Japan’s Positive and Negative Aid Sanctions Policy Toward Asian Countries: Case Studies of Thailand and Indonesia

In this paper, Japan’s positive and negative aid sanctions policy toward Asian countries since the introduction of new aid guidelines will be examined and discussed. Japan can choose to impose negative aid sanctions (the suspension or a decrease in foreign aid) on recipient countries where undesirable policy changes occur, while positive aid sanctions (an increase in foreign aid) would be applied to aid recipients that conduct desirable polices in the light of Japan’s ODA Charter. The Japanese government implemented four positive aid sanctions in Asia, i.e. in Mongolia, Cambodia, Central Asian republics of the former Soviet Union and Vietnam. However, Japan was reluctant to employ negative aid sanctions in the region despite various violations of human rights in Thailand and Indonesia.Foreign Aid, Japan, Asia, Thailand, Indonesia

International Comparison of Japan’s Official Development Assistance (ODA) policy

The introduction of the ODA Charter in 1992 can be seen as Japan’s official pledge to pay more attention to political conditions in recipient countries and to impose political conditionalities on them. However, in practice, the Japanese government has continued using foreign aid as a diplomatic tool to pursue own economic interests. In this paper, in order to determine the quality of Japanese foreign aid, Japan’s ODA will be compared with the foreign aid of other countries. In term of quantity, the amount of Japan’s ODA is impressive. In 1989, Japan topped the US as the biggest donor of foreign aid among all aid donor countries. Despite the impressive quantity of Japanese foreign aid, the ratio of Japan’s ODA to GNP in 1999 was 0.27 percent, which was lower than the average ODA ratio to GNP among DAC members (0.39 percent). Denmark was the country with the highest ratio (1.06 percent) followed by the Netherlands (0.82 percent). In term of geographical distribution, a prominent characteristic of Japan’s ODA is that Asia, especially East Asian countries, receives the biggest share of Japanese aid. Far East Asia received 54.5 percent of this amount, and South and Centra Asia received 19.2 percent. African countries in South of the Sahara were left far behind receiving only 9.5 percent of total Japanese bilateral aid, while the African countries in North of the Sahara received only 2.1 percent. Furthermore, Grant Share (GS) of Japan’s ODA was 39.6 percent, while the DAC’s average rate of GS that year was 77.8 percent. Among DAC members, the Scandinavian countries, Australia and New Zealand had a very high GS, almost 100 percent. Germany’s and France’s GS were nearly 80 percent. These figures show that Japan’s GS has been one of the lowest among DAC members. Also, Japan’s untied aid ratio became one of the highest of the DACForeign aid: Japan: quality of aid

The Fertility-Development Relationship in the United States: New Evidence from Threshold Regression Analysis

This study employed a threshold regression analysis (Hansen, 2000) to examine the relationship between per capita Gross Domestic Product (GDP) and total fertility rate (TFR) in the United States. The United States is the only developed country where the declining fertility rate was reversed and recovered to the replacement level of 2.1. The findings indicate that there was a statistically significant threshold in the fertility-development relationship and a reverse in the fertility decline. The threshold value of real per capita GDP based on the Laspeyres index was US$22,267, while the threshold value of real capita GDP based on the Fisher index was US$21,264. This means that the decline in the fertility rate could be reversed when per capita income reached US$21,000-US$22,000. The empirical findings also indicate a significant negative relationship between per capita GDP and TFR when income level in the country was below the threshold value. This negative association between the two variables reversed to a positive relationship when income level had exceeded the threshold value. The findings of this study confirm the existence of a J-shaped fertility-development relationship in the United States.

A Dynamic Model of Foreign Aid Allocation

This paper uses the Generalized Method of Moments (GMM)-type of estimator of Arellano and Bond (1991) to analyze the dynamics of adjustment in foreign aid allocation over the period 2000-2005. The empirical findings reveal a complex nature of foreign aid allocations. On the one hand, the static panel data models indicated that aid donors tended to provide larger amounts of foreign aid to the poorer developing nations which were in a greater need for the development assistance. On the other hand, the dynamic panel data models indicated contradicted results, where relatively wealthy developing countries have received larger amounts of foreign aid.

Is GDP in ASEAN countries stationary? New evidence from panel unit root tests

This study investigated stationary process in real per capita Gross Domestic Product (GDP) in nine ASEAN countries, namely, Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. It employed both the ‘first generation' and the ‘second generation' of panel unit root tests for this purpose. Despite some differences in the findings, the empirical results suggested that per capita GDP had been characterized by a nonstationary process, as the results from the second generation of panel unit root tests indicated. This implies the presence of some common factors in these countries' GDP time series which would persist over time.

Does the “Phillips Curve†Really Exist? New Empirical Evidence from Malaysia

The hypothesized trade-off relationship between inflation rate and unemployment rate has been known as the “Phillips curveâ€. Though the Phillips curve has played an important role in the decision-making process on macroeconomic policy, there have been critics who doubted the existence of the “Phillips curveâ€. Despite a number of studies on the Phillips curve, there has been a lack of research that probed the hypothesis in the developing countries' context. This paper chooses Malaysia as a case study to empirically examine the relationship between inflation rate and unemployment rate. The most interesting finding of this paper is the existence of a long-run and trade-off relationship – and also causal relationship between the unemployment rate and the inflation rate in Malaysia. In other word, this paper has provided an empirical evidence to support the existence of the Phillips curve in the case of Malaysia.

Population Growth and Economic Development: New Empirical Evidence from Thailand

Population growth has a substantial impact on economic development. There are two schools of thought regarding this issue. Some researchers maintain that population has a negative impact on economic development while others are convinced that the effect is positive. This paper aims to provide additional evidence by employing the bounds test (Pesaran et al., 2001) to analyse a long-run relationship between population growth and economic development in Thailand. The findings of this study indicate the existence of a long-run equilibrium relationship between population growth and economic development in Thailand. Also, the findings show that there exists a unidirectional causality from population growth to economic development in Thailand. This means that population growth in Thailand has a positive impact on the country's economic performance. These findings support the population-driven economic growth hypothesis which states that population growth promotes economic development.

Main characteristics of Japanese Official Development Assistance (ODA) flows

At the end of the 1990s, the Japanese government distributed annually more than US$10 billion as foreign aid directly or indirectly to developing countries. Japan’s ODA can be divided into the following four groups: 1) Bilateral Grants, 2) Technical Co-operation, 3) Multilateral Aid, and 4) Bilateral Loans. In 2001, Bilateral Grants made up 19.3 percent of Japan’s total ODA budget; Technical Co-operation constituted 29.7 percent; Multilateral Aid and Bilateral Loans accounted for 24.7 percent and 26.3 percent, respectively. There have been criticisms that Japanese ODA loans have been provided mainly for economic infrastructure projects only. In response to these criticisms, the Japanese government claims to have made efforts to channel these loans into various social sectors, such as agricultural projects or rural development.Foreign Aid, Japan

Do exports act as “engine†of growth? Evidence from Malaysia

For decades, the conventional wisdom for a developing nation striving to achieve an impressive economic growth has been to carve a niche in the global marketplace. However, empirical findings of various research studies on the “export-led growth†hypothesis do not provide a solid evidence to support this viewpoint. The current paper chooses one of the “East Asian Miracle†economies, Malaysia, to empirically examine whether exports act as the “engine†of growth. The results of the empirical analysis do not support the “export-led growth†hypothesis. Rather, they lead to a conclusion that there exists a “virtuous cycle†or mutually reinforcing relationship between Malaysia's exports and GDP in the long run. The findings also detected unidirectional short run causality from GDP to exports, but not vice versa. This means that the increase in Malaysia''s export tends to be an effect, and not the cause, of the country''s output expansion.

A Critical Assessment of Japan’s Foreign Aid Sanctions Policy: Case Studies of Latin American Countries

The Japanese government introduced new foreign aid guidelines in 1991 and it pledged to impose aid sanctions on those aid recipient countries whose governments violated human rights or democratic principles. The introduction of the new aid guidelines is expected to produce a certain effect on Japan’s foreign aid policy. This paper examines Japan’s aid sanctions policy toward Latin American countries as a case study. Since new ODA guidelines were introduced, Japan implemented three positive reinforcements in Latin America, i.e. in Nicaragua, El Salvador and Peru, while negative reinforcements were introduced twice, i.e. in Haiti and Guatemala. The findings indicate that Japan apparently pledges to promote human rights and democracy with the aim of showing solidarity with other aid donor countries while the pursuit of economic interests seem to remain a driving force behind Japanese aid policy.Foreign Aid, Aid Sanctions, Japan, Latin America