Will Japan increase aid and improve its allocation to help the poorer countries achieve the millennium development goals?

Will Japan increase aid and improve its allocation to help the poorer countries achieve the millennium development goals?

Developed countries have pledged to increase financial assistance to poor countries in order to help them achieve the Millennium Development Goals. A few donors such as the US and the UK have been increasing their financial assistance in the recent past, but this trend has yet to be generalised across the donor community. Japan is among the largest aid donors, but has as yet not followed the US and the UK in increasing her aid budget. This paper sets the task of examining the prospects of Japanese aid to increase significantly in the coming years, and its allocation to be re-directed towards the most aid needy countries. To this end, we turn to the past to investigate how Japanese aid policies have changed over time and also identify empirically the major determinants of aid allocation. Our study shows that whilst Japan's aid has increased in the past, in response to the broadening of its aid policy to include humanitarian and development objectives, the empirical analysis on aid allocation shows that geo-economic interests have played a crucial role. Given the historical trend one can conclude that the same determinant factors may keep on playing vital roles in aid allocation decision-making at least for some years to come, even though
there has been an increased call for more assistance to poor regions.

Reproduction, copy, transmission, or translation of any part of this publication may be made only under the following conditions:
• with the prior permission of the publisher; or
• with a licence from the Copyright Licensing Agency Ltd., 90 Tottenham Court Road, London W1P 9HE, UK, or from another national licensing agency; or
• under the terms set out below.
This publication is copyright, but may be reproduced by any method without fee for teaching or non-profit purposes, but not for resale. Formal permission is required for all such uses, but normally will be granted
immediately. For copying in any other circumstances, or for re-use in other publications, or for translation or
adaptation, prior written permission must be obtained from the publisher, and a fee may be payable.
Available from:
Communications Unit
Institute of Development Studies
at the University of Sussex
Brighton BN1 9RE, UK.
Tel: +44 (0)1273 678269
Fax: +44 (0)1273 621202
Email: bookshop@ids.ac.uk
www.ids.ac.uk/ids/bookshop