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![Page 1: Kenichi Ohno National Graduate Institute for Policy Studies Development with Alternative Strategic Options A Japanese View on the Poverty Reduction Drive.](https://reader036.fdocuments.in/reader036/viewer/2022062314/56649e365503460f94b260b8/html5/thumbnails/1.jpg)
Kenichi OhnoNational Graduate Institute for Policy
Studies
Development with Alternative Strategic
Options
A Japanese View on the Poverty Reduction Drive and Beyond
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Background Ongoing global poverty reduction
partnership Japan is uncomfortable
--It feels current strategy is unbalanced
--Fear of marginalization--New engagement effort is begun--Catalyst for a group of LDCs/donors?
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Recent Poverty Cutting Drive World Bank’s CDF/PRSP UN’s Millennium Development
Goals Poverty-terrorism nexus EU and US pledge to increase ODA Many international conferences for
development in 2002
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Japan’s Concern (Domestic) Due to fiscal crisis, Japan’s ODA is
to be cut (now top donor) Popular demand for transparency
and accountability Groping for new ODA vision – from
quantity to quality
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Japan’s Concern (External) With partnership approach, ignoring
global trend is more difficult Japan’s policy silence may lead to
marginalization--Too much focus on poverty; too little
on growth and industries--From ODA loans to grants?--Less aid for middle-income countries?
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Japan’s External Initiatives Disappointment with IMF’s handling of A
sian Crisis -- Chiang Mai Initiative, New Miyazawa Plan
WTO’s slowness -- Japan-Singapore FTA (2001); proposals for Japan-ASEAN and other FTAs
Unease with PRSP/MDGs -- ?????
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For Reshaping ODA Policy MOFA’s ODA reform effort METI’s study on ODA for “Asian Dynamis
m” IDEA, WSSD (2002); TICAD3 (2003) GRIPS Development Forum Washington DC Development Forum Inputs to Vietnam’s PRSP (starting)
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Targeted Audience Governments and scholars in East
Asia Same in other developing regions Sympathetic donors Aid professionals with little exposure
to East Asia--We don’t expect unanimous approval--Research must proceed in parallel
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Japan’s Proposed Agenda
1. Critique of current global strategy
2. East Asian development as an alternative approach (where conditions are right)
3. Japan’s two-track development assistance vision
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Agenda (contd.)
4. Industrial support in the age of globalization
5. PRSP is too small for East Asian experience or aspiration
6. Transferability to other regions, especially Africa?
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1. Critique of Current Strategy World Bank’s policy shifts are too
quick and radical Industries (60s), BHN (70s), SA
(80s), privatization & institutions (90s), now poverty (cf. Easterly 2001)
Development strategy should be more stable and cumulative
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Japanese Views Strategic diversity, not convergence Real-sector concern, not just
framework Deeper studies of each sector/country
required, rather than policy matrices or cross-country regressions
More patience, respect, ownership for developing countries (incl. selection of goals and strategies)
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Costing of MDGs: some Q’s$40-$70 billion, or doubling global ODA
Devarajan, Miller, Swanson (WB Apr 2002)
Why assume only ODA funding?--Even poor can generate resources (FSR/PSD)
Are two calculations consistent?--Investment-output-poverty linkage vs. adding up pro
-poor expenditures No problem with aid absorption capacity?
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2. East Asian Dynamism Development as poverty reduction
vs. development as catching up Meaningful participation in
regional/ global production network through trade and investment
Higher and more dynamic aspiration (health, primary education not enough)
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Increasing Linkage (1)
Input Procurement (% of total)
0102030405060
1992 1998
OtherAsiaJ apan
Asian Affiliates of Japanese Firms
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Increasing Linkage (2)Asian Affiliates of Japanese Firms
Output Sales (% of total)
0102030405060
1992 1998
OtherAsiaJ apan
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East Asia Cuts Poverty
Population in Extreme Poverty (%)
0102030405060
East Asia LatinAmerica
South Asia Sub-SaharanAfrica
1990
1999
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Region’s Enabling Environment World Bank’s East Asian Miracle (1993)
assessed policies of individual countries Asian growth as collective phenomenon Region provides enabling environment
for growth and structural change From market-led to institution-led
regional integration (cf. EU) Crisis impact? Back to normal
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3. Japan’s Two-Track ODA One pillar for global contribution,
including poverty and environment Another pillar for supporting East
Asian dynamism as a production network
Two pillars have always been present, just affirm them (Japan’s dual identity)
Do both with more confidence and flexibility
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4. Today’s Industrial Support Infant industry support with
subsidies and protectionism no longer allowed
FDI attraction is key: understand agglomeration and fragmentation, and virtuous circle (Southern China)
Simple opening is not enough
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Support (contd.) Policies for offering superior locational a
dvantages and low costs of doing business are needed
--Improving domestic skills, infrastructure, institutions; efficient public services; good management of IZs and EPZs, etc.
Case for regional public action is strong--Narrowing gaps, integration, harmonization, crisi
s prevention, externalities, etc.
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Theories of Flying Geese
1. Factor-proportion viewIndustries shift as capital-labor ratios
change through accumulation
2. Technical ladder viewTechnology is transferred from low-tech to
high-tech by learning
3. FDI dynamism viewIndustries arise where a critical mass of FDI
is accumulated (no capital/technology needed)
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5. PRSP in East Asia? Vietnam with typical E Asian aspiration National goal: Industrialization &
Modernization by 2020 10-Year Strategy & 5-Year Plan CDF pilot country; full PRSP in 2002 How does it really work? Indonesia,
Laos, Cambodia, (Africa) are watching
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Vietnam’s CPRGS Considered “great success” because of
strong country ownership PRSP renamed to “Comprehensive
Poverty Reduction & Growth Strategy” Policy inputs through CPRGS? Unlikely Enthusiastic donors, skeptical donors Growth-poverty link left ambiguous
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PRSP Approach
Poverty Reduction
Goal:MDGs
CDF/PRSP
Means:
Pro-Poor Policies Growth Policies
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East Asian Aspiration
Equitable Growth
Goal:
< Vietnam >Industrialization & Modernization
5-Year Plan & 10-Year Strategy
Means:
Growth Policies Social Policies
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Governments in East Asia Very strong interest in narrowing intra-re
gional gaps (original ASEAN vs CLMV) Also interested in infrastructure, HRD, tr
ade, FDI attraction Rejection of narrow “poverty reduction” a
pproach
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Governments in EA (contd.) More, not less, economic
cooperation including middle-income countries
ODA is but one tool of cooperation among many
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6. Not Just in East Asia There are countries with similar
growth aspiration outside East Asia Transferability?
--Initial step is disseminating information--Partial or revised implementation possible--Academic debate can go on in parallel
Concentrate on a few pilot projects/ countries (not many)
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Dissemination Plan Japanese research papers to be
selected, summarized and translated in readable form, for policy impact
Non-profit organizations should support government
Use (or convene) international conferences for announcement of policies