East Asian Perspectives ofDevelopment Partnerships andGrowth Support

Izumi Ohno, April 13, 2010
GRIPS Development Forum
National Graduate Institute for Policy Studies
http://www.grips.ac.jp/forum-e/index.htm

Main Points
 East Asian perspectives of development

partnerships
 Missing elements of current aid effectivenessdebates? (esp. policy ownership) Diversity and complementarity as theprinciple of development partnerships(eg. growth support)
 Ethiopia – a possibility of new partnershipmodel in Africa?

East Asian Perspectives ofDevelopment Partnerships
 Not only managing donors, but also managingpolicy ideas (“policy ownership”)
 Using aid for growth and “graduation”
Existence of “exit strategy” from aid
 Absorption of foreign knowledge & technology
internalization institutionalization becoming donor
agencies (e.g., South Korea, Malaysia, Thailand,China)
 Synergy effects among aid, trade, andinvestment
Izumi Ohno and Masumi Shimamura (2007). Managing Aid and the Development Process;Izumi Ohno and Kenichi Ohno (2008). “Ownership of What?—Beyond National Poverty Strategies andAid Harmonization In the Case of Vietnam” in Aid Relationships in Asia, edited by Alf M. Jerve et.al.

Policy Ownership
Missing Elements of Aid Effectiveness Debates?
Prof. Gerald K. Helleiner (on Tanzania, 2002)“… some donors seem to believe that ownership exists whenrecipients do what we want them to do but they do so voluntarily.”Joachim Chissano (Mozambique’s former President,2007)“…even today many Africans see the relationship with donors as
still influenced by the colonial past, where donors “know” what, howmuch and when recipients need. Thus, in some cases, the prioritiesof donors and recipients do not match: an example of this is theconstruction of infrastructure in Africa, viewed by the Africans as ahigh priority for their sustainable development and systematicallydismissed by donors.”[Quoted from] ‘Why we should “rethink” aid. Conference on ‘New Directions in Development
Assistance,’ University of Oxford, 10 June 2007.

Policy Ownership
Missing Elements of Aid Effectiveness Debates?
 Ownership of what?, by whom?
 Policy ownership Managing policy ideas (= content), by making“informed choices” based on policy multiplicity
 Improving policy capability through selective,hands-on experiences (trial & errors, andadjustments)
 China: Special Economic Zones – creating goodbusiness conditions in limited areas to receive
investment.

Diversity and Complementarity
Policy Ideas and Approaches

Is global convergence to a single idea or approachdesirable?
 Heterogeneity of partner countries, as well as thedonor community
 Each donor has different strengths and weaknesses
relative to others
 Diversity likely to increase in the future (esp. the roleof emerging donors and the private sector)
 Development partnerships should be based on theprinciple of “diversity and complementarity.”

Non-fungibility of Ideas
Policy ideas are often non-fungible even underharmonized procedures.
 In light of diversity of donors and partner countries,
we should be open to various possibilities andexplore ways most suitable for each case.
 Importance of providing alternatives
 Country ownership, based on policy multiplicity.
 If all donors’ advices are the same, how can partnercountries choose and combine ideas?

Non-fungibility of Ideas：： Growth Support
World Bank・Doing Business approach (general improvement of investment
climate, benchmarking with international standards)

Framework
approach

DFID (UK)・Doing Business approach・Strong interest in the financial architecture and policy
framework (e.g., infrastructure, industrial support)

Framework
approachGermany・Doing Business approach is not enough; strong interest in theindustry structure & players of the market economy
・Multi-level approach—policy & institutions, intermediate
associations, firms and TVET; capacity development

Ingredients
approach (+framework)

Japan・Doing Business approach is not enough; strong interest inindustrial structure & players of the market economy
・Dynamic capacity development—focus on strengths, goal
orientation, field-based concrete thinking

Ingredients
approach (+framework)

GrowthDiagnostics（HRV Tree)・Identify a limited number of country-specific binding constraints(benchmarking with International standards)
・Mainly research; partner countries are expected to “selfdiscover” prescriptions.

Framework
approachInternational
GrowthCenter （IGC)

・Country-specific growth analysis and policy support;
establishment of country offices
・Intend to improve growth diagnostics by combining research &policy dialogue

Framework
approach (+ingredients?)

Non-fungibility of Ideas(example: UK and Japan)“Infrastructure”
Innovation in infrastructure financing (UK) -- local
currency guarantee, project development facility for
privately-financed infrastructure, reaching the poor, etc.
 Building roads & bridges (Japan) -- location, design &technology, durability, etc.
“Industrial promotion”
Challenge funds (UK) -- matching grants for innovative
business models, designing architecture for publicprivate partnerships, etc.
 Concrete industrial support (Japan) -- Master Plan for
specific industries, factory diagnosis, industrial humanresource training, etc.
Non-fungibility of Ideas(more example: EU & JICA support in Tunisia)
JICA ProjectProjectObjectives
MainActivities

EU Project

Strengthening international competitiveness ofTunisian industries
Quality improvement

Assistance for firms toguidance at the production acquire ISO certification
floor of model firms (kaizen) (int’l standards)

Features of Different approach for
Assistance each firm (order made)Instructors required tohave practical experienceson the production floor
Formulation of M/Pthrough the bottom-up
approach, deriving from theproduction floor

Common approach for allfirms (ready made)Instructors not required tohave practical experiences
Focus on quality
management & document
management systems
Source: T. Kikuchi, Ch.7(GRIPS 2008)

Inseparability of Content andInstruments
Content (= ideas) and instruments (= approaches) arehardly separable
 In development aid, different content / ideas call fordiverse aid instruments
 Need to match aid modalities with development
priorities of each country Conflict with the need for instrumental harmonization?

Inseparability of Content andInstruments
It is important to match country needs, instruments, andcomparative advantages of donors. need to pursue
instrumental “best mix” in each country context.
Projects

Budget Support

Providing large resource
Instruments Addressing specificproblems, seeking policy
transfers (incl. recurrent
innovation, implementing
expenditures), generating
pilot activities (for wellmultiple policy and institutional
defined objectives)
reforms in a synergic manner
Preferred by donors who
Preferred by donors who
Donorsemphasize field-based
excel in policy dialogue andprocess support, as an entry administrative reformpoint

Ethiopia
A Possibility of New Partnership Model in Africa?
Strong “policy ownership” and clear leadership vision
Strong interest in the East Asian experiences; using aid for graduation
Policy already in place:-- ADLI (Agri. Dev. Led Industrialization) (since mid-90s)-- Industrial Dev. Strategy (2002): emphasis on exports & priority industries
GoE approaches donors individually (““policy multiplicity”” rather than“one voice”), requesting industrial support unique to each donor:
 Germany – comprehensive support under the Engineering Capacity
Building Program (TVET, business support, universities, quality
infrastructure, etc.) & UCBP Japan – industrial policy dialogue and business support (Kaizen)
 Italy/UNIDO – leather industry, M/P drafting USAID – marketing, matching for AGOA
 World Bank – competition policy, privatization, business support
 China – infrastructure (roads, dams), TVET, industrial zones, textile MP
 India – industrial zone for garment firms

Implications for AfricanPartners and Donors
Greater attention should be given to the East Asian
perspectives of ownership and development partnerships


Policy ownership
Using aid for growth and graduation (“aid relations”– too narrow)
Linking aid, trade and investment

Donors should:

Seek an inclusive approach to enhance combined development
effectiveness.
Collaborate, based on the principle of “diversity andcomplementarity.”
Support capacity development of partner countries, so that they
could make “informed choices” based on policy multiplicity.