Japan's Aid for Low-income Countries: a Comparative Study in the Context of Changes of Aid Regime

Abstract

This paper is aimed at clarifying characteristics of the Poverty Reduction Aid Regime, the regime's new aspects which appeared in the 2000s, and Japan's position in relation with the regime. Though the International Regime theory's general applicability has been challenged, it can well explain continuation and changes in agreements and rules among international aid donors for low-income countries. Succeeding the Structural Adjustment Regime which was formulated in the 1980s, the Poverty Reduction Regime shares some characteristics with its predecessor regime but differs from it in important points. Under the Poverty Reduction regime, respect for recipients' ownership, close coordination and harmonization among donors, and prioritization of human poverty reduction are uniquely emphasized. For donors leading the regime such as northwestern European donors, public debt relief for low-income countries was practically the most important issue. Also, radical aid reforms to realize coordination and harmonization are pursued by them. For the purpose of avoiding repetition of undue debt accumulation and economic mismanagement in recipient countries, they promoted formulation and implementation of Poverty Reduction Strategy (PRS), with which each aid input is to be aligned. General Budgetary Support (GBS) is being recommended as the best leverage to let recipient governments formulate and implement PRS, whereby expected reforms are pushed forward. The Japanese government was reluctant in agreeing to the wholesale debt relief and has been suspicious about effectiveness of new initiatives including GBS, alignment, and harmonization, while it formally has not been against the agreements and the rules of the Poverty Reduction Regime and signed the Paris Declaration stipulating them. The country, however, has heralded the slogan of “poverty reduction through economic growth”, which could be regarded as differentiation form the Regime's inclination to reduction of human poverty. Yet, the regime's leading donors has also slightly extended their perspective so that infrastructure development could be incorporated into their priority area of assistance while maintaining the regime's fundamental characteristics. Rather real difference and challenge to the regime could come from emergence of new donors such as China. This could generate also a challenge and at the same time opportunities for Japan's aid, the only non-Western DAC member for the future.