption of the central government to the local level.
Globalization and new opportunities refer to the use of ICTs to makevarious projects possible, including promotion of social advocacy and effective monitoring of human rights violations. In this era of globalization,
USAID believes that it should provide funds to global self-regulating organizations (SROs) that define standards in order to accumulate knowledge andexperience. Successful examples in this area include a project in Indonesiathat used ICTs to improve government transparency and promote citizen
8
participation.
The third issue is the increasing importance of South Asia and the link
between development aid and conflict prevention, a link that is considered
important by donors, international society, and the U.S. government.
Although the link has not been clearly delineated, USAID believes that if its
support contributes to conflict prevention in this region, then it serves theinterests of the U.S.
Implementation of Strategic Assessments
In line with its result-oriented approach in development aid, the U.S. implements strategic assessments in the area of governance. USAID conducts
these assessments in four steps, each of which analyzes the political system,
primary actors, key institutions, and execution. In the first step, USAID
looks at five variables - whether there is a basic consensus on a politicalsystem; whether basic human rights are guaranteed by law; whether faircompetition is working in elections and markets; whether certain segmentsof the society are denied their political, social, or economic participation;
and whether transparency, accountability, and efficiency are ensured in boththe public and private sectors.
8. http://www.swara.net

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The second analysis identifies primary actors, supporters, and opponents
of democratic reforms. The purpose of this analysis is to understand which
actors are opposed to the reforms and their political, economic, and social
incentives. Based on the results of the first and second analyses, USAID
identifies which organizations to support.
The third step identifies key institutions based on a recognition that
actors do not play politics in the abstract, but institutions structure politics
by official and unofficial rules and by providing incentives to and placing
limits on the actors. USAID believes that four institutions - the legal system,competitive systems including election, governance including the legislative
system, and civil society - are especially important in democratic reforms.
The fourth step concerns formation of an optimal strategy. The framework of strategic assessment is a means to conduct political analyses, andits ultimate goal is to prepare a workable development plan. This is why
these analyses need to distill important facts from daily events. These strategic assessments are conducted by outside consultants in cooperation withthe recipient government.
Attempts to Create Governance Indicators
In addition to the strategic assessments, USAID is also trying to create original indicators that measure level of governance. The agency is the mostadvanced bilateral aid organization in this effort. Because the Bush administration has explicitly taken a result-oriented approach, indexing governanceis more important than for other countries. USAID monitoring efforts wereapparently strengthened with the adoption of the Government Performanceand Results Act in 1994, which brought attention to the federal government's ability to run programs efficiently.
In 1996, USAID developed a set of performance indicators for the
democracy sector. These indicators have been used and reviewed in trials in
Guatemala, the Philippines, Uganda, and Ukraine. The Handbook of
Democracy and Governance Program Indicators, published in 1998, introduced these indicators that can be used by field missions to assess the performance of their programs. In addition to its original indicators, USAID
also uses the Freedom House freedom ratings and Transparency International's corruption indices.

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United Kingdom (DFID)

Philosophy Toward GovernanceAccording to the Department for International Development (DFID) of theUnited Kingdom, the term governance means "how the institutions, rules
and systems of the state - the executive, legislature, judiciary and military operate at central and local levels and how the state relates to individual citizens, civil society and the private sector" (DFID, 2001). In its 1999 strategic paper, DFID announced a policy to treat governance as one of nine priority areas, which include poverty reduction; the environment; water
resource management; health and primary education; growth, equality, andsecurity; reduction of urban poverty; women in development; and humanrights of the poor. One characteristic is that it tries to influence the donor
community to recognize the importance of governance by, for example, initiating dialogue in the DAC. DFID insists that aid agencies need to cooperate with governments and civil society organizations to construct a newmechanism in governance that is similar to the Comprehensive Development Framework (CDF) in poverty reduction.
DFID identified seven essential elements of good governance - operation of political systems that provide opportunities for all people; economic
stability that promotes growth; implementation of pro-poor policies andconsistent allocation of public resources; guaranteeing the equitable anduniversal provision of basic services; ensuring access to the justice system;a security framework where communities can resolve differences before
they develop into violent conflicts; and an honest and accountable government that can combat corruption. Based on a logic that effective governments can promote economic growth and efficient services, DFID considers
improved political systems and good governance of supreme importance.
Implementation Structure
The governance division of DFID is an advisory group that is structurally
different from regional divisions and parallel to other advisory groups incharge of education, health and population, infrastructure and urban development, and social development. Because it is important to have experts inthe field to translate strategies to actions, DFID has many policy advisors in
its local offices. This arrangement gives DFID a comparative advantage
over other donors because it is especially important in governance to know
local conditions.
Another characteristic of the DFID implementation structure is its
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monolithic nature. As a policy, the British government aims to form partnerships with recipient countries and the private sector. These partnerships
help to maintain consistency between the objective of sustainable development and various policies dealing with the environment, trade, investment,
and agriculture. Within the government, DFID handles all aspects of international aid from policy development to implementation. Several organizations are related to DFID. The Commonwealth Development Corporation
provides loans to the private sector in developing countries. The British
Council provides assistance in human resource development. Crown
Agents, which was privatized in 1997, procures goods and services. In addition, NGOs in the U.K. have a long history, strong base, and are very active.
Structural Adjustment Loans
DFID is inclined to involve other donors in its efforts to improve governance in developing countries. This approach is also exhibited in its cooperation with structural adjustments loans from the World Bank and ADB. For
example, DFID provided fiscal assistance to local governments implementing reforms with structural adjustment loans from the World Bank.
A large issue is what to do with the so-called 'poor performers' that havepoor governance and high poverty rates. The trend to increase aid to countries with good governance and while setting a primary goal of poverty
reduction seem to be mutually inconsistent given that the level of governance is negatively correlated with poverty level. There will be people who
question whether it is right to abandon African countries that have bad governance and a huge number of poor people. DFID, which passionately advocates poverty reduction, needs a persuasive answer to this question.
The DFID attitude toward this issue is quite clear - it does not base aid
allocations on the current level of governance, but instead looks at the commitment of the current administration to improve governance and the character of its leaders. In other words, it will assist a country when the administration shows a strong will and executing ability for reform, even if thecountry scores low in governance indicators. On the other hand, it will notprovide much aid to a country if the administration does not show an eagerness for reform, even if its governance indicators are not so bad.
Examples of the former are Uganda and Rwanda, which receive a goodshare of DFID aid because their leaders are committed to reforms eventhough their governance is not very good right now. On the contrary, DFID
tends to restrict its aid to the governments of Sierra Leone and Zimbabwe
236

Defining and Promoting Governancedue to governance problems. DFID often helps countries with political commitments with budgetary support programs on the condition that they implement reforms. With limited financial resources, DFID looks to work with
the World Bank and other donors.
However, there may still be an argument that withholding assistance togovernments that lack commitment to reforms punishes poor people in thesecountries. The response of the World Bank and DFID is slightly weaker
than the one we just discussed: They provide technical assistance to improve fiscal management and then wait to see what happens.
For problematic countries, DFID is also selectively helping provinces orministries that have better political conditions, and trying to influence otherprovinces or ministries. As another way to help these countries, DFID provides direct assistance to local citizen groups and NGOs, but acknowledges
that not all such projects are going well, and for this reason considers themas a second best solution.
Efforts to Eradicate Corruption
Eradication of corruption is also an important goal. DFID lists three important items - aid coordination, international efforts to prevent money laundering, etc., and fighting corruption in the U.K. The government of theNetherlands is cooperating extensively with the U.K. in this area. The British
government recently adopted a law that makes it illegal for British companies to bribe foreign governments. The British government is also utilizing
the European Union's aid facilities to avoid accusations of policy interference. It is more difficult for a bilateral donor to get involved in political governance issues such as an independent judiciary without eliciting criticism.
Attempts to Create Governance Indicators
DFID uses the indices of two other organizations, Freedom House andTransparency International. Some in DFID have reservations about the former, and the latter is not considered neutral because of methodologicalproblems, including the number of survey samples. In addition, DFID isdeveloping a tool kit that is different from a check-list of indicators and canbe used by governments, civil society organizations, and development aid
agencies. DFID thinks that the process should be led by developing country
governments, including civil societies, and that the aid community needs tofoster government accountability and incorporate this approach into the
CDF and PRSPs. DFID believes that if such an approach is accepted by237

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governments, they will not be cornered into a disadvantageous position.
This approach aims to improve the abilities of recipient states instead ofpunishing governments with a will to change solely because of poor governance. Evaluations are conducted not by experts, but by citizens of theassessed country. Assessors use available and easily updateable data as indicators and do not collect data on their own. DFID plans to implement thisnew governance performance assessment in various countries, including 16
in Africa and four in Asia from 2003 to 2006.

Implications for Japanese Aid
This paper first examined why governance has come to be emphasized indevelopment assistance. Although we did not cover Japan and its support
for governance, it is important to discuss how Japan should consider thework of other donors, and how it may cooperate with them.
Philosophy Toward Governance. In contrast to other major donors, theJapanese government has not clarified its philosophy toward governance,.
JICA dealt with this issue for the first time in 1995 when it published
Participatory Development and Good Governance. It went further in a 2002
report, Roads to Democracy and Governance. While acknowledging theimportance of governance, the Japan Bank for International Cooperation(JBIC) used its Journal of Development Assistance to say that it is undesirable to make loans contingent upon the governance of recipient countries.
The Japanese government as a whole, however, has not made its position
clear on this matter. This needs to be addressed in the on-going discussions
on the revision of the ODA Charter.
Conditions for Aid. There is a question as to whether Japan should follow
the World Bank and the U.K. and provide SALs with conditions thatdemand improved governance. Japan does not need to change its ways. The
first reason is that it would be difficult to make a drastic shift in its aid policies because unlike the World Bank, Japan does not have much experiencein making SALs with strict conditions. Developing countries favor Japanese
aid for this very reason. The second reason is a lack of local staff.
Governance SALs require local monitoring of the recipient government,
which is very difficult for Japan because it does not have as many local staff
as the World Bank or DFID.
Yen Loans. Should Japan continue to provide yen loans? Japan needs tocoordinate its opinions on governance with other major donors. There is
now somewhat of an international consensus that the amount of financial
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Defining and Promoting Governanceaid to the government of a country with poor governance, or more precisely,
whose leaders lack the commitment to reforms, should be reduced. But
Japanese loans, which are huge, can render other donor efforts meaningless.
Japanese aid to Sri Lanka was an example of this problem until recently. It
is necessary for Japan to not only debate the desirability of its approach, butalso explain its stance to other donors.
Aid Coordination. In addition to traditional aid coordination such as identification and implementation of co-financed projects, Japan needs to haveregular discussions about the political situation and governance of recipient
countries, especially those where Japan has a relatively large presence. By
regularly consulting with other donors that have many local staff and areknowledgeable, Japan will be able to gain insights about supporting a specific country.
Aid Implementation. The debate about how the Japanese government and
JICA should implement grant aid and technical assistance to improve governance will be increasingly important from now on. This paper has mentioned many examples of activities in this area, especially those of UNDP.
Japan has traditionally focused on human resource development and implemented many training programs, but now technical assistance is moving
into more crucial areas such as fiscal management. In light of these changes,
Japan needs to clarify the difference in its programs from those of other
donors and their effectiveness at supporting governance. Japan also needs tolearn what it can from various new projects implemented by the Bank andUNDP, as well as share its own successful examples.
Governance Indicators. Japan should consider using governance indicators.
Admittedly, attempts by the World Bank/OECD research group to create
new indicators are not successful at this point, but Japan is too far behind
efforts to create new indicators and should use existing ones. Japan probably
does not need to create original indicators, but there should at least be adebate about which indicators to use to make Japanese ODA more effective.
One of the most prominent trends in development assistance is an emphasis on governance in recipient countries. In this arena, the British government, with limited financial resources, is making great strides toward improving the governance of developing countries by involving the WorldBank in its endeavors. In contrast, Japan is not exercising its influence asmuch as the Bank or the U.K., despite its vast financial resources and potential. Although Japan is continuing its traditional grant and technical assistance that centers on human resource development, it is not necessarily in239

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step with international trends. We need to now have serious discussions on
many issues - are the current policies good for Japan; what is the best courseof action; how much is possible with the current organizational structure;and how to coordinate aid with other donors and recipient countries.

References
DFID. 2001. Making Government for Poor People: Building State
Capability.
JICA. 2002. Minsyu teki na Kuni Dukuri heno Sien ni Mukete - Gabanansu
Kyouka wo Cyushin ni Mukete [Roads to Democracy andGovernance].
_______. 1995. Sankagata Kaihatsu to Yoi Touchi Bunyabetsu Enjyo
Kenkyukai Houkokusyo [Study of Participatory Approach to
Development and Good Governance]
Kaufmann, D, D. A. Kraay, and P. Zoid-Lobaton. 1999. GovernanceMatters. Policy Research Working Paper. World Bank.
Kusakabe Motoo. 2002. Kaihatsu ni Okeru Nihon no Chiteki Kouken no
Arikata [Ways of Japan's Intellectual Contribution to Development],
Kokusai Kaihatsu Janaru [International Development Journal],
September, No. 550.
Mahbub ul Haq Human Development Centre. 1999. Human Development
Report in South Asia 1999. Oxford University Press.
GRIPS (National Graduate Institute for Policy Studies). 2003. ODA Taiko
wo Kangaeru [Discussions on Japan's ODA Charter], GRIPS
Development Forum Policy Minute, No. 17.
Oshiba Ryo. 1994. Kokusai Soshiki to Seiji Keizaigaku: Reisen go no
Kokusai Kankei no Wakugumi [International Organizations andPolitical Economics: Framework of International Relations after theCold War], Yuhikaku.
UNDP. 2002. Human Development Report 2002. Oxford University Press.
White House. 2002. Fact Sheet: a New Compact for Development.
World Bank. 2002. World Development Report 2002: Building Institutionsfor Markets. Oxford University Press.
_______. 2000. Helping Countries Combat Corruption: Progress at theWorld Bank Since 1997.
_______. 1998. Assessing Aid: What Works, What Doesn't, and Why. Oxford
University Press.
_______. 1992. Governance and Development.
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Peacebuilding Before and After 2002

Peacebuilding Before and After 2002
Takao Toda

The Encounter Between Development and Peace
In a speech at Harvard University in June 1947, G.C. Marshall, Secretary ofState of the United States at the time, said:"[T]he people of this country are distant from the troubled areas of theearth and it is hard for them to comprehend the plight and consequent
reactions of the long-suffering peoples, and the effect of those reactions
on their governments in connection with our efforts to promote peace inthe world."
After more than half a century, society is still driven by the need to sharethe same message. The Marshall Plan was significant in that it was a global
strategy of the U.S. that anticipated the Cold War, and at the same time,
understood the issues of world peace and development and tried to address
them with determination and massive investments. As the plan got on track,
however, discussions of helping nations emerge from war and helping
develop poor countries in the same context became more rare. For example,
the World Bank Group had an original goal of assisting post-World War II
reconstruction,1 but subsequently it was recognized as a so-called specialized agency of development aid to support the economic development ofpoor countries.
In January 1961, the United Nations passed a resolution to designate the1960s as the Decade of Development. Throughout the decade, aid to developing countries, including newly independent states, was further expanded.
During this period, the 'territorial fight' between the East and West intensified, and both sides engaged in an aid competition. Despite that process,however, we should note that the scope of development aid was limited toeconomic issues such as growth and poverty reduction and did not confront,
Toda was deputy resident representative of the JICA office in the USA at the time this paper was written. He
is now the director of the Office of Peacebuilding and Human Security. The opinions expressed in this paper
are those of the author and not those of JICA. Most of the websites referred to in this chapter existed as ofJanuary 1, 2003. This paper was written in June 2003.
1. The purpose of major loans in 1947 was post-war reconstruction in France, the Netherlands, Denmark,and Luxemburg. The first loan for development was provided to Chile in 1948, and the number of similar loans has increased gradually since then. As of July 1952, loans for the reconstruction of Europe
accounted for 35 percent of the total amount of loans.

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at least directly, issues surrounding peace and armed conflict. The WorldBank followed the basic agreement at the time of its establishment andavoided direct involvement in political issues. In 1961 President Kennedy
established the U.S. Agency for International Development (USAID),
which was positioned, unlike its predecessor, the International Cooperation
Administration, as a specialized agency for development assistance (USAID
website).
As the issue of conflict in developing countries came under close scrutiny after the collapse of the Cold War, the era came to a turning point. Fromthe 1990s, assistance for reconstruction and development in developing
countries suffering from armed conflicts emerged as an important agenda.
We saw many dramas unfold in which countries that had experienced
extended armed conflicts arrived at peace, received support from the international community, and started on a path to recovery and development. A
comprehensive peace treaty was signed in Mozambique in 1992; a peaceaccord was reached in El Salvador in the same year; the International
Committee on the Reconstruction of Cambodia was established in 1993; thefirst post-apartheid general election was held in the Republic of South
Africa in 1994; and the Bosnia peace treaty was signed in 1995. On theother hand, in poor countries such as Somalia, Rwanda, Burundi,
Democratic Republic of Congo (the former called Zaire), armed conflicts
and poverty combined to prolong chronic conditions that were, and in somecases still are, hostile to human survival.
In this light, especially since the mid-1990s, the international community began to recognize and share the critical questions of how to put postconflict countries on a smooth path to recovery and development, and how
to prevent conflicts so those countries will not fall back into the vicious
cycle of conflict and poverty. In 1997, the Development AssistanceCommittee (DAC) of the Organization for Economic Cooperation andDevelopment (OECD) published Guidelines on Conflict, Peace andDevelopment Cooperation (OECD/DAC, 1997). Partly based on the
Guidelines, the Japanese government in 1999 announced its policy toaddress the issues of conflict prevention, conflict-induced refugees, andpost-conflict recovery in the Medium-Term Policy on Official Development
Assistance.

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2002 — An Unsettled Year
The terrorist attacks in the U.S. on September 11, 2001 forced wealthy
nations to realize their connection to the people of poor countries who
account for more than 80 percent of the world. In December of the same
year, Gordon Brown, finance minister of the United Kingdom, proposed a
Marshall Plan for the 21st century so that the world would see the reconstruction of the long war-torn Afghanistan from a global perspective andmake efforts to reduce poverty by 2015, one of the Millennium Development Goals (MDGs). He insisted that development aid should be doubled(Washington Post, 2001). While the international community did not necessarily embrace this proposal with enthusiasm, it effectively sparked a competition between the U.S. and Europe to increase aid.
The year 2002 was clearly a year of 'storm and stress' in the context ofdevelopment aid and peacebuilding. Beginning with the International
Conference on Reconstruction Assistance to Afghanistan in Tokyo in
January, the international community moved dynamically to support the
post-war reconstruction of Afghanistan. Sri Lanka and Angola suddenly
emerged as recipients of reconstruction assistance. East Timor joined theWorld Bank and IMF in July and the Aceh peace pact was signed in
December. As tensions rose in the Middle East and the Korean peninsula,
discussions were held about peacebuilding and stabilization in both2
regions.
During the same year the United Nations held many meetings of the
Economic and Social Council and other bodies to discuss peacebuilding anddevelopment. Various citizen groups participated in many of these meetings.3 Discussions by the Commission on Human Security,4 co-chaired by
Sadako Ogata and Amartya Sen, attracted attention. The Commission was
not only discussing development and peace from a more comprehensive
perspective, but was also considering how to operationalize its findings. The
DAC used a network of experts on peacebuilding to discuss the issue of ter2. For example, the Center for Strategic and International Studies (CSIS), one of the most influential thinktanks in the U.S., is working with the Association of the U.S. Army (AUSA) on a study of post-war
reconstruction (Post-Conflict Reconstruction Project) with the reconstruction of Iraq in mind. In addition, CSIS conducted many seminars and studies on various hot spots (CSIS website).
3. For example, about 1,400 NGO participants attended a meeting hosted by the United Nations
Department of Public Information (UNDPI) at UN headquarters from September 9 to 11, 2002 and discussed peacebuilding - ranging from conflict prevention to postwar reconstruction from various perspectives, including the environment and conflict, media, psychiatric medicine, peace education, and humanrights.
4. For details of the Commission on Human Security, see its website, www.humansecurity-chs.org/

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rorism.5
The question of what we can do for countries that are in a post-war
reconstruction phase was highlighted when assistance to 'poor performers'(countries that receive aid yet fail to make progress) and 'countries with difficult partnerships' (countries in which effective implementation of aid isdifficult for various reasons) was discussed (OECD/DAC, 2002). The
World Bank proposed the concept of Low Income Countries Under Stress(LICUS) and emphasized the need to extend special assistance to developing countries under the threat of armed conflict or with other problems(World Bank, 2002).
With the 9-11 terrorist attacks as a turning point, the next year the U.S.
government launched various initiatives. Its commitment to increase theamount of development aid (a 50 percent increase by 2006) and the estab6
lishment of the Millennium Challenge Account (MCA) are said to be an
historic transformation of the U.S. development aid. The year 2002 is considered to be on a par with two periods of major transformation - 1947 when
the Marshall Plan was announced, and 1961 when the Foreign Assistant Act
was passed and USAID was created.7 The MCA does not provide direct aid
to developing countries that can be breeding grounds for terrorists or are inarmed conflict. On the contrary, its objective is to encourage governmentsof developing countries to promote good governance, invest in people, andpromote economic freedom (Asahi Shimbun, January 7, 2003, Morning
Edition).
In fiscal year 2002, the Japanese government created a scheme ofConflict Prevention and Peacebuilding Grant Aid (¥12 billion). In May, theAdvisory Group on International Cooperation for Peace8 was establishedwithin the Cabinet Secretariat and published a report at the end of the year
(Advisory Group on International Cooperation for Peace, 2002). An overhaul of the ODA Charter (Cabinet decision dated June 30, 1992) defined
official Japanese development assistance (ODA), and was launched in
5. OECD DAC Expert Workshop on Root Causes of Terrorism: The Role of Development Cooperation(DAC Network on Conflict, Peace and Development Co-operation, NY, 26 September 2002)
6. For the official announcements of MCA, see USAID (2002b), Department of State (2002), and theWhite House website.
7. On January 7, 2003, Andrew Natsios, the USAID administrator, summarized the reforms launched in
2002, and said that development constitutes one of the three pillars of U.S. foreign policy along with
defense and diplomacy, and announced a report on the challenges of development aid in the following
10 years (USAID, 2002a). In this report, mitigating and managing conflict are considered the mostimportant issues.
8. Office of the Prime Minister website.

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March 2002. One of the issues in revising the Charter was how to stipulate
Japan's peacebuilding efforts. In a document entitled Concrete Plans for
ODA Reform: Gaining Public Acceptance for Japan's ODA (Liberal
Democratic Party, 2002), the Liberal Democratic Party claimed that there
was a need to revise the Charter because of changes in international affairs
during the 10 years after the Charter was adopted and to use "the ODA in
the areas of human security and peacebuilding." Howard Baker, U.S.
Ambassador to Japan at the time, recognized that "Japan has used its ODA
soundly to advance peacebuilding and development" and then advocatedthat "Japan and the U.S. should cooperate with each other in eliminating
poverty and other problems that can breed terrorism" (Asahi Shimbun,
January 7, 2003, Morning Edition).
The year 2002 was filled with activities focused on peacebuilding. The
Japanese government expanded its support for reconstruction in developing
countries that experienced conflict through UN agencies and the Japan
International Cooperation Agency (JICA). In addition to continued assistance for postwar reconstruction in Cambodia, East Timor, and Bosnia andHerzegovina, Japan began to assist Afghanistan, Angola, Sri Lanka, and thePhilippines (Mindanao), among others (Box 1).
The year 2002 was when JICA built on its past studies of peacebuilding
and entered a new stage to examine how these theoretical findings can beapplied to implementation of aid (JICA, 2001a). In a joint evaluation with
the Canadian International Development Agency (CIDA), the Japan Peace
and Conflict Impact Assessment (JPCIA) was used for the first time to eval9
uate actual development aid. To understand the interaction between peacebuilding and development aid from diverse perspectives, JICA discussed thetheme of 'reconstruction and development assistance and gender' with theUnited Nations Development Program (UNDP). In the same year, the Japan
Bank for International Cooperation (JBIC) undertook a full-fledged study
on peacebuilding using post-war reconstruction in Sri Lanka and othercountries to sum up and further develop its knowledge. JBIC has also
shown interest in providing assistance for social stability in Mindanao.

9. Following recommendations made at a Japan-Canada Joint Peacebuilding Symposium in Tokyo in
September 1999, the first evaluation took place in Canada in September 2000, the second in Guatemala
in February 2001, and the third in Cambodia in November 2001. The results of these evaluations weresummarized in 2002.

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Box 3-10.Japan's assistance to Afghanistan and ODA
In the process of peace and reconstruction in Afghanistan, Japan has always played a leadingrole while maintaining close partnerships with the UN and major donor countries.
Japan’s objective, consolidation of peace, includes three pillars:• Support for the peace process (supporting the emergency Loya Jirga [Grand Assembly],
strengthening administrative capacity)• Restoration of law and order (demobilizing soldiers, rebuilding civilian police, anti-narcotic
activities, demining)• Reconstruction and humanitarian assistance (rebuilding local communities, human resource
development in education and health sectors, infrastructure building)
It is noteworthy that ODA plays an important role in all three of these pillars and that theoriginal objective of ODA — to contribute to economic and social development — and assistance for post-conflict recovery and peacebuilding are being carried out in a harmonious combination. Japan has provided financial support and dispatched policy advisors to theAfghanistan Reconstruction Trust Fund (ARTF) and provided technical training to Afghans in
the areas of public administration, healthcare, education, and broadcasting.
Efforts at restoration of law and order are made in a program called Register for Peace to support
the social rehabilitation of disarmed and demobilized soldiers by providing job training and other services. We are considering the Grant Assistance for Grassroots Projects to support demining activities
undertaken by NGOs and helping to develop alternative crops to narcotics. In terms of reconstruction
and humanitarian assistance, activities are underway in various sectors such as rebuilding local communities (including assistance for resettlement of refugees and domestic evacuees), human resource
development (expansion of primary and girls education), healthcare, and basic infrastructure (roads,
water, broadcasting).

We should not forget the importance of stabilizing the entire region through assistance toneighboring countries. In addition to direct assistance to Afghanistan, Japan has launchedcomprehensive assistance to stabilize the region by providing emergency economic assistance to Pakistan, refugee assistance to Tajikistan, and expanding economic cooperation withPakistan, Tajikistan, and Uzbekistan.
Source: Ministry of Foreign Affairs, Japan, website; JICA Annual Report, 2002, pp.12-26)

World Bank and UNDPWorld Bank

The Bank's peacebuilding efforts include: (i) keeping a distance from political issues that can be closely related to peacebuilding such as human rights
and democratization; (ii) using its massive fund mobilization power to contribute more during the full fledged reconstruction phase rather than the earlier emergency or the recovery phases (iii) redeveloping public finance,
basic industries, and infrastructure using partnerships with developing countries governments; and (iv) using its strength as the 'knowledge bank' on
development issues and being a leader in project implementation andresearch.
These characteristics, however, are becoming less pronounced whencompared to other organizations. For example, the Bank is being forced to
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tackle political issues through its involvement in governance support andeconomic management policies. It is compelled to get involved in very earlystages as it did in Afghanistan. It has more opportunities to use NGOs, andhas expanded training assistance in addition to building and infrastructureassistance. Through these changes, the range of the Bank's peacebuilding
activities is expanding. The Bank is also playing an increasingly importantrole as the coordinator of multilateral and bilateral donors.
In 1998, the Bank's Operations Evaluation Department (OED) reviewed
past post-war reconstruction assistance and recommended establishing morepractical policies in this area. In response to this recommendation, the Bank
adopted an Operational Policy (OP) on Development Cooperation and10
Conflict in January 2001. For the first time, this policy provided a comprehensive framework for the Bank's operations that had tended to be limited toreconstruction assistance to countries that had experienced conflict. Threepoints are noteworthy: (i) the OP emphasizes a need for continuing assistance in all recipient countries based on recognition that economic growthand poverty reduction diminish potential causes of conflict; (ii) it emphasizes the need for expanded assistance to countries affected by conflicts,
that is, it encourages Bank staff to consider the perspective of conflict andpeace in all development activities conducted in those countries; and (iii) it
states that there is a need in countries emerging from conflict to support thetransition toward sustainable peace. In addition, the policy directs staff torefer to the policies on general emergency assistance,11 gender (Gender
Dimension of Conflicts Prevention and Reconstruction), indigenous
people,12 and involuntary relocation13 in their operations.
It is noteworthy that the old approach which positioned peacebuilding asa sector of development aid or as a challenge for developing countries underpost-war reconstruction was cast aside. There is now a tendency to understand peace and development as inseparable. The majority of projects aredesigned to deal with unique problems of post-conflict such as demilitarization, demobilization, reintegration, demining, financial support to interim
governments, education for former soldiers, civilian use of military facilities, refugee assistance, and employment for those who are involuntarily
relocated. It is interesting, however, that there are a few projects designed
10. Operational Policy 2.30
11. Operational Policy 8.50
12. Operational Directive 4.2
13. Bank Procedures 4.12

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primarily to prevent potential conflicts by supporting the independence andsolidarity of women, empowering the media, and encouraging dialogue
between different ethnic groups.
What share of all projects is related to peacebuilding? About 16 percentof the Bank's loans and credits are said to be conflict-related (Ragazzi,2001). Moreover, about 40 percent of the 100 countries eligible for Bank
assistance are affected by armed conflicts, either on-going or in the immediate past. If all assistance to affected countries is considered as conflict-related, the share of peacebuilding becomes 40 percent. On the other hand, theonly aid modality of the Bank that is explicitly aimed at peacebuilding is the
Post-Conflict Fund (36 countries, 110 projects, US$ 50.9 million as of
October 2002). If limited to this modality, the share of the Bank's peacebuilding activities in all operational activities becomes very small, less than
one one-hundredth of a percent. In this era when peace and development areconverging, the numbers are losing significance. We cannot find a common
standard to differentiate peacebuilding and other activities within the Bank.
If we follow the Operational Policy on Development Cooperation and14
Conflict and interpret the relationship between Bank activities and peacebuilding in the broadest sense, all Bank loans and other activities support
peacebuilding in one way or another.
Furthermore, the Bank has recently undertaken a study on conflict that
focused on natural resources in developing countries and the illegal flow offunds associated with development of these resources. The study deals withconflict prevention measures as well, so it is attracting the attention of those
who are searching for future peacebuilding work. The report of the study
points out that MDGs do not contain clear goals on the issue of peace andconflict and proposes a new goal of halving the number of conflicts by
2015. This proposal provides valuable inspiration in thinking about how
international goals in development should be set in the future.
UNDP

UNDP has made good use of its vast network in developing countries (morethan 130 locations) and played an important role in the area of peacebuilding. UNDP peacebuilding efforts so far have three characteristics.
First, UNDP has been expected to coordinate not only agencies within
the United Nations Development Group, but also other multilateral and14. O.P. 2.30

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bilateral donors, although to different degrees depending on the country.
Second, UNDP has played a role in transitioning from humanitarian aid
organizations to development aid agencies by leading the recovery phase ofreconstruction assistance before the World Bank and other multilaterals
enter the picture.
Third, for the reconstruction and development phases and conflict prevention, UNDP has dealt with potential causes of conflicts (or recurrence of
conflicts) that are regarded as difficult for bilateral donors and multilateralagencies to handle. It has promoted assistance in areas such as governance,
capacity development, the judiciary, police, law and order, demilitarization,
demobilization, reintegration of soldiers, and small arms management.
UNDP has played an especially significant role in demining, assisting morethan 20 countries with their efforts. In addition to simply removing landmines, it has also helped to rehabilitate victims and served as a bridgebuilder between other donors and developing countries. UNDP has also
taken advantage of its position as a member of the United Nations family or
its 'trusted partner status' (Ball, 2002) to address sensitive issues that touchupon state sovereignty such as promotion of democratization in the areas oflaw and order and national security.
UNDP is likely to keep playing these important roles in the future. As
the World Bank, other multilaterals, and bilateral donors expand theirpeacebuilding activities, and UNHCR and other humanitarian aid agencies
deepen their commitment to a smooth transition from emergency andhumanitarian assistance to reconstruction and development, the different
roles for UNDP and other organizations are becoming less clear. There arealso some challenges that UNDP is facing in today's climate of demanding
results. Issues such as governance and capacity development are very
important, but it is difficult to attain visible or quantified results in shortperiods of time. There is a need to build a theoretical framework to continue
and expand efforts on these fronts.
We should pay attention to the role that UNDP can play in so-called
South-South cooperation to promote cooperation among developing countries for post-war reconstruction and conflict prevention. When it comes tosupporting South-South cooperation, UNDP and JICA are the two mostprominent organizations among the development aid organizations. In
assisting post-war reconstruction of Afghanistan, for example, the twoorganizations tried to move behind the scenes to indirectly support assistance by neighboring and other developing countries. Political tensions in
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the surrounding countries and regions have hindered these efforts, but weshould follow what will be achieved in the future. It will be increasingly
important to try to stabilize an entire region that contains a country withproblems rather than concentrating on peace and development one country
at a time. The idea of encouraging active involvement of developed anddeveloping countries within and outside the region will also be important.
For this reason, UNDP is expected to remain one of the main actors in thisarea.

Creating a New Movement
We need to clarify the relationship between trends in development aid in
general and peacebuilding. How should the concepts of 'results-oriented
assistance' and 'aid coordination' be understood within the context of recent
trends, especially in light of the need for peacebuilding?
Results-Orientation in Peacebuilding

The first challenge is how to evaluate the contributions of development aid
to peacebuilding in the context of results-oriented foreign aid. There havebeen efforts since the early 1990s to establish concrete goals for the international community and to address development issues, including poverty
reduction, in a comprehensive manner. The process that began with the
DAC's New Development Strategy (OECD, 1996), was carried on throughthe United Nations Millennium General Assembly, and ended with theMillennium Development Goals (MDGs) that represents the culmination ofsuch activity (Toda, 2002). The year 2002 was a year of peacebuilding, andalso a year in which the results-orientation for aid was strongly reaffirmedby the entire international community.
Beginning with the International Conference on Financing forDevelopment in Monterrey, there was an increasingly spirited movement to15
unite the international community in pursuing the MDGs and to measure
the achievements of development aid with a long-term perspective. There
have not been, however, sufficient discussions that integrated the twothemes - peacebuilding and a results-orientation for aid. For example,
15. Before and after the Monterrey Conference, the U.S. objected to Goal 8 of the MDGs which was incorporated to draw more aid money from advanced countries. It avoided mentioning the MDGs on official
occasions and instead referred to the Millennium Declaration and International Development Goals. In
the latter half of 2002, the U.S. finally recognized the MDGs as the development goals that should be
pursued by the international community.

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peacebuilding is not mentioned in the MDGs (JICA, 2001a). There havebeen few discussions about what forms a results-orientation should take inpeacebuilding. What is the ideal relationship between the effort to achieve
concrete, numerical targets in poverty, education, healthcare, and contributions to peacebuilding? How should we allocate finite aid resources to thesedifferent objectives? Discussions of these questions have only just begun(Toda, 2002). It is also unclear how we should evaluate the success or failure of assistance whose main objective is conflict prevention. Is it really fairto label a country like Zambia a 'poor performer'? It is surrounded by neighboring countries involved in armed conflicts, yet it has somehow managed
to maintain peace while accepting many refugees from these countries, but
has failed to improve economic and social indicators despite large development investments. (World Bank, 1998) Those involved in development aid,
including the author, do not yet have satisfactory answers to these questions.
Aid Coordination from the Perspective of Peacebuilding

The term 'aid coordination' makes us think about coordination through the
Poverty Reduction Strategy Papers (PRSPs) and harmonization of aid procedures. However, when we look at the concept of aid coordination from aperspective of peacebuilding efforts, two issues emerge from different
angles - coordination for a seamless transition from emergency and humanitarian aid to reconstruction and development aid; and coordination of efforts
on various fronts, including economic, military, political, and socioeconomic (JICA, 2001a). Concrete efforts on the ground have only just begun. We
are only beginning to respond to the challenge of promoting partnerships
and coordination among actors in these diverse fields.16

Strengthening Japan's Efforts
In comprehensive efforts for both peace and development, Japan has apotential to leading the international community in both theory and practice.
Japan made a remarkable recovery from the devastation of World War II
and has a constitution that proudly proclaims pacifism. The country can
16. For example, the CSIS website argues that experts in the three areas of diplomacy, development, andmilitary should come together to address the 'post-war' reconstruction and development of Iraq and propose to build an institution for the three parties to work together. The author suspects there are more thana few issues to be resolved before this proposal can take hold, considering the bureaucracy of the U.S.
government (especially the relationship between the State Department and the Department of Defense)
and the relationship between NGOs and the military.

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make an important contribution to the international community through apotential that has been cultivated through historical experience and its
intense desire for peace. There are, however, severe restrictions that hinder
this potential, including legal restrictions of the United Nations Peace
Keeping Operations (PKO) and international emergency assistance, restrictions on coordinating PKO and ODA, and requirements to ensure the safetyof aid personnel. We should examine development aid while considering
the two (interrelated) issues of 'strengthening conflict prevention efforts' and'securing the safety of aid personnel'.
In its implementation of ODA, Japan pays close attention to the safety of
its personnel. It is not uncommon for Japan to refrain from sending aid personnel for safety reasons to locations where the United Nations, other bilateral donors, and NGOs have an active presence. Some argue that Japanese
ODA personnel should at least go to locations where UN personnel are
active, while others argue that they should avoid taking risks and concentrate on removing the causes of conflict such as poverty. Moreover, somebelieve that we cannot remain a spectator if we are to truly pursue peace,
and that we should act, even if it means taking some risks (Isezaki, 2002).
In light of these arguments, two points should be emphasized.
First is the importance of conflict prevention. Strengthening peacebuilding efforts in development aid does not necessarily mean that aid personnel
take higher risks. The most effective and valuable peacebuilding efforts areprevention of armed conflict. There are many things that aid personnel canand should do without risking danger. Many of these activities do not attract
attention of the international community, let alone the media.
But there are many things we should do that are just as important, or insome cases more important, than going to a dangerous location and risking
lives, even when an armed conflict has not materialized. Activities in suchsituations - low-profile activities in peacetime - should receive more credit,
and we should invest more efforts and resources in them. We should notdeny the value of attracting the attention of the international community,
however, we would be remiss if we consider these values as the ultimate
objective and discussions about effective peacebuilding strategies become
secondary.
Second are the variable risks confronted by aid personnel. In the earlystages of post-war reconstruction in developing countries, risky situations
cannot be avoided, but it is not an all or nothing choice. Manifestation ofrisks depends on at least two factors - how much of a risk (exposure) and252

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the ability of organizations and individuals to cope (resilience). In Japan,
collecting safety information and identifying risks - the factor that cannot be
controlled by the donor - is relatively advanced, but there have not beenenough discussions on resilience, for which the donor does have some control.
To improve coping skills, there is a need to not only train individuals,
but also to improve the crisis management capacity of implementing agencies. They should collect information, anticipate and analyze risks, andwork closely with other organizations (for example, the United Nations
Police).
***In a JICA survey of February 2001, more than six months before the 911 terrorist attacks, more than 80 percent of Japanese respondents regarded
developing countries as 'dangerous' (JICA, 2001b). Even more people now
probably consider not just developing countries, but any foreign country
including the U.S., as dangerous. Meanwhile, the total of Japan's ODA was
reduced by about 30 percent during the past five years. The prolonged
slump of the domestic economy and recent international events combined tomake the Japanese more inward-looking.
Under the circumstances, a need has emerged for the Japanese to ask if
their country can maintain peace and make progress without peace andprogress in the world, and what specifically Japan can and should do to
make international contributions. In asking these questions, it is important
to do away with the preconception that peacebuilding is synonymous withgoing to dangerous places. There are many things we can do through development aid to establish a solid track record and broaden the options thatJapan can take.

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