Doing Good or Doing Well: Japan's Foreign Aid Program

Japan's emergence as a world economic power is second only to the end of the Cold War in its significance for the world's political economy. While volumes have been written profiling Japan's behavior in trade and finance, less has been written about a third facet of its economic personality - its foreign aid program. In this important new book, Margee M. Ensign shows that contrary to stated claims, Japanese aid is inextricably linked to Japanese business interests.
In Doing Good or Doing Well?, Ensign explores one of the most controversial issues pervading the volatile U.S.-Japan relationship: the practice of aid "tying." In a masterful piece of research, Ensign shows how Japanese foreign aid to the developing world is often tied to purchases from Japan, and contradicts official Japanese statistics stating that American firms have won an increasing share of Japan's loan-financed aid projects. She reveals that the loan component of Japanese aid is effectively tied to purchases from Japan, making this portion of the aid program essentially one of private foreign assistance.
Ensign also discloses how economic aid from Japan which is used to build infrastructure can lay the groundwork for lucrative business ventures by Japanese firms. Overall, Tokyo's policy enables Japanese capital to establish a foothold in the developing world, with potentially devastating consequences for countries battling poverty and environmental ruin.
Doing Good or Doing Well? has wide-ranging implications for U.S.-Japanese relations, for Third World development, and for U.S. foreign aid policy. Some in the West will conclude that the U.S. should restructure its aid policies to mimic the Japanese model. One dominant argument in Congress is that U.S. aid should be used to support U.S. exports. Ensign convincingly shows that it is in the best interest of the U.S. and the Third World that foreign assistance be used to support broad-based economic growth and development. Finally, her findings - that Japan's aid focus is a narrow one - suggest that Japan does not yet have the kind of global vision that helped to reshape the world after World War II. For the U.S., these results are a reminder that economic nationalism must be countered by a global blueprint if the international economic system is to remain open and cooperative.

Japan's emergence as a world economic power is second only to the end of the Cold War in its significance for the world's political economy. While volumes have been written profiling Japan's behavior in trade and finance, less has been written about a third facet of its economic personality - its foreign aid program. In this important new book, Margee M. Ensign shows that contrary to stated claims, Japanese aid is inextricably linked to Japanese business interests. In Doing Good or Doing Well?, Ensign explores one of the most controversial issues pervading the volatile U.S.-Japan relationship: the practice of aid "tying". In a masterful piece of research, Ensign shows how Japanese foreign aid to the developing world is often tied to purchases from Japan, and contradicts official Japanese statistics stating that American firms have won an increasing share of Japan's loan-financed aid projects. She reveals that the loan component of Japanese aid is effectively tied to purchases from Japan, making this portion of the aid program essentially one of private foreign assistance. Ensign also discloses how economic aid from Japan which is used to build infrastructure can lay the groundwork for lucrative business ventures by Japanese firms. Overall, Tokyo's policy enables Japanese capital to establish a foothold in the developing world, with potentially devastating consequences for countries battling poverty and environmental ruin. Doing Good or Doing Well? has wide-ranging implications for U.S.-Japanese relations, for Third World development, and for U.S. foreign aid policy. Some in the West will conclude that the U.S. should restructure its aid policies to mimic the Japanese model. One dominantargument in Congress is that U.S. aid should be used to support U.S. exports. Ensign convincingly shows that it is in the best interest of the U.S. and the Third World that foreign assistance be used to support broad-based economic growth and development. Finally, her findings - that Japan's aid focus is a narrow one - suggest that Japan does not yet have the kind of global vision that helped to reshape the world after World War II. For the U.S., these results are a reminder that economic nationalism must be countered by a global blueprint if the international economic system is to remain open and cooperative.