The GRIPS Development Forum Report forJapan-UK Aid Partnership Toward 2008

Diversity and Complementarity in Development Aid――East Asian Lessons for African Growth――
Edited and published by the GRIPS Development Forum, February 2008

About This Book
This book was born out of our desire to link two very different strands of development
thought, the one in the East and the other in the West, for synergetic cooperation indevelopment assistance. In undertaking this project, we, the Japanese researchers, foundideal partners in the aid circle of the United Kingdom (UK) where government, academia,and civil society worked together to generate policy activism. The National Graduate
Institute for Policy Studies (GRIPS) in Tokyo cooperated closely with the Overseas
Development Institute (ODI) in London to produce this volume. However, bilateral
discussion quickly spilled over to other countries. We were delighted to also invite experts
with development experiences in Malaysia, Zambia, Tunisia and Uganda to contribute to thisvolume.
This book hopes to be both provocative and persuasive. It is published in 2008, the year inwhich Japan hosts the G8 Summit and the Fourth Tokyo International Conference on African
Development (TICAD IV), as well as the year in which the Japan International Cooperation
Agency (JICA) is restructured to assume greater functions as aid agency. This book isoffered as an intellectual input to these events. We are also confident, however, that it
contains ideas that are useful far beyond 2008. The principles advanced here should beapplicable to all donors, NGOs and business enterprises engaged in the task ofdevelopment.
Chapter 1 presents the basic ideas of this volume. Chapters 2 and 3 review the Eastern andWestern ways. Chapters 4 to 6 discuss recent shifts in development vision and introduce
growth-enhancing governance, a concept that may bridge the gap between the East and theWest. Chapters 7 to 10 go into concrete details of particular countries and give examples of
how the East approaches industrial policy problems. We did not impose uniformity in style or
terminology on our diverse authors, which range from renowned academicians toexperienced practitioners. The reader will surely see that, collectively and ultimately, allchapters speak in one voice despite different backgrounds from which they arise.

Key Concepts of the Overview Chapter
Each developing country is unique. The donor community is also a heterogeneous group.
Development effort should take advantage of these differences instead of suppressing all
development strategies and aid instruments into one. Japan and the United Kingdom (UK)are very different donors and, precisely because of that, there is a great potential for
productive bilateral cooperation in aid efforts between them.The report discusses importantbut different roles that Japan and the UK have played in development, and proposes
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The GRIPS Development Forum Report forJapan-UK Aid Partnership Toward 2008

enhanced partnership between them.
Global aid trends have changed significantly over time. Even within the last two decades,
dominant aid policy has shifted from macro-oriented structural adjustment to poverty
reduction with concrete social sector targets, then to a search for a new source of growth.
Recently, there has also been strong pressure to adopt budget support and unify aid
procedures. In some developing countries, project aid has been marginalized regardless ofwhether it is integrated into the government’s policies and systems. Expenditures on healthand education increased greatly at the cost of economic infrastructure. These shifts areoften global and driven by the quest for new initiatives and political leadership on the donors’
side rather than by customized responses to socio-economic situations in individual
developing countries.
This report argues that donor collaboration should follow the principle of diversity andcomplementarity so as to maximize aggregate aid effectiveness. The idea is a general one
that should be extended to the entire donor community although we mainly focus on
Japan-UK cooperation in this volume. This proposal is justified by the principles ofcomparative advantages among donors, non-fungibility of ideas, and inseparability ofcontent and instrument.
Aid policy and instruments should be partly common and partly different among donors.
Donors should be sufficiently common to be able to work together, share long-term goals,and simplify procedures. But they should at the same time retain their natural differences topermit a meaningful division of labour in development efforts.
Donor collaboration should be based on the principle of diversity and complementarity.
Comparative advantages of donors: Each donor has different strengths. To maximize
outcome, they should mainly work on respective “comparative advantages” andexchange expertise with each other. This is the most basic theory of international
economics that should apply to aid as well as trade. The situation where all donors do
the same thing, regardless of what they can do best, should be avoided.
Non-fungibility of ideas: Policy ideas are often non-fungible, even under harmonizedprocedures. Developing countries are diverse in stages of development, levels ofinstitutional capacity, specific needs, and so on. Donors also have differentapproaches toward the same goal, be it industrial competitiveness or rural poverty
reduction. Donors should be open to various possibilities and explore ways mostsuitable for each country, rather than imposing cookie-cutter molds.
Inseparability of content and instrument: The content and instrument of donor
assistance are sometimes separable, but in many important cases they are closelyrelated. Donors which excel in policy dialogue and policy support may find budget
support very useful. Donors that emphasize field-based process support may preferproject aid as entry points. As content diversity and instrumental harmonization may
conflict with each other, practical balance should be sought in achieving both goals.
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Japan has growth orientation that reflects its catch-up experience as a latecomer, as well as
East Asia’s development experiences to which Japan contributed through aid, trade andinvestment. Japan’s aid is often bottom-up with strong field-based real sector accents. By
contrast, the UK has deep knowledge and experience in African development. It is also a
leading donor in poverty reduction. The UK is good at designing policy frameworks andinstitutional architecture, conducting policy dialogue, and stakeholder engagement witheffective communication strategies.
Without conscious effort to work with each other, the two countries will conduct aid more orless independently, and fruitful partnership will not be realized. They should know andcomplement each other to achieve common goals.
The past decade has seen debates between extremes such as “poverty reduction vs.
economic growth” or “budget support vs. project aid.” Fortunately, there is an emerging
consensus that such dichotomies are neither realistic nor desirable. Moreover, a risinginterest in growth promotion in the UK, and Japan’s new desire to make a new contribution
to Africa, offer an excellent opportunity to strengthen the bilateral partnership. The UK’s
framework-building approach, including the recent concern over governance issues, andJapan’s concrete, bottom-up approach to industrial development and technology are highlycomplementary. There is also a good possibility of Asia-Africa cooperation based on
knowledge sharing between East Asia’s emerging donors such as Malaysia and Thailandand African countries, in which Japan can play a mediating role. Through these efforts,
Japan-UK cooperation should help concretize growth initiatives in developing countries,
especially Africa.

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Table of Contents and Contributors
About This BookGRIPS Development Forum
Words by Simon Maxwell, Director of Overseas Development Institute, UK.
Chapter 1 An Overview: Diversity and Complementarity in Development Efforts
GRIPS Development Forum
Chapter 2 The East Asian Growth Regime and Political Development
Kenichi Ohno, Professor, National Graduate Institute for Policy Studies, Japan
Chapter 3 Understanding British Aid to Africa: A Historical Perspective
Tony Killick, Senior Research Associate, Overseas Development Institute, UK.
Chapter 4 The Rise of the East: What Does It Mean for Development Studies?
Hubert Schmitz, Professor, Institute of Development Studies, University of Sussex, UK.
Chapter 5 Governance and Development: The Perspective of Growth-enhancing
Governance
Mushtaq H. Khan, Professor, School of Oriental and African Studies, University of London, UK.
Chapter 6 Governance for Growth: Improving International Development throughAnglo-Japanese Cooperation
Max Everest-Phillips, Senior Governance Adviser, Growth & Investment Group, Department forInternational Development, UK.

Chapter 7
The Quality and Productivity Improvement Project in Tunisia: AComparison of Japanese and EU Approaches
Tsuyoshi Kikuchi, Senior Industrial Consultant, Japan Development Service Co., Ltd., Japan.
Chapter 8 Strategic Action Initiatives for Economic Development: Trade andInvestment Promotion in Zambia
Dato' J Jegathesan, Senior Investment Adviser, CEO, JJ International Consultant, Malaysia.
Masayoshi Ono, Project Formulation Adviser, Japan International Cooperation Agency, Japan.
Chapter 9 Diverse Models of Development and Aid Management: Experiences ofThailand, Malaysia, and the Philippines
Izumi Ohno, Professor, National Graduate Institute for Policy Studies, Japan
Masumi Shimamura, Associate Professor, National Graduate Institute for Policy Studies, Japan.
Chapter 10 The Relationship between Aid and Economic Growth: What Aid Strategy
Should the Government of Uganda Promote?
Lawrence Kiiza, Director of Economic Affairs, Ministry of Finance, Planning and Economic Development,
Uganda.
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