In addition, basic infrastructure such as transport, energy and communications will be provided to link urban and rural areas where regional disparities exist. In providing such assistance, attention will be paid to ensure that infrastructure helps the poor to participate in economic and social activities by, for example, connecting feeder roads to national roads.

Pockets of extreme poverty exist also in urban areas due to population growth and migration from rural areas. Assistance will therefore be provided to labor-intensive medium, small and micro enterprises, with a particular focus on technical assistance to contribute to the development of micro-finance in urban areas.

As the poor often depend directly on natural resources for their livelihoods and are therefore particularly vulnerable to the effects of environmental degradation, full attention will be paid to ensuring sustainable development in reducing poverty through economic growth.

## (d) Assistance for institutions and policies to reduce poverty

(i) In order to reduce poverty, it is important to establish institutions and policies that protect the rights of the poor based on the principle of equality under the law, and to enable the poor to participate in political activities and to exercise their capabilities. Assistance will therefore be provided to contribute to the protection of human rights, the rule of law, and the promotion of democratization.

(ii) Assistance will be provided for capacity building to enable governments of developing countries to formulate and implement appropriate development strategies.

(iii) In order to minimize the impact on the poor of economic crises, inflation and similar events, macroeconomic stabilization through appropriate fiscal and monetary policy is essential. To this end, assistance such as dispatching experts will be provided to build the capacity of government officials.

## (2) Sustainable Growth

### i. Japan’s position on sustainable growth

(a) In order to reduce poverty and to ensure that the results of development are sustained, sustainable growth is essential for developing countries. As the leading role of the private sector is key to sustainable economic growth, it is important to promote private sector activities, including trade and investment through ODA. In addition, it is important that ODA be provided to help developing countries participate in the multilateral free trade system.

(b) As a country that receives benefits from international trade and that is heavily dependent on other countries for resources, energy and food, Japan will actively contribute to the sustainable growth of developing countries through ODA. This is highly relevant for ensuring Japan’s security and prosperity, thus promoting the interests of the Japanese people.

(c) It is important to analyze the impediments to sustainable growth on a country basis and to assist in the provision of socio-economic infrastructure, policy formulation, institution building, and development of human resources in a comprehensive manner according to the specific circumstances and stage of development of each country. Through the provision of such comprehensive assistance, improvements in the investment climate and the attainment of sustainable economic growth in recipient countries will be pursued.

(d) The increasing number of economic partnerships in recent years play an important role in facilitating cross-border flows of people, goods, capital and information, and these have contributed to the overall growth of the countries concerned by liberalizing trade and investment and by promoting the harmonization of economic systems. Japan is working toward strengthening economic partnerships with other countries beginning with countries in the East Asia region. For those developing countries with which Japan is seeking economic partnership, Japan will make strategic use of ODA to assist in establishing a trade/investment environment and economic infrastructure that will make such partnership more effective.