Assessing japanese aid allocation

Abstract

Many empirical studies reveal that Japanese aid allocative behaviour is not humanitarian. It is viewed as commercially motivated and geopolitically motivated. It is further reputed that Japanese development assistance program have earned a reputation being concentrated in Far East Asian region. I reexamine these issues. In this paper, I also perform an econometric analysis of aid allocation, covering 6 aid donors and 168 aid recipients over the period 1990-2002 and accounting for both altruistic and selfish donor motives but with more regional variation. The results indicate a significant difference in Japanese aid allocative behaviour towards Far East Asian region and the other regions. The behaviour is highly poverty focused in Far East Asia but selfish motives are also high. Comparing to aid allocation to Far East Asia, Japanese aid allocation to the other regions is less altruistic and selfish. It further confirms commercial motives have been less important in both regions while political motives have been enhanced in the other regions over time. At same time, altruistic motives have been weakened over time regardless of the regions. I also find the evidence that US pressure toward Japanese foreign aid policy has impact on Japanese aid allocation.