### 3. Japan's Medium-Term Policy on Official Development Assistance (ODA)

Introduction

August 10, 1999

Humankind has achieved an unprecedented level of development during the second half of the 20th century. In developing countries, average life expectancy has increased by more than 20 years, while adult literacy rates, which in the 1950s stood below 50%, rose to about two-thirds. However, some 1.3 billion people continue to live in extreme poverty, 1.1 billion people do not have access to safe and clean water, and more than 800 million people are suffering the effects of malnutrition and starvation. Clearly much remains to be done. Many countries have taken large strides toward democratization and the implementation of market-oriented economic systems since the end of the Cold War. Yet during the same period, in some regions of the world, conflicts and domestic confrontations have taken on a greater intensity, often instigated by conditions of poverty and lack of development.

With dramatic advances in information technology and economic liberalization, important improvements in economic efficiency have been attained, together with a rapid growth in international interdependence. However, this wave of globalization has left many countries behind, exacerbating the gap between the rich and the poor. The Asian economic crisis of 1997 unveiled the structural vulnerability of developing economies and underlined the need for new assistance. Furthermore, the Asian economic crisis served to spotlight the close and inseparable economic ties between Japan and the East Asian region (including Southeast Asia). As such, Japanese assistance for structural reform, economic rehabilitation, and social stabilization in East Asian countries constitutes an extremely important and direct link to the prosperity of Japan and is also an important factor in the formulation of Japan's economic policies.

Global warming and other environmental problems could potentially have a negative impact, not only on individual countries but on the Earth in its entirety. Indeed, there are numerous problems that demand a concerted effort on the part of the international community, including the problems of population growth, AIDS, food, energy resources, and drug abuse. These are problems that are intricately linked to the developing world.

With the approach of the 21st century, the industrial countries of the world face the common challenge of supporting developing countries to achieve sustainable and environmentally sound development. As the world's second largest economy and the largest donor of official development assistance (ODA), Japan shoulders the important responsibility of contributing to sustainable social and economic development in developing countries. This is a role through which Japan can win the confidence and appreciation of the international community. Furthermore, as a nation whose prosperity is closely linked to world peace and stability and that is highly dependent on the importation of resources, energy, food, and other basic materials, ODA plays a very significant role in ensuring Japan's own stability and prosperity. As such, economic assistance promotes Japan's best interests, including the maintenance of peace.

Japan is experiencing fiscal and economic difficulties and there have been major changes in the domestic and international environment for aid. It is necessary to further consider, in a more integrated manner, how to implement ODA in light of these factors. Under such circumstances, it is important to earn public understanding and support for the ODA program in order to continue to respond to the high expectations of the international community. To achieve this understanding and support, assistance must be adequately implemented in accordance with the basic philosophy and principles spelled out in the Official Development Assistance Charter (ODA Charter) $ ^{*1} $ and efforts must be continued to improve the effectiveness and efficiency of aid programs. Moreover, proper accountability must be established vis-à-vis the Diet and the general public, and Japan's ODA program must be coordinated with its foreign policies and with other important policies pertaining to the national interest.

While Japan's ODA program has generally received high marks, it is a fact that the original objectives of ODA projects are not always met and that certain improvements are necessary. This is attributable, in part, to the inherent difficulty of undertaking ODA while working jointly with countries with vastly differing histories, cultures, customs, laws, and linguistic backgrounds.

In view of the above, the Government of Japan herein sets down its basic approaches in regard to ODA, and identifies overall priority issues and sectors as well as those by region. Undertaken with a five-year time frame in mind, this medium-term policy will be subject to review and modification in response to changing domestic and international conditions.