1. Supporting MDGs through Growth-Driven Poverty Reduction Japan’s ODA and Asia October 9, 2002 Izumi Ohno National Graduate Institute for Policy Studies

2. Background Ongoing global poverty reduction partnership –World Bank’s CDF/PRSP(1998/99- ) –UN’s Millennium Development Goals (2000/01-) –Poverty-terrorism nexus (2001.9.11) EU and US pledge to increase ODA Japan’s policy silence (and ODA cut) – But, new engagement is beginning

3. MDGs: Significance Reaffirming the shared goals among development partners –“Symbolic” significance Containing “aid fatigue” Unresolved tasks (on substance) –How to operationalize MDGs/PRSP?

4. Japan and MDGs/PRSP Opportunity for reshaping Japan’s ODA policy Opportunity for promoting Japan’s engagement in global development agenda Japan’s crucial role in Asia’s development –Leading donor, more than 60% of bilateral ODA directed to Asia –Various aid schemes (grants, loans, TA)

5. Donor Composition

7. ODA Composition: Grants vs. Loans

8. MDGs/PRSP: Issues for Asia Coverage mismatch –MDGs (global) > PRSP (limited to IDA countries): China, India? Even for PRSP countries, slow start in Asia (except for Vietnam) –Importance to reflect the lessons from early PRSP countries (e.g., Africa, LAC) –Opportunity to improve the current approach by incorporating Asia’s development experiences

9. Regional Distribution: Population in Extreme Poverty

10. PRPS Countries by Progress (Aug. 2002)

11. Asian Perspectives Differences from early PRSPs –Linkage with HIPC debt relief –Stages of development, relationship with int’l financial community –History of aid coordination (e.g., role of new aid modality, existing development plan)

12. PRSP Countries by HIPC Status (Aug. 2002)

13. Asian Perspectives Growth-driven poverty reduction-- particularly in East Asia: –Halving income poverty in 90s (--key target already achieved before MDGs launch) –Development driven by trade & investment –Participation in regional/global production network through int’l division of labor Beyond MDGs/PRSP –Narrow “poverty reduction” approach, not enough

14. East Asia Reduced Poverty Despite Currency Crisis

16. Vietnam’s Experience Asia’s first CDF/PRSP pilot country –Full PRSP completed in May 2002 –Establishment of localized VDTs Recognized internationally as “good practice”: strong country ownership –Building on the existing development vision (i.e., 10-Year Strategy, 5-Year Plan)

17. Vietnam’s Experience Growth orientation: PRSP renamed to “Comprehensive Poverty Reduction & Growth Strategy” (CPRGS) –East Asia’s aspiration for catch-up –National goal: “Modernization & Industrialization” by 2020 –Growth and equity –Sustainability of poverty-reduction efforts

18. New Trend? (Post- Monterrey) WSSD (Johannesburg Summit) –Expressed interest by African leaders in East Asian development experiences (IDEA: Foreign Minister Kawaguchi) –Prof. Jeffrey Sachs: importance of trade & investment in African development (METI seminar) IMF/World Bank Annual Meetings –Trade as a vital engine for poverty- reducing growth

19. New Trend? (Post-Monterrey) Relevance not just in Asia…. Move for the next generation of PRSP beginning in African countries –From “PRSP” to “PRS” –Adding growth agenda (“scaling up”) Forthcoming int’l conferences –SPA, TICAD 3 etc.

20. Likely Future Developments Emerging consensus: growth-driven poverty reduction Remaining unresolved issues: –“Framework vs. ingredient” approach (Prof. Yanagihara): Japan’s real-sector concern, not just framework –The role of government in industrial support in the age of globalization Revival of policy debates in the early 90s? (e.g., East Asian Miracle 1993)

21. Implications for Japan’s ODA Excellent opportunity for active engagement in improving the current MDGs/PRSP approach To this end, however, Japan’s ODA needs reform: –Stronger country-focus –Partnership approach, particularly in deepening growth agenda in the multilateral framework

22. Implications for Japan’s ODA –Field delegation –Reinforcing intellectual network –Focusing on “core competence” and positively participating in aid modality discussions, etc. Importance to take advantage of the ongoing ODA reform momentum

23. Recommendations Starting from Asia… –Full-fledged PRSP implementation expected in Asia (e.g., Indonesia, Cambodia, Lao PDR, Bangladesh…) –Country Assistance Program to be revised/formulated (Vietnam, Sri Lanka) Building on the recently initiated Japan’s efforts (particularly on external initiatives) –IDEA, TICAD3 (MOFA)

24. Recommendations –Efforts to reinforce Japan’s relationship with World Bank (MOF) –Study on East Asia’s development & cooperation, “Asian Dynamism” (METI) … THE END For our support to ODA reform, please see website of GRIPS Development Forum: http://www.grips.ac.jp/forum/ (Japanese) http://www.grips.ac.jp/forum-e/(English)