Following World War II, the United Nation's International Bank for Reconstruction and Development (World Bank) lent Japan--which at the time was a recipient of development assistance--a total of $860 million for its reconstruction efforts. The amount Japan borrowed from the World Bank was second only to that of India. Slightly less that half (49.8%) of the money was used to improve the efficiency of Japan's distribution system and to build expressways to deal with the expected growth in passenger car ownership. A little over 9% (9.3%) went to constructing the Tokaido Shinkansen. The now-defunct Japanese National Railways received loans of between \400-\500 billion in today's yen per project. In the private sector, 17.8% of the World Bank loans was spent to increase the capacity of Japan's electric power companies--which included the construction of superpower plants such as the Kurobe No. 4 hydroelectric power plant and the Kanagawa thermoelectric power plant--while 18.3% was used by Japanese steelmakers to modernize their existing plants and to construct new plants in Chiba, Wakayama and elsewhere.

     Thanks to the loans--which thus went to build Japan's infrastructure (roads and railways) and key industries (electric power and steel)--and thanks to the diligence and hard work of the Japanese people, the country in a very short time rose up from being a recipient of aid to become an economic superpower. And today Japan has unseated America to become the number one donor of develpment assistance, dispersing over $13 billion yen a year.

     Japan's success has helped motivate countries like South Korea and Taiwan that are trying to follow in Japan's tracks. And Japan's experience as a recipient of development assistance has taught it to appreciate the feelings of countries on the receiving end of aid in a way that previous donor countries could not, and this empathy is well reflected in its official development assistance (ODA) policies.

     Japan's ODA has been criticized for lacking a philosophy similar to the West's firm belief in helping people in need, as represented by evangelism and noblesse oblige. Japan's ODA is rather characterized by the idea of helping recipient countries to help themselves and of offering them nurture and support. It does not attach political conditions to aid as a means of forcing recipient countries to change, as some countries are apt to do. Japan's ODA is, however, not without problems: the proportion of Japan's ODA to its GNP is small (0.32%--it has pledged 0.7%) and Japan is near the bottom among members of the Organization for Economic Cooperation and Development's Development Assistance Committee in terms of the proportion and overall volume of grants, technical cooperation and other gratuitous aid provided. These problems must be resolved sooner or later. On the other hand, Japan is head and shoulders above other countries in terms of the proportion of its aid with no strings attached. When goods and services are procured with Japanese aid, firms from all countries are given ample opportunity to tender a bid. Participation in the bidding by firms from the very countries receiving aid helps encourage recipient countries to help themselves.

Copyright (C) 1998-2010 Jeffrey G. Stocker