### 2. Sustainable Growth

Sustainable growth is indispensable to the stability and development of poor countries. Poverty reduction through economic growth is an important approach. Therefore, Japan is willing to proactively support developing countries' efforts for sustainable growth. In order to support sustainable growth of developing countries, Japan gives priority to the development of socioeconomic infrastructure that is important for economic activities. It also places priority on the promotion of trade and investment through economic assistance including policy-making, the development of institutions and human resources development and on the facilitation of economic growth of aid-receiving countries through the enhancement of the private sector and technology transfer. This part discusses socioeconomic infrastructure, policy-making, the development of institutions, human resources development, trade and investment, Other Official Flows (OOF), the government's cooperation with the private sector, etc.

## (1) Supporting Socioeconomic Infrastructure

As explained above, Japan believes that sustainable growth is indispensable for the development of poor countries. In order to reduce poverty, therefore, Japan has given priority not only to anti-poverty measures and other direct social development assistance to the poorest people, but also to the promotion of trade, investment and human exchanges through the development of transportation and communications networks and other socioeconomic infrastructure as the foundation for the development of poor countries. Vietnam, for example, issued the Comprehensive Poverty Reduction and Growth Strategy (CPRGS) as its poverty reduction strategy paper (PRSP) in May 2002. This strategy, while emphasizing economic growth, gave priority to the expansion of basic social sector services but lacked priority on the development of large-scale infrastructure. Thus while respecting the Vietnam government's ownership, Japan then cooperated with the World Bank and other organizations in persuading Vietnam to pay attention to the role of large-scale infrastructure in promoting economic growth and reducing poverty and to emphasize this point in the strategy. As a result, Vietnam added a new chapter on large-scale infrastructure to the CPRGS in November 2003. The revised Vietnam strategy thus places greater emphasis than other countries' PRSPs on the role of large-scale infrastructure in promoting economic growth and reducing poverty (see page 96 of ODA White Paper 2003 for details).

Japan has also begun to focus on the relationship between infrastructure development and the efficiency of social sector assistance, based on three health-related Millennium Development Goals-reducing child mortality, improving maternal health, and combating HIV/AIDS, malaria and other diseases. In order to accurately grasp the role of infrastructure development and other projects in improving maternal health and provide useful viewpoints for planning new infrastructure development projects, the United Nations Population Fund (UNFPA) and the Japan Bank for International Cooperation (JBIC) cosponsored a symposium in January 2004 on "Does infrastructure serve to improve maternal health?" Specifically, participants in the symposium reaffirmed the possibility of road projects' contribution to the improvement of maternal health and considered how best to assess such impact by assessing and compiling the impact of road development projects in Indonesia on maternal health improvement.

Infrastructure development projects cover from ports, harbors, roads and other transportation facilities to communications, energy, river management and irrigation facilities, and urban and rural living environments. Most of these are expected to have large-scale, long-term economic effects to support economic growth. Japan's assistance for infrastructure development projects centers on loans (Yen loans) because of their large scale. Approximately 94% of Yen loans pledged in fiscal year 2003 target social infrastructure development (see Part II, Chapter 2, Section 3, 3-(5) for energy and Part II, Chapter 2, Section 3, 1-(3) for river management and irrigation facilities).

## (a) Transportation and Telecommunications Infrastructure

Economic infrastructure includes road, railway, port and harbor, airport and other transportation infrastructure, as well as telecommunications infrastructure ranging from cable, wireless and satellite communications systems to telephone, radio, television, Internet and other media facilities. Economic infrastructure development has contributed to sustainable growth of developing countries by promoting distribution of goods, industrial development and trade, and by increasing employment and income opportunities. In fiscal year 2003, Japan extended 146.7 billion yen in assistance (26.3% of Yen loans) for transportation infrastructure development and 25.8 billion yen (4.6%) for telecommunications infrastructure development.

In the transportation infrastructure sector, in fiscal year 2003 Japan assisted the "Transport Sector Loans for National Road Network Improvement" to reconstruct degraded and vulnerable bridges on state and provincial roads throughout Vietnam to develop safe, smooth and reliable road networks