### ii. Approach to sustainable growth and specific actions

## (a) Development of economic and social infrastructure

Infrastructure is of fundamental importance in promoting private sector activities. Japan has actively supported the provision of economic and social infrastructure underpinning economic growth through such means as yen loans, and has played a particularly major role in providing the basis for economic growth mainly in the Asia region. Promoting the development of economic and social infrastructure requires appropriate levels of medium- to long-term funding, and there are still only a limited number of developing countries that can secure sufficient levels of funding from their own revenues and private capital. From this standpoint, Japan will assist in the provision of economic and social infrastructure that contributes to improvement of trade and investment climates, such as roads, ports and other transport infrastructure, energy related infrastructure such as power generation and transmission facilities and oil and natural gas facilities, telecommunications and IT infrastructure, and infrastructure for improving the living environment, while paying particular attention to the institutional and policy environment and debt management capacity of developing countries. Assistance with infrastructure will be complemented by assistance in intangible areas of infrastructure, such as the promotion of sector policy formulation and dialogue, and development of human resources, so as to ensure that infrastructure is sustained and properly maintained.

As infrastructure sometimes benefits wide areas crossing national borders, assistance will be provided taking into account the perspective of the development of the region as a whole. In order to facilitate cross border movement of people and goods, Japan will provide assistance for capacity building on transport security and security measures. In the light of the importance of sources of funding other than ODA to developing countries, emphasis will be placed on coordinating the roles played by private capital and “other official flows” (OOF), and encouraging the participation of the private sector through “public-private partnership” (PPP). In the construction of infrastructure, full attention will be given to social and environmental considerations.

## (b) Policy formulation and institution building

In addition to assisting in the development of economic and social infrastructure, assistance in areas such as macroeconomic stabilization, development of policy and institutions on trade and investment, and development of policy and institutions for information and communication society, is indispensable for promoting private-sector led sustainable growth.

To promote macroeconomic stability, Japan will assist in the formulation and implementation of appropriate and sustainable fiscal and monetary policy, public debt management, and economic policy, and will place an emphasis on assisting the formulation of industrial policy designed to expand trade and investment, and of rural and regional development policy in the light of decentralization. In concrete terms, assistance will be provided for institution building in the fields of economic management, finance, tax, customs and the development of human resources, and the development of local and supporting industries. To developing countries that are in transition to a market economy, particular support will be provided for policy formulation, institution building, development of legal systems, and the fostering of human resources to facilitate such transition.

In order to develop institutions to promote trade and investment, Japan will assist the improvement of systems and institutions that are in accordance with international economic rules taking into account each country's economic situation. This includes, for example, assistance with government procurement standards and certification systems, protection of intellectual property, and improvement and operation of physical distribution networks. Eradicating corruption, implementing legal and institutional reforms, improving the efficiency and transparency of public administration, and strengthening the administrative capacity of local government are important to building a fair and democratic society and also to improving the investment climate. For this purpose, Japan will assist the capacity-building of governments to improve governance.

## (c) Assistance in human resources development

Developing human resources improves the quality of labor force and provides an impetus for yielding technological innovations. In view of Japan's own experience of economic development, development of the human resources necessary for national economic and social development and for science and technology in both the government and private sectors played a major role in economic growth. Support will be provided to improve basic education, higher education and vocational training in developing countries, and to assist the development of human resources in a wide range of fields by, among other things, providing scholarships to study at higher education institutions in Japan. Through the dispatch of experts to developing countries and training programs, Japanese technology, knowledge and human resources will be utilized for the development of human resources in a range of fields, such as industrial development including the development of small and medium enterprises and information and communications.