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Supporting MDGs through Growth-Driven Poverty Reduction

Supporting MDGs through Growth-Driven Poverty Reduction. Japan’s ODA and Asia. October 9, 2002 Izumi Ohno National Graduate Institute for Policy Studies. Background. Ongoing global poverty reduction partnership World Bank’s CDF/PRSP(1998/99- ) UN’s Millennium Development Goals (2000/01-)

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Supporting MDGs through Growth-Driven Poverty Reduction

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  1. Supporting MDGs through Growth-Driven Poverty Reduction Japan’s ODA and Asia October 9, 2002 Izumi OhnoNational 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

  6. 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

  15. 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)

  16. 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

  17. 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

  18. 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.

  19. 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)

  20. 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

  21. 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

  22. 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)

  23. 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)

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