Network-based Development
Cooperation as a Way Forwardfor Japan
Izumi Ohno
GRIPS Development Forum, March 16, 2017

Objective of Today’s Presentation
 Analyze the new landscape surrounding Japanesedevelopment cooperation, from two perspectives:

Partnership with the private sector (esp. business)
 Partnership with Asian emerging donors
 Propose “co-creative” partnerships, through“network-based” development cooperation, as acentral pillar of Japanese DC:

Engaging various stakeholders in developmental
partnerships
 Mobilizing human & knowledge assets fostered in thepast decades of Japanese ODA1. Partnership with the Private Sector
 Japanese aid has been consistent since the 1950s:

transformative (growth) agenda.

Two pillars: infrastructure & human resources

 FDI, trade & ODA linkage (Cf. Japan ODA Model: METI) Unlike many Western donors, the recent growthresurgence is NOT new to Japan.
 What’s new in the SDG era?

Deeper involvement of business in solving global & local
development challenges – Creating Shared Value (CSV)
approach Requiring closer networks with local people & institutions
 The domestic context (for J) and development

challenges (for partner countries) are also changing.

SDGs
Enhanced
Role
Business
SDG
Enhanced
RoleofRoleofEra:
theEra:PrivateSectorinofDevelopmentin Development
Businessin Development

Trickle Down Theory(Emphasis on large-scale infrastructure, economic growth)Trickle
DownAdjustment
TheoryStructuralProgram(Emphasison large-scale
infrastructure,economic growth)(Small government,liberalization& privatization)

Structural Adjustment Program(Smallgovernment,liberalization& privatization)
HumanDevelopment(Adjustmentwith Human Face)Sustainable Development, Environment & Social
Consideration
HumanDevelopment
PovertyReduction (Adjustment with Human Face)SustainableDevelopment,Environment & Social(Global partnershiparound MDGs)
Consideration
Poverty ReductionNewpartnership
Partnershipbtw. MDGs)
Business and Development(Globalaround(Addressing development challenges via core business,e.g., Inclusive business, BOP business.)Economic vs. SocialDevelopment
 Economic vs. Social
WealthCreation, as
Development
Primary Role of Private
 Wealth Creation, as
SectorPrimary Role of Private
Sector
CSV: Creating
CSV: Creating
Shared Value

Shared ValueMNCs:
Increasedbtw.
responsibility
givingattention to the local conditions and socioNewPartnershipBusinessforandDevelopment
environmental
aspects inchallenges
developingvia
countries,
as corporate behavior expands to the(Addressing
development
core business,e.g.,Inclusivebusiness, BOP business.)developingregions.
LDCs: Desire for industrial catch-up, technology transfer, overcoming middle-income traps,
development of local business & small farmers, etc.
(Source) Prepared by the author

Domestic Context
 Since around 2010, MOFA and JICA (not just METI)

have become active in promoting partnerships withJapanese business.

Shrinking domestic market, collapse of J-style keiretsu system, etc.

 Increased attention to the role of business insolving development challenges, by mobilizing theirtechnologies & innovation power.

Inclusive/BOP business, outward FDI by Japanese SMEs, etc.

 New ODA modalities have been introduced.
Fact-finding surveys, pilot & dissemination of technologies, support
to J. SMEs, JICA-local govt. collaboration, etc.

 Abenomics (Dec. 2013- ), accelerating this trend.
New Revitalization Strategy; allocating additional budgetEvolution of Japanese Outward Manufacturing FDI• 1970s to mid-80s： Rapid increase in FDI to North
America & Europe, Asian NIEs (Trade friction with the West,avoiding tariff & non-tariff barriers imposed on exports. EPZ/SEZs by AsianNIEs)• Latter half of 1980s： Gradual shift from NIEs to ASEAN(Transfer of labor-intensive production processes to Southeast Asia, as aresult of the Plaza Accord. Low wage advantage)• 1990s-early 2000s： Rapid increase in FDI to China(Expansion into Chinese market, with economic reforms & globalintegration)• After 2010： FDI to ASEAN, growing interest in India &Myanmar, overseas expansion of SMEs independently ofbig business (Asia becoming a center of global production & sales,China+1, Thailand+1)

New wave ofGlobalization

6FDI from Japan to Vietnam(Registration)
日本の対ベトナム直接投資（認可ベース）$100 million（億ドル）

Number of projects
（件）

90

400
352

80

350

3.82

317

342

70

300

76.537

60
250
50

208

12.22

200
40

154
44.70

146
30
20
47
10
0147

107

27
15
0.76

93

3.33 11.3

94

95

54

1.69

65
40

5.91 6.57

96

97

12

14

48

26

61
3.553
5.6

1.08 0.62

0.81 1.64

1.02

98

00

02

99

53

01

103

2.243

04

77

3.389

20.40118.4931.383
2.34410.565 9.652
4.3706100

5.892 43.71
9.62

4.76

05

150114070809

101150
14.06

13.37

0121314（年）New FDI
新規投資額

Expansion
拡張投資額

Total
合計投資額

Source: Foreign Investment Agency/Ministry of Planning and Investment, Vietnam.

Number of new projects
新規件数

CreatingNew,
New,Dynamic
Dynamic Links
CreatingLinks&&Networks
Networks*“SmallFactoryininJapan”
Japan”
FromFrom“SmallFactory
Relianceon
on final
final assemblers
Reliance
assemblers& variouspartner
partner factories& variousfactories

OrderProcu
Procurremeementnt

Raw
Materials
Parts
Raw
Materials
SupplyParts supply

Needtoto acquireacquire broad
Needbroadmanagement functions
managementfunctions
Overall Mgt . (HRD &Overall Mgt . (HRD &Labor Mgt., Finance,Labor Mgt., Finance, etc.)
etc.)

Order
Process
Process
Manuf
Manufaacturi
cturing
ng

Independent decision toIndependent
to venture
venture decision
into overseas
into overseas
markets
markets

Specialized inSpecializedin
single process
singleprocess

PartnerPartnerfactories
infactories
inJapanJapan

toto “Global“GlobalFirm”
Firm”

Distribu
Distribtion
ution

Sales/
Sales/
MarketMarketinging

Service/
ServiceMainten/Mainte
ancenance

Support Functions
SupportFunctions

Clients（Final Assemblers, etc. ）Clients（Final Assemblers, etc. ）Procur
Procur
ement
ement

Manuf
Manufaacturi
cturing
ng

SelectingSelectingpartnerpartnerfactories &factories &training
training them
them

Distri
DistribbutioutionnSales/
Sales
Marke/Mark
ting
eting

Service/
Service
Mainten/Maint
ance
enanceEstablishing
Establishingmarketing &&marketing
serviceservice
networks by
networks
bythemselves
themselves(Source) Elaborated by the author, based on an article(Source) Elaborated by the author, based on an article of Mr.
of Mr. Hirotoshi Ito, JETRO Sensor, Aug. 2012, Figure 1
Hirotoshi Ito, JETRO Sensor, Aug. 2012, Figure 1 (p.22)(p.22)

Searching for a New PPP Model
From “All Japan” to more “Inclusive” PPP model
Such changes in Japanese business model imply theneed to transform the nature of Asia-Japan
partnerships —going beyond the traditional PPP basedon “All Japan” model to “mutual learning” model.
 It is important to build “co-creative” partnerships withAsia (& elsewhere) —based on broader & deeper
networks with local talents and organizations.
 Japan should mobilize the existing local HR &institutions, fostered through decades of ODA &economic cooperation more strategically.
 Also, there are emerging Asian initiatives tostrengthen networks with Japan (for their industrialupgrading), which should be fully capitalized.
9

2. Partnership with Asian Emerging Donors:“Cooperation” and “Competition” ?
The rise of Asian emerging donors and growthresurgence among traditional donors are welcome
development for Japan—which has tended to be isolated
within the int’l community & the DAC.

The age of choice (ODI 2013)—more diverse &increased development partners imply that developing
countries could benefit from the greater choice ofdevelopment cooperation.

This demands enhanced efforts on Japan to sharpen its
own comparative advantage (“nitche”).

Japan should focus on its core competence to makedistinctive contributions to the new era of development
cooperation.

 This is an era of “Cooperation” and “Competition.”Japan’s Core Competence (1) Catch-up, latecomer perspectives
 Utilizing its aid and development experiences inEast Asia
 Collaborating with emerging donors (e.g., South
Korea, Thailand, Malaysia, China), based onshared development visions
Growth-driven, poverty reduction (aid is not just charity)
 Respect for each country’s uniqueness Realistic and pragmatic approach to aid delivery
 Mainstreaming East Asian perspectives into

global development debates

Japan’s Core Competence (2) Japan as a “Solution Provider”
 As a mature donor, there are knowledge and technology
accumulated within Japan —business, local govt., univ.,
NPO/NGO — in overcoming socio-economic problems
through its own catch-up & development (e.g., urban mgt.,
pollution, UHC, disaster prevention)
 Positioned to provide public goods for future Asia and theworld in the area of frontier challenges (e.g., aging,declining birth rates).

 Japan as a “Knowledge Partner”
 Intellectual aid and policy dialogue, with int’l comparative
analyses of best practices (not just Japan, but other Asianpartners), based on the networks nurtured through past &current ODA partnerships.

Japan’s Core Competence (3) Japan as a “Quality Leader” in global

business activity

Strong manufacturing (monozukuri)-orientation
 Long-term commitment
 Provision of partner support, HRD, QCD,technology transfer
 Good legal compliance (e.g., environment,human rights), etc.
Ethiopia PM Halemariam（AU Chair@TICAD V: 2013)‐Strongly welcome Japanese companies (esp. manufacturing)‐Expect Japanese FDI as Quality Leader (not, Quantity)‐Appreciate Japanese companies to bring and share Japan’svalue system, work ethics, quality (kaizen).

3. Recommendation: Network-based
Development Cooperation
 The SDG era—increased complexity ofdevelopment challenges, requiring combined
resources and capabilities of diverse stakeholders.
 Japan should strengthen “co-creative” partnerships
with various stakeholders in Japan and abroad.
 It should also mobilize human & knowledge assets,
nurtured through decades of its ODA & experiences.
 It is important to build and mobilize “multi-facetednetworks” encompassing:
Business, local govt., NPO/NGO, univ. & research inst., etc.
 Emerging donors in Asia, local people & organizations withshared value in Asia & elsewhere.
Co-Creative Partnerships, based on Multi-faceted
Networks & Japan’s Comparative Advantages


Solution Provider

KnowledgePartner

Quality LeaderNetwork-based DC:
Engaging various
stakeholders indevelopmental
partnerships !!

Finance

HumanResources

KnowledgePrivate sector:
business & NGOs
(Japan & abroad)Local govt.

Universities,
researchinstitutes, etc.

Emerging donors(Trianglecooperation)

Examples(Network-based DevelopmentCooperation)

Knowledge Partnership:
Ethiopia-Japan
Industrial Policy Dialogue
Late PM Meles Zenawi asked GRIPS & JICA to start kaizen& policy dialogue in Ethiopia (2008).
Kaizen (JICA support) – phase 1 (2009-11), phase 2(2011-14) & phase 3 (2015-19)


Based on successful pilots, Ethiopia Kaizen Institute (EKI) wasestablished; National Kaizen Movement has been launched; JICA
is currently supporting advanced kaizen.

Policy dialogue (by GRIPS & JICA) – phase 1 (2009-11),
phase 2 (2012-16) & phase 3 (2017-20).


17 sessions held so far with PM, ministers & operational level.
Study concrete cases in Asia & Africa, and propose pragmatic
policies based on Ethiopian reality.
Inviting practitioners from Thailand & Malaysia to policy dialogue.
Sending a group of Ethiopian senior officials to Malaysia.

Partnership with Local Government
Sharing the experiences of city management
Japanese local govt., business and NPO, jointly haverich experiences in overcoming pollution, managing
urbanization and industrialization.


Sustainable & Green cities―Yokohama (mega city), Kitakyushu(green city), etc.

Japan has also accumulated the expertise of disasterprevention and reconstruction.

<Compilation of Kitakyushu Model>

Kitakyushu
Story・Overcoming Pollution
・Becoming Green city
・Background

Waste mgt.
Text
book

Case
studies

Source: Kitakyushu Asia Centerfor Low-Carbon Society

SustainableCity（Concept &Framework)

EnergyWater &Sewerage
Envt.
Protection①Situation analysis②Strategy
formulation③Action plans④Verification &impactmeasurement⑤Implementation& resource
mobilization

Case Studies (Kitakyushu)

Partnership with Business
Utilizing ODA-based human & institutional networks
Assets accumulated through decades of ODA and economic
cooperation (e.g., JICA experts, JOCV volunteers, localpartners)
 JETRO (local BOP coordinators), HIDA (ex-AOTS) almuni
associations (local companies, businessmen, etc.), foreign
students in Japan

Kenya: JKUATJoint research(Pro-Japanesefaculties& students)

Nisshin Oishii Project(Jomo Kenyatta Univ. ofAgriculture and Technology)

OSA Japan(ex-JICA expert)
with Kenyan experts

NPO Core RoadEmpowerment(ex-JICA expert)

Eco-friendly toilet, LIXIL

Working with Asian Leaders, who Share Common
Manufacturing Values
Policymaker (former JICA counterpart, Thailand)• Mr. Panuwat Triyangkulsri, Director of the Bureau of Supporting
Industry Development (BSID), MOI/DIP, Thailand.
• Trained as counterpart of Japanese ODA (80s- ) for industry promotion
projects for metal & automotive sectors.
• Currently, key policy maker of Thai SI development & partners withJapanese business; also initiated Triangle Cooperation with Mekong
region (for SI development).

Home-grown, Japanese-style Monozukuri Human Resource
Training & Educational Institutions
Technology Promotion
Association Thailand-Japan(TPA)：• NPO established by Thai people who
studied in Japan and returned toThailand, to disseminate and teachJapanese monozukuri. Initially received
ODA & other support (METI & HIDA,etc.), but now provide technical training,shindan, Japanese language training, etc.
under fully local ownership.
• Currently, engaged in business matching
btw. Thai and Japanese SMEs and variousbusiness consulting.

Thai-Nichi Institute of Technology(TNI)：• Private university established by TPA in 2007
to educate industrial human resources familiar
with Japanese monozukuri.
• Will start international programs for theneighboring countries from Aug. 2018(“Thailand + 1” strategy).
• Also, interested in promoting R&D
collaboration btw. Japanese & Thaicompanies.
20