## Column I -3 Japan's Postwar Recovery

After World War II, receiving support and finance from members of the international community including the United States and the World Bank, Japan made efforts to rebuild the country, which had been devastated during the war. This experience underpins Japan's subsequent experience of providing support in East Asia and forms the base of Japan's ODA philosophy of providing support for self-help efforts, as is often pointed out.

## Relief and rehabilitation support from the United States

When the Second World War ended, the United States had the world's top aid-giving capacity. The United States had two funds for occupied areas—the Government Appropriation for Relief in Occupied Area (GARIOA) Fund and the Economic Rehabilitation in Occupied Area (EROA) Fund—and Japan received relief and rehabilitation support from both of them. A total of 1.8 billion dollars (present value equivalent to approximately 12 trillion yen; of which 1.3 billion dollars was charge free) was disbursed through the two funds—from 1946 for the GARIOA Fund and from 1949 for the EROA Fund. These counterpart funds $ ^{*} $ became the financial resources used for low-interest funds for promoting economic rehabilitation such as infrastructure development including currency stabilization, development of the national railway system, electrical communications, electric power, marine transportation, coal mining and others.

## World Bank loans

Before the end of the Second World War in 1945, the desirable form of the world economy after the War and the support for rehabilitation were actively investigated among the Allied nations. In July 1944, the Bretton Woods Agreement was concluded with the participation of 44 Allied nations. Rehabilitation was coordinated based on this Agreement, mainly with the International Monetary Fund (IMF) established in 1945 and the International Bank of Reconstruction and Development (IBRD). Japan started receiving loans from the World Bank in 1953 and had concluded loan agreements for 34 loans amounting to 862.9 million dollars in total by 1966.

At that time, Japan did not have sufficient funds for its rehabilitation. The World Bank contributed greatly to the development of important infrastructure and key industries, particularly the development of the road, electric power and iron and steel sectors. The Fourth Kurobe Hydroelectric Power Plant (Kuroyon Dam), the Aichi Irrigation Project, the New Tokaido Line (the Shinkansen project) and the Tomei and Meishin Expressway, for example, were facilitated by loans from the World Bank.

Japan started providing assistance in 1954, while being provided assistance from other countries. Japan also received loans from the World Bank, and laid the foundations for its own economic development. After the disbursement for the Tokyo-Shizuoka Expressway in 1966, Japan graduated from receiving World Bank loans. Since then, it has grown as a major donor country. Japan completed repayment of these loans from the World Bank relatively recently, in July 1990.

Currently, Japan emphasizes the importance of various forms of assistance. In particular, unlike other countries, Japan effectively uses the form of assistance of concessional loans known as Yen loans. This position is undoubtedly underpinned by the experience of the effectiveness of the support Japan received from the World Bank.

Note: Profit on sale of commodities recipient countries have purchased using commodity aid. In this case, profit on sale of goods purchased by the GARIOA and EROA funds is indicated.