The Business of Japanese Foreign Aid: Five Case Studies from Asia (European Institute of Japanese Studies East Asian Economics and Business Studies Series)

318 Pages·1996·4.52 MB·English

by  M. Soderberg

The Business of Japanese
Foreign Aid

Japan is now the world’s largest donor of Official Development
Assistance (ODA), distributing one-fifth of all world-wide foreign aid.
Concentrating heavily on infrastructure projects in Asia, Japanese ODAs
have predominantly taken the form of concessional loans, raising many
questions about the aims and motives of the Japanese foreign aid
programme.
The Business of Japanese Foreign Aid brings together five case studies
focusing on the procedures, methodologies and business mechanisms
at the implementation level of ODA, suggesting that there are many
more factors influencing the process than might have been anticipated
at the policy-making level in Tokyo. Examining such countries as China,
Thailand, Indonesia and the Philippines, these studies explore the process
not only of giving but also of receiving aid, arguing that many of the
recipient countries exert considerable influence over the distribution of
Japanese foreign aid.
Marie Söderberg is Senior Research Fellow at the European Institute
of Japanese Studies, Stockholm.
European Institute of Japanese Studies East Asian
Economics and Business Studies Series
Edited by Jean-Pierre Lehmann
Director, European Institute of Japanese Studies
The centre of gravity of the global economy is now firmly in the Asia
Pacific region. The European Institute of Japanese Studies East Asian
Economics and Business series analyses some of the reasons for and
implications of this fundamental shift. Edited by Jean-Pierre Lehmann,
and calling on contributors from across the world, the series will
showcase the first-class research instigated by the Institute in Stockholm.
The Business of Japanese Foreign Aid is the first book to be published
in the series.
The Business of Japanese Foreign Aid
Five case studies from Asia
Edited by Marie Söderberg
The Business of Japanese
Foreign Aid

Five case studies from Asia
Edited by Marie Söderberg

London and New York
First published 1996
by Routledge
11 New Fetter Lane, London EC4P 4EE
This edition published in the Taylor & Francis e-Library, 2002.

Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001

© 1996 The European Institute of Japanese Studies, selection and
editorial matter; individual chapters, the contributors
All rights reserved. No part of this book may be reprinted or
reproduced or utilized in any form or by any electronic,
mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from
the publishers.

British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British
Library

Library of Congress Cataloging in Publication Data
The business of Japanese foreign aid: five case studies from Asia/
edited by Marie Söderberg
1. Economic assistance, Japanese—Asia—Case studies.
I. Söderberg, Marie.
HC412.B867 1996
338.9' 15205–dc20 96–5527

ISBN 0-415-13878-7 (hbk)
ISBN 0-203-03566-6 Master e-book ISBN
ISBN 0-203-20184-1 (Glassbook Format)
Contents

Series editor’s preface vii
List of figures ix
List of maps x
List of tables xi
List of contributors xiii
Abbreviations xiv
Introduction: Time to look at Japanese aid in practice
Marie Söderberg 1
1 Japanese ODA—what type, for whom and why?
Marie Söderberg 31
2 OECF and the implementation process
Marie Söderberg 51
3 Japanese ODA—the business perspective
Marie Söderberg and Magnus Berg 72
4 Road to development in Thailand
Marie Söderberg 89
5 Power and development in Indonesia
Åsa Malmström 127
6 Power and democracy in the Philippines
Ben Warkentin 151
7 Shipping aid to China
Marie Söderberg 211
vi Contents
8 Rail aid to China
Gang Zhang 245
Conclusion: Working the two-way process
Marie Söderberg 277
Index 290
Series editor’s preface

One of the defining issues of the turn of the century will be the
international role that Japan will assume. The current circumstances
and trends indicate that the role will be defined primarily by Japan’s
financial power, rather than by ideology. In the post cold-war age, this
quality in principle should make Japan well equipped for approaching
matters from a predominantly pragmatic viewpoint.
Having emerged in this decade as the world’s biggest provider of
overseas aid to developing countries, by definition Japan’s role looms
large. It has also aroused controversy. As Japan is generally suspected
of pursuing economic objectives according to mercantilist principles,
the accusation has been that Japan’s aid business is business for Japanese
business.
The research undertaken by Dr Marie Söderberg and her team makes
a significant contribution by addressing these questions from a detailed
and concrete perspective. And it comes up with some surprising answers,
proving that conventional wisdom may be off the mark.
Having ascertained the principles and guidelines emanating from
the relevant bodies in Tokyo, the book focuses on what actually happens.
The Business of Japanese Foreign Aid delves in depth into the mechanics
and dynamics of the transactions from governments to business in
specific instances in China, Indonesia, Thailand and the Philippines. In
so doing, the practices and prospects for European companies are
described and discussed.
It is a pleasure to have this book as the first in the series jointly
launched by the European Institute of Japanese Studies at the Stockholm
School of Economics and Routledge. The series focuses on the
economics and business of the East Asian region and in particular the
driving forces, trends and developments in intra-regional cross-border
flows of capital, goods and technologies. The Asia Pacific region is
viii Series editor’s preface
presenting the international business community with new bases of
competition. The objective of the series is to provide sound analysis on
these forces in a manner that will provide enlightenment and practical
assistance to business executives, government officials and academics,
to policy-makers and to policy-thinkers.
Japanese aid in East Asia is one of the major integrative forces. In
light of the significant sums it represents and will represent, it has major
implications for European corporations. The detail and depth of Marie
Söderberg’s work will significantly enrich their strategies. It also
provides an excellent launch for this new series.
Jean-Pierre Lehmann
Figures

1.1 OECF loan disbursements, 1984–93 39
1.2 Trends in growth of ODA and other budgets 41
2.1 Changes in capital and borrowing balance 53
2.2 OECF loans, 1979–93 59
2.3 Loan commitments by sector, FY 1993 64
2.4 OECF project cycle of loans to foreign governments 70
3.1 Clients of Japanese engineering consulting firms
working on overseas projects 78
4.1 OECF loan commitment by sector 97
5.1 Relative growth of Japan’s Indonesian ODA, exports
and investments 130
6.1 OECF loan commitments by sector 159
7.1 OECF loan commitments to China by sector 215

APPENDICES

8.1 China’s freight transport, 1980 and 1993 274
8.2 China’s passenger transport, 1980 and 1993 274