No.87 The Benefits of Unification Failure: Re-examining the Evolution of Economic Cooperation in Japan

Why do some countries employ a single ministry to administer all foreign aid activities while others have a number of different ministries to manage their aid programs? This question should interest not just the historians of foreign aid, but also those engaged in contemporary policy. Additionally, it has a strong bearing on the rise of emerging donors, as many of the new donors are also at the stage of forming bureaucracies for giving aid.While Japan has been relatively successful in integrating agencies at the implementation level (e.g., the establishment of new JICA in 2008), centralization at the ministerial level is lagging far behind and decision making is confusingly multi-centric. The 2003 DAC (Development Assistance Committee) peer review of Japan highlighted that “Japan’s aid system remains one of the most dispersed and complex among DAC members, which presents clear challenges for co-ordination.” Having multi-centric bodies making decisions about the use of the ODA (Official Development Assistance) has repeatedly been criticized, both domestically and internationally, as inefficient and ineffective.
I argue that the inability of the government to unify its administrative system should not be seen as sheer failure. The very continuation of such failure for the past 60 years should also be viewed as achieving something successfully, if unintended: the involvement of a wide range of constituents from the private sectors, and preparing more broad-based Japanese economic cooperation. Like in the assessment of any other policy, the costs and benefits of administrative unity should be carefully weighed. I would further claim that quasi-governmental corporations, which functioned as a mediator between ODA related ministries and the private sectors, played a significant role in expanding the constituents of economic cooperation within Japan. In the field of economic cooperation, only the costs of a dispersed system have been pinpointed without due attention being given to its potential benefits.

Keywords: aid administration, unification, quasi-governmental corporations, economic cooperation, Japan