East Asian Experience and African Development
How to Assist Growth in Africa &
Elsewhere
Policy Formulation in Developing Countries GRIPS Development Forum
Cashew nut seller in Mozambique Copper Belt in Zambia Garment workers in Ethiopia
Topics
1. The meaning of East Asian lessons
2. Desirability vs. feasibility (interaction of economics and politics)
3. Features of Japanese FDI and ODA
4. Policy entry points—how the Eastern method should be transferred to other regions
5. Mindset and absorptive capacity of developing
country governments
EAST (esp. Japan) WEST Goal Dynamism--national pride,
industrialization, compete for excellence, graduate from aid
Altruism—poverty reduction, equity & rights; rich must help poor to alleviate pain
Approach Pragmatism--obsession with concrete details & progress;
JICA goes to factories & farms
Rule-based--install proper &
general framework; leave details to consultants
Time scope
Long-term--some projects take decades to bear fruits;
trials & errors are acceptable
Short-term--every project must produce visible results for evaluation after 2-3 years Democra
cy
Democracy & markets need time to grow and mature
Democracy as pre-condition of growth at any income level Typical
programs
Infrastructure, industrial HR, SMEs, TVET, industrial master plans, FDI-local firm linkage, productivity, creation of new industry, one-stop service…
General budget support, law, governance, PPP, export
marketing, trade negotiation skill, green manufacturing, business matching funds…
Developmental Vision: East & West
At the risk of oversimplification
Even though PSD and industrial policy have come to be widely accepted, East and West have different views on how growth should be supported.
1. The Meaning of East Asian Lessons
It is NOT copying some policies adopted in some East Asian countries to Africa (or any other
place) without critical examination of local context—all countries are different.
Lessons should be about mindset (heart) and methodology (tools) of development policies
What should be learned:
Leadership
Popular mindset, national movements
Policy procedure, organization, documentation
General capability to create your own policy by selecting and modifying other countries’
diverse experiences
Fact Learning & Creative
Thinking Must Go Together
Confucius (551-479BC), Chapter on Politics, Lun-yu “Learning without thinking is useless; thinking without
learning is insecure.”
「学びて思わざるは罔（くら）し、思いて学ばざるはすなわち殆
（あやう）し」
Friedrich W. Nietzsche, Thus Spoke Zarathustra (1883) Three transformations of the spirit:
1. Camel – “Put a heavy load on me” (learning the world knowledge)
2. Lion – kill a dragon whose name is “Thou Shalt”
(emancipation from authority & tradition)
3. Child – A spontaneous actor who has absorbed knowledge but freed oneself from imposed ways “The child is a self-propelling wheel.”
2. Desirability vs. Feasibility
Development is both a political process and an economic process.
What should be done
HRD & technology Infrastructure
Integration & competition Institution building, etc
What can be done
Leadership
politics, foreign relations popular mindset
administrative capacity
Each country is unique in what needs to be done as well as what can actually be done.
Any policy maker must work simultaneously with economic and political space (content vs. doability).
(mainly economics) (mainly politics)
Desirability vs. Feasibility (cont.)
We need to figure out a policy sequence which is both desirable & feasible in each country’s
context.
Policy advice without political or local feasibility cannot be implemented regardless of whether proposed actions are a few or many, common or tailor-made.
Examples:
IMF’s big-bang liberalization, privatization &
integration
WB’s good governance & “international best practices”
Growth diagnostics (Harvard economists incl. Rodrik)
Recommending a Japanese or Korean model to all countries
3. Features of Japanese FDI
Africa asks: “China, India, Turkey, Brazil, etc. are already here.
Why do Japanese firms not come to Africa?”
The Japanese business model is unique:
Manufacturing-centered—investments in property, trade and mining are relatively small compared with others
Monozukuri (manufacturing) spirit—proud of factory floor;
endless pursuit of quality & customer satisfaction
Long-term orientation—last in coming to frontier countries but once invested, will stay long against difficulties
Partner assistance—providing training to local firms and engineers because long-term relation & trust are important
Legal compliance—observance of local labor, tax, environment laws
Japanese manufacturing firms are slow but sincere; developing countries will eventually realize their virtue (cf. Southeast Asia;
but not yet in Africa).
Features of Japanese ODA
Unlike WB or UN, Japan’s aid policy has been constant since the 1950s: infrastructure & human resource are two pillars.
“ALL JAPAN”—officials, academics, experts and businesses cooperate to design and implement projects (cf. contract- based consultancy in USAID, Korea’s KSP…)
Institution building and training locals—sustainability after JICA experts leave; graduation from aid is the ultimate goal.
Gemba orientation—working in factories & farms; however, communicative ability (English, report writing) is inferior.
Linkage between FDI and ODA.
Some projects are very long-term: Thailand’s King Mongkut University, Indonesia’s Brantas River Basin development Vietnam’s Cho Ray Hospital, Chile’s salmon industry…
Preference of productive sector projects over general budget support or like-minded donor coordination.
Marketing Japan’s FDI &
ODA in Africa
Quality, not quantity or speed, should be promoted and promised in Japanese manufacturing FDI or ODA.
Publicize merits of Japanese FDI & ODA to “frontier”
countries; differentiate from China.
Enter Africa with small-scale but high-quality:
Add value to exports by safety & quality guarantee, packaging, logistics, etc. (eg. coffee, sesame…)
Produce highly-priced “champion products” by branding and strategic marketing
Manufacturing FDI that uses high-quality local materials (eg. leather products, gems & jewelry…)
Japan is unlikely to create a large export base for electronics or auto in Africa (production base is shifting from China to Thailand, Vietnam, Indonesia, Cambodia, Myanmar… and Ethiopia?)
4. Japan’s Entry Points for Industrial Assistance in
Frontier Countries
GRIPS Dev. Forum, Proposal for a New African Growth Support Initiative, Aug.2008.
(1) If the government already has a good strategy, mobilize standard assistance tools to support that strategy.
(2) Engage in policy dialogue (preferably followed by specific aid projects and other assistance).
(3) Build a core infrastructure with additional aid and investments around it for comprehensive
regional development.
(4) Provide missing elements (infrastructure,
technology, skills, etc.) to entice (Japanese)
firms to invest under open access and non-
exclusivity principle.
(1) Mobilizing Standard Aid Tools to Support Existing
National Vision
Industrial policy menu is common. What is not common is each country’s capability to execute standard policies effectively in the local context.
Japan has many industrial aid tools which are widely practiced in East Asia.
Kaizen (quality and productivity improvement)
Shindan (SME management consultant system)
Engineering universities and colleges
TVET-industry linkage
Industrial estates & strategic FDI marketing
SME assistance package
Integrated export promotion (Korea)
Strategic creation of new industry through industry- government-university cooperation
Comprehensive regional development with core infrastructure
(2) Japan’s Policy Dialogue with Developing Countries
If policy is weak or if a nation wants to learn the Eastern way, Japan can engage in policy dialogue for improving policies, building mutual trust & understanding, and targeting aid:
Argentina – Okita Mission, 1985-87; follow-up 1994-96
Vietnam – Ishikawa Project, 1995-2001
Thailand – Mizutani Report for upgrading SMEs and supporting industries, 1999
Indonesia – Urata Report for SMEs, 2000; Prof. Shiraishi &
Asanuma for financial crises, 2002-04
Mongolia – Ueno, Hashimoto, 1998-2001
Myanmar – Prof. Odaka, 1999 (not successful), 2012-
Laos – Prof. Hara for overall dev. strategy, 2000-05
Ethiopia – GRIPS-JICA, 2009- kaizen & policy dialogue
Vietnam – Joint Initiative 2003- (investment climate);
supporting industries 2008-10; industrialization strategy 2011-13; Local government industrial support 2015-?
Africa Taskforce
Meeting Jul. 2008 Official launch Jun. 2009 Preparation
Industrial Policy Dialogue
Final session May 2011
Kaizen Phase 1 (30 pilot companies)
(With Germany)
JICA’s Industrial Cooperation
Metal industry survey
Kaizen Phase 2
（Institution & human resource) Start
Jan. 2012
Note: Black boxes indicate three-level policy dialogue in Addis Ababa (PM, ministers, operational level).
Phase 1 (2009-11) Phase 2 (2012-15)
Champion Products
PM Meles PM Hailemariam
Final session
Aug. or Oct. 2015
Kaizen Phase 3 (Advanced level)
Branding &
promotion
2008 2009 2010 2011 2012 2013 2014 2015
PM Abe visit
2016
Malaysia mission TICAD V
Ethiopia-Japan Industrial Policy Dialogue
With Former PM Meles at PM Office
Senior Economic Advisor Newai Presenting JICA’s Kaizen Report
High Level Forum (Aug. 2014)
Lecture at Civil Service University (Economic Development of Japan)
At MOFED
(3) Japanese Assistance for
Regional Development around Core Infrastructure
Greater Mekong – East-West and North-South Corridors for development of Indochina Region
Thailand - Eastern Seaboard: industrial cities around port infrastructure (Ms. Shimamura)
Indonesia - Brantas River Basin Development
Vietnam - Highway No.5 and FDI attraction
Cambodia - Port, industrial park, FDI attraction
El Salvador - La Union Port and comprehensive regional development (Dr. Hosono)
India - Delhi-Mumbai Industrial Corridor
Mozambique - Nacala Port and Nacala Corridor,
agriculture and industrial parks
Pacific Ocean
Road
(US aid) Bridge
(Japanese aid)
(Japanese aid) Regional development
(Japanese aid)
Honduras
Components of Japan’s ODA in El Salvador
- Construction of La Union Port
-
Rebuilding an old bridge (Honduras border)
-
Digital map technology for efficient planning
-
Urban development planning for La Union City KEY INFRASTRUCTURE
- MEGATEC La Union (training center)
- Primary schools & math
- Clean water
- Rural electrification
- Solid waste control Social & Human RD
- SME promotion
- Aquaculture
- Small-scale agriculture
- Reservoirs & irrigation
- Small-scale livestock
- La Union Port
- Plan Puebla Panama
- CAFTA & other FTAs
- Cent. Amer. integration
- M/P for Eastern Region Support for
Productive Sectors
Eastern Region Development
Source: Summarized from Prof. Hosono’s presentation
(Map source: JBIC)
- Mozambique is Japan’s target country in Africa for regional development approach:
Nacala Corridor, Nacala City planning, Pro Savanna agriculture (with Brazil), etc.
- However, Japan has not built effective policy channels with Mozambican Gov’t.
- WB supports implementation of multiple corridors development.
(Map source: World Bank)
- Brazil, India, etc. interested in Mozambican resources (coal, natural gas).
5. Mindset & Absorptive Capacity of Developing Country Governments
Even though Japan teaches & transfers the same skills &
technology in a similar way, developing country governments are all different.
Example: productivity movement
Singapore—fully mastered it and started teaching to other countries
Thailand—MOI & private NPO have made great effort to learn kaizen & shindan for partial success
Indonesia, Vietnam & India—Japan & private sector make effort, but gov’t does not promote productivity
Mauritius & Burkina Faso—kaizen was once learned but now nearly forgotten.
How should Japan teach different governments?
Willingness
to learn Policy ownership
Current industrial knowledge
Stability of leader &
government
Capability of top leader(s) &
ministers
Capability of mid/low
officials
Thailand High Moderate High Low Moderate Moderate
Vietnam Low High Low High Low Low
Indonesia Low High Low Moderate Moderate Low Cambodia High? moderate?Low to Low High Moderate to high? Low
Mauritius High High High High High High?
Rwanda High High Moderate High? High ?
Ethiopia Very high Very high Moderate High High Low
Mozambique Low Low Low High? Low Low
Comparing Mindset & Absorptive Capacity
For the purpose of transferring industrial skills & knowledge
(preliminary grading, subject to revision)
1/ Japan’s resource is limited while industrialization is difficult; support should be given to most promising students.
2/ Patience is required if Japan has to teach an important country with low mindset & capacity.
3/ Willingness to learn is more important than current knowledge or political stability.
