1 Introduction

Kaihatsu-yunyū (開発輸入, literally translated as “develop-and-import”) was once a widely used policy instrument and financing mechanism that characterised the early years of Japan’s post-war “aid” to and economic cooperation with developing countries.1 In the absence of an official definition and clear criteria, kaihatsu-yunyū has been used to refer to a mechanism—particularly during the 1960s and 1970s—by which Japanese companies invest capital and export technology overseas to develop and import raw materials vital to the Japanese economy (Uraki 1969). Yet, the initial form and idea of kaihatsu-yunyū appeared in the 1950s as a dual-purpose tool of Japan’s economic cooperation with the developing world to secure resources (largely in minerals and energy) and to promote the export of Japanese plants and machineries needed by those industries (Hara 1966; JBIC 2003, p. 232; JEXIM 1961).2

Despite its significance and wide usage in Japan, kaihatsu-yunyū remains little known outside of Japan. As a Japanese policy tool, its “translatability” was of little concern to Japanese actors involved. As such, it remained untranslated. Yet, the rapid increase of China’s South-South Cooperation (SSC) since the 2000s brought about changes. Kaihatsu-yunyū attracted the attention of academics and media due to its mounting presence and visibility in Africa (see below). And, Japan’s Goa formula—the earliest form of kaihatsu-yunyū—gained interest when it was recognised as the archetype of China’s Angola model (see Brautigam 2009). The Angola model consists of large-scale resource-for-infrastructure swap agreements, which initially emerged in Angola (Alves 2013; Brautigam and Gallagher 2014). In explaining such traits of China’s SSC in Africa, Brautigam discusses how China learned the essential idea of Japan’s kaihatsu-yunyū as seen in the Goa formula—a long-term resource-backed financing arrangement in which India exported two million tonnes of iron ore annually to Japan as repayment (Brautigam 2009).3 There are indeed some striking resemblances between Japan’s Goa formula and China’s Angola model—especially their basic mechanisms and the Western criticism towards both.

Notwithstanding its strategic significance for Japan's post-war development and some recent interest through China's SSC in Africa, there are very few studies solely dedicated to kaihatsu-yunyū in Japanese—and far fewer in English. Even when kaihatsu-yunyū is mentioned, it is largely done so as a passing remark to state its role in importing vital raw materials (including minerals or oil) with no further elaboration. Moreover, some of the studies that included a brief analysis of kaihatsu-yunyū contain partly inaccurate or mutually contradictory data. This requires that its emergence, evolution, ideational background, and implementation mechanisms be explained afresh.

In order to address this knowledge gap and its related misconceptions, the chapter does three things. First, it examines the mechanisms and operation of kaihatsu-yunyū as it emerged in the archetypal case of the Goa formula, simultaneously historicising the policy tool in the context of Japan’s economic cooperation between the 1950s and 1960s. Second, the chapter contextualises kaihatsu-yunyū, and particularly its later development kaihatsu-yunyū enjo, as a dual-purpose policy tool that facilitated Japan’s post-war economic cooperation. In doing so, the chapter further considers its significance through the notion of aid for trade. Finally, rather than repeating what is already said, the concluding remarks briefly discuss the legacy and significance of kaihatsu-yunyū in Japan and beyond.

2 Understanding Japan’s Goa Formula

The basic financing arrangement of the Goa formula was essentially a long-term resource-backed credit agreement in which Japan provided (exported) the necessary machinery, equipment, and technology in exchange for Goa’s iron ore as repayment (Arase 1995, pp. 39–40). In many well-known studies, the Goa formula is noted as Japan’s first official concessional yen loan (see Chapter 12) to India in 1958 (Arase 1995; Brautigam 2009, pp. 46–47; Lancaster 2010, p. 35). However, the origin of the formula goes further back to October 1951 when the Japanese mining corporation Kōkan Mining Company and the local shipper Chowgule and Company, Ltd. in Goa signed the first resource-backed credit agreement to modernise infrastructure to accelerate and increase mining production in Sirigao mine (Ozawa 1986; Jain 2017).

Then, how did the 1951 project come about? Moreover, what gave rise to this particular formula of long-term resource-backed credit agreement that essentially secured a seemingly “mutually beneficial” trade deal between Japan (i.e. export of the plant facility in exchange for the import of vital resource) and Portuguese Goa (i.e. improved means of production for export and guaranteed access to a market)? To answer these questions, let us first look at the mechanism of the Goa formula more closely.

2.1 The Goa Formula as Kaihatsu-Yunyū

Japan’s iron import from Goa began in the 1920s through Nichi-in-Tūshō (日印通商)—a trading company that was a subsidiary of Kishimoto Shōten (岸本商店), a major iron and steel trading/wholesale company based in Osaka.4 Since the end of the war, Japan became increasingly reliant on imported iron ore. In the early post-war years, Japan’s steel industry mainly purchased iron ore at market prices from foreign resource companies. Yet, such a method and its cost were not sustainable in the face of Japan’s growing industrial needs. As shown in the former Fuji Iron and Steel Company president’s enthusiasm over economic cooperation (see footnote 2), Japan’s steel industry was keen to “assist” Southeast Asian countries with development of their mines in terms of capital, equipment/machinery, and technology in exchange for better trade deals (Hara 1966). Amidst the search for cheaper and more stable supplies of iron ore, the Korean War broke out. The US’ emergency supplies procurement from Japan further strengthen the US-Japan economic cooperation via the development of Southeast Asia (Okita 1951; JEXIM 1961, p. 33, pp. 70–71; also see Marquat’s statement below). Particularly in light of US procurement, securing a stable iron ore supply for Japan received the foremost attention from both sides (JEXIM 1971, p. 29). To address the issue, the General Headquarters of the US-led Allied Powers (GHQ) suggested “development issues” in Goa (JEXIM 1961, p. 33, pp. 70–71). During this period, Japan categorised South Asian countries including India as part of Southeast Asia in Japan. With Kishimoto Shōten serving as an agent to facilitate the process of the credit agreement between the exporter and importer of iron ore (Tanaka 1994, p. 69), Japan’s steel industry (with a nudge from the GHQ) shaped the course for kaihatsu-yunyū at the dawn of 1950s (Tanaka 1994).

The 1951 Goa project was essentially a resource-backed credit agreement between the Japanese mining corporation Kōkan Mining and the local shipper Chowgule to modernise production measure to accelerate and increase mining outputs in Sirigao mine (Ozawa 1986; Jain 2017). In exchange for 1.5 million tonnes of Goa’s iron ore over a three-year period, the contract included the provision of JPY 580 million in loan credit—co-financed by Japan Bank for Export and Import (JEXIM) and three Japanese commercial banks—to support Kōkan Mining’s export of the mining-plant facility (National Diet 1951; Takehara 2001, pp. 290–291). JEXIM’s export credit for the Goa project was its first and most iconic financing arrangement for Kaihatsu-yunyū, which was later officially called resource development-import finance (shigen kaihatsu-yunyū kin’yū) (JEXIM 1971, pp. 256–269), or, more colloquially, as the “Goa (or Chowgule) formula” (Kobayashi 2000, p. 55). The system emerged to develop raw materials overseas by modernising the iron ore mining production to increase outputs in Shirigao mine through providing the mining-plant facility, technical training, and access to the Japanese market (JEXIM 1961; Hara 1966).5

Further, it is also important to appreciate how the Goa formula emerged from the geopolitically specific context of Portuguese Goa. While mines in the rest of India were state-owned, Portuguese Goa was the only state where mines were privately owned by local business men and traditional land owners (Routledge 2000, p. 2649). Licences to mine and ship iron ore were granted to a small group of families including Chowgule by the Portuguese before their ouster in 1961 (Routledge 2000, p. 2649). Thus, other iron ore kaihatsu-yunyū agreements in India during the 1950s were based on the so-called “Kiriburu formula” of which the Indian counterpart was an official government body—e.g. the National Mineral Development Corporation—due to the state-ownership of mines (Hara 1966, p. 72).

2.1.1 The Mechanism

The 1951 Goa project was based on the Japanese mining corporation Kōkan Mining Company’s contract with Chowgule and Company, Ltd., which had the license to mine and ship extracted ore from Sirigao mine to Japan. Although the agreement seems a straightforward one between two business partners, its financing-related mechanism tells a more complicated story.

As Fig. 1 shows, two groups of actors played equally important parts to constitute this formula. The first group is the Japanese steel industry that played the role of both a credit guarantor and iron ore consumer. Also, as Chowgule’s repayment for the mining equipment/machinery was deferred (over the three-year period), three Japanese steel companies paid part of the iron ore import price in Japanese yen (JPY) to Kōkan Mining to ease its financial burden on Chowgule’s behalf (Hara 1966).6 The second group consists of the financiers including JEXIM and the three commercial banks. JEXIM played a crucial role by extending a large sum of export credits totalling JPY 466 million—the initial loan of JPY 416 million in 1951 was followed by additional loans of JPY 12 million in 1952 and JPY 38 million in 1954 (JEXIM 1961, p. 33). Additionally, the three commercial banks provided funds of JPY 114 million to Kōkan Mining (JEXIM 1961, p. 33; Takehara 2001, pp. 290–291).

Fig.1
A chart presents the GOA formula, stemming from agreements between Chowgule and Company Limited and Kokan Mining Company. It involves long-term import deals with Japanese steel firms. These deals repay Kokan Mining through Chowgule and offer guarantees. JEXIM and banks provide co-financing.

Source Adapted from Hara (1966, p. 72, pp. 86–88), JEXIM (1971, p. 39), National Diet (1951), Takehara (2001, pp. 290–291), and Tanaka (1994, p. 69)

The original Goa formula.

Full size image

The co-financing arrangement also emerged from the geopolitically specific context of occupied Japan under the US-led GHQ. In the process leading up to the birth of JEXIM in 1951, Joseph Morrell Dodge—an economic advisor to the GHQ—stressed two grounds for the co-financing with private banks as JEXIM’s main lending method (JEXIM 1961, pp. 25–26). The first reason concerns “[t]he principal function and first responsibility” of JEXIM’s financing that was to supplement the commercial finance (and the lack of it) by extending “necessary long-term credits for financing the production of capital goods in Japan for export and their export in Japan” (Dodge 1950, cited in JEXIM 1961, p. 21, emphasis added). Thus, JEXIM was “not [to] compete with the Japanese Commercial Banks” (ibid.), but to address Japanese companies’ hardship in obtaining the necessary commercial funds for the production of plant facilities for export. As the plant export was one of the most effective tools for hard currency acquisition, JEXIM’s funds were mainly provided to the Japanese companies facing difficulties in securing their production costs, which ultimately hindered their exports (JEXIM 1961, p. 25). The second reason stems from JEXIM being set up as “a minimum operating organisation” with “the simplest possible structure” (Dodge 1950, cited in JEXIM 1961, p. 20).7 Thus, for the first few years since its establishment in 1950, JEXIM was rather small and understaffed, so there was a need to commission/contract some of its works out to private banks for smoother operation (JEXIM 1961, p. 26).

The Goa formula—essentially a long-term resource-backed credit agreement method—was the prevalent form of iron ore kaihatsu-yunyū until the early 1960s, and was better known as yūshi-baikō (融資買鉱) in Japan’s mineral resource industry (JOMEG n.d.; Tanaka 1994).8 The method enabled Japanese companies to directly participate in local production without equity ownership (Hara 1966, p. 72). This non-equity contractual arrangement was designed to address not only strong nationalist sentiments in India against foreign equity ownership (JEXIM 1971, p. 29), but also Japan’s own anxiety over heightening anti-Japanese sentiments in Asia (Kim 2022). Thus, the Goa formula constituted a sharp departure from “the traditional type of investment in which all services are offered, along with equity capital, in one package” (Ozawa 1986, p. 605). Ultimately, as Ozawa highlights, the 1951 Goa project clearly set a precedent for newer forms of investment-like non-equity contractual arrangements (Ozawa 1986, p. 605). Through the Goa formula, Japan secured “mutually beneficial” trade deals that “help[ed] India/Portuguese Goa to help itself” (Kato 1996). Japan exported the plant facility in exchange for the import of vital resource while India modernised its production infrastructure (hence, increased outputs) and guaranteed access to the Japanese market (Ozawa 1986, p. 605).9

3 “Trade or Die”: Contextualising the Idea of Kaihatsu-Yunyū

Japan must fully engage with development in Southeast Asia to increase resource supply that are in shortage for the world. We, the US, are willing to provide necessary finance […] for Japan to develop Southeast Asia […] [Thus, t]he region contributes raw materials, Japan provides equipment, skills, [and] effort/labour, the US provides finance. It is ideal for three counterparts to contribute but cooperate as one in proceeding with development.

16 May 1951, William Frederic Marquat,

Head of the Economics and Science Section, the GHQ

“To a very large degree, the future of Japan, its progress and ultimate improvement in living standards, will depend on the continuous aggressive expansion of exports.”

9 November 1951, Joseph Morrell Dodge,

economic advisor to the GHQ

3.1 Kaihatsu-Yunyū as a Dual-Purpose Policy Tool for Japan’s Post-War Economic Cooperation

Kaihatsu-yunyū was indeed a vital policy instrument of Japan’s economic cooperation in the early post-war years. But it was also a reflection of widely shared “mentality” in Japan, “Trade or Die”—derived from Japan’s own understanding of its international position since the opening of its economic and diplomatic relations with the world in the late nineteenth century (Bullard 1974, p. 846; Kotabe 1984, p. 33). Basic ideas underpinning kaihatsu-yunyū were also clearly reflected in the statements by Marquat and Dodge above. Therefore, Tokyo began economic cooperation with, or “aid” to, Southeast Asian nations in efforts to rebuild trade relations for Japan’s own economic reconstruction since the beginning of 1950s (Caldwell 1972; JEXIM 1961). “Aid giving” sounds rather “irrational,” or something of luxury, for the war-devastated economy of Japan at the time. Its GNP per capita (USD 190) was either far lower than or comparable to some of its recipient countries in Southeast Asia (Shimomura 2014, p. 117).10 Yet, as a resource-impoverished “semi-developed country (chūshinkoku,中進国)” (Sato 2016a), policymakers in Tokyo understood the gravity of recovering trade via aid to and economic cooperation with Southeast Asia amidst heightening anti-Japanese sentiments (Shimomura 2014; Sato 2016b).

To rebuild trade, Japan needed to secure raw material supplies from the region to expand its exports. And, the Korean War-induced demands—particularly, on some iron and steel products—further compelled Japan’s search for cheap and stable supplies of iron ore in Southeast Asia (Asai 2002, pp. 256–258). Such development thinking was also clearly presented in the Yoshida Cabinet’s “New Economic Policy” (1951) and the “Outline of Important Economic Measures for the Future” (1951) that detailed the basic economic policy for post-Occupation Japan. Both documents stressed (1) Japan’s determination to actively partake in international economic cooperation in the development of Southeast Asia and to strive to strengthen trade relations with the region; (2）the necessity of export expansion and raw material import security—hence, to provide (export) the necessary capital/consumer goods and technology while increasing Japan’s import of raw materials from the region (Shimomura 2014, pp. 120–122).11 To put these ideas to work, as in the case of Goa project, Japanese businesses, with the help of JEXIM’s credits, promoted their capital goods exports via deferred payment that took the form of long-term import agreements of vital mineral resources (Ishikawa 2002, p. 46). This arrangement was fitting for both partners, who were mutually suffering from severe shortages of hard currency. Thus, kaihatsu-yunyū in the 1950s was an epitome of Japan’s efforts to trade (hence, to not “die”) through economic cooperation with and aid to Southeast Asia by mitigating obstacles to trade.

As Japan entered the 1960s, Japanese policy and business circles showed greater interest in kaihatsu-yunyū for stable and lower-cost raw materials in response to rising resource needs (Uraki 1969; Rix 1979; Fukushima 2008; Hall 2020). Hence, Japanese companies increased their kaihatsu-yunyū Foreign Direct Investment (FDI) to strengthen control of their resource supply (Ikenoue and Ono 1998). Unlike the non-equity contractual agreement of the 1950s’ Goa formula, kaihatsu-yunyū FDI in the 1960s sought equity ownership. This form of kaihatsu-yunyū FDI aimed to secure and expand “Japanese-owned-or-produced (kokusan 国産)” resources—and, in doing so, ultimately contributed to the stabilisation of domestic prices (Uraki 1969; JEXIM 1971). Further to this shift in kaihatsu-yunyū methods, some important changes in Japan’s political economy gave rise to the so-called kaihatsu-yunyū–style aid (hereafter kaihatsu-yunyū enjo). This type of aid was devised to assist developing countries by building (1) basic infrastructure and (2) local capacities for development and export of their raw materials. Hence, kaihatsu-yunyū enjo responded to two particular issues that became essential for Japan’s economic growth and trade expansion in the 1960s.

The first issue concerned Japan’s need to adjust its mounting trade surpluses with Southeast Asian countries (MITI 1965; Uraki 1969). With trade normalisation, Japan’s trade volume as well as trade surpluses with Southeast Asian countries swelled rapidly from the 1960s (Kim 2022). In order to resolve the lopsided trade relation and subsequent import restrictions on Japanese goods, kaihatsu-yunyū was identified as a key measure in Japan’s strategy towards promoting/increasing raw material imports from Southeast Asia. For example, the Ministry of Trade and Industry (MITI)’s white paper emphasised the utility of kaihatsu-yunyū enjo to improve the quality of primary commodities from Southeast Asian countries and to reduce their production costs via financial and technical assistance (MITI 1965, p. 178). While MITI’s white paper emphasised the economic growth of Southeast Asia—then the second-largest export market of Japan—would ultimately lead to the growth of Japan’ trade, it exhibited how kaihatsu-yunyū enjo contributed to the diversification of export commodities as well as the expansion/promotion of exports from Southeast Asian countries (MITI 1965, pp. 180–181). Further, the white paper stated that capital and technology assistance via kaihatsu-yunyū enjo was not solely confined to activities at the production stage (i.e. the development of raw materials) but also those to improve quality and price of primary commodities. In doing so, kaihatsu-yunyū enjo provided necessary support to promote Japan’s purchase/imports of those primary commodities with improved quality and price (MITI 1965, pp. 180–181).

The second issue centred on the international call for increasing aid to resolve the issue of “underdevelopment” in the global South. Along with aforementioned assistance to promote Southeast Asia’s primary commodity export, the Japanese government provided Official Development Assistance (ODA) for local infrastructure development to better facilitate kaihatsu-yunyū (Hara 1966, p. 14, p. 25; Uraki 1969). In doing so, kaihatsu-yunyū enjo helped Japan address (1) “underdevelopment” issues in Southeast Asia by improving local infrastructure and production measures, (2) trade deficits by importing primary commodities developed through such aid—which also reduced the foreign currency burden of Southeast Asian countries (Hara 1966, p. 14, p. 25).

3.2 Kaihatsu-Yunyū Enjo as “Aid for Trade”

Kaihatsu-yunyū enjo, which emerged in the 1960s, envisioned aid that promoted trade. For Japan, kaihatsu-yunyū helped to (1) secure stable and sustainable raw material supplies by exporting Japanese plant facilities or equipment and (2) improve production measures of raw material development and import these products from Southeast Asia. For Southeast Asian countries suffering from severe shortages of hard currency, Japan’s kaihatsu-yunyū and kaihatsu-yunyū enjo provided much needed capital goods, infrastructure, and technology (hence, saving their foreign currency for industrial development) to develop the region’s natural resources to increase their exports (Hara 1966, p. i). While kaihatsu-yunyū in the 1950s was largely conducted on a non-concessional commercial basis, kaihatsu-yunyū enjo in the 1960s had a stronger element of aid and ODA (and was therefore concessional) to address the issue of “underdevelopment” in Southeast Asia (Hara 1966, p. 23, p. 25; Uraki 1969).

Yet, a report on Japan’s kaihatsu-yunyū in India published by the Japan External Trade Organization (JETRO)12 discussed how the ideas of kaihatsu-yunyū enjo (aid to promote trade) were ill-fitted to an international forum like United Nations Conference on Trade and Development (UNCTAD) in its 1960s state (Hara 1966). At the first session of UNCTAD in 1964, developing countries—particularly India—made undeniably strong demands for the rich economies of the North to increase purchases of their raw materials. In response, the authors of the JETRO report stressed the importance of Japan as an OECD-DAC member13 expanding its kaihatsu-yunyū enjo—not only to increase primary commodity purchase but also to assist developing countries’ economic development to resolve underdevelopment issues (Hara 1966, p. 64). However, the idea of kaihatsu-yunyū enjo (or anything similar) was rather ill-fitted at a multilateral trade forum like the UNCTAD because, as the authors conjectured, developing countries would likely shun kaihatsu-yunyū enjo as another form of colonial exploitation (Hara 1966, pp. 9–10). The authors, however, emphasised the importance of respecting the will of developing countries’ by responding to their requests for kaihatsu-yunyū enjo when they arise. This request-based approach allowed Japan to tackle distrust and suspicion amongst developing countries (Hara 1966, p. 11; see also Chap. 7).

The authors raised two explanations for the failure of kaihatsu-yunyū enjo to gain traction in international fora. The first point concerned the fact that the forum made too sharp a distinction between aid and trade—thus, it placed a great emphasis on trade rather than on aid (Hara 1966, p. 11). The opposite was true of the international aid circle then—but here, its great emphasis was on aid and economic development was detached from discussions on trade (see King et al. 2012). There were few linkages between aid and trade, which were ostensibly distinct areas of policy. The second point raised the low-quality high-cost production problem in developing countries. For this point, the authors maintained the importance of Japan’s assistance for developing countries’ self-help efforts: “[Since] simply leaving it to [developing countries themselves] would not improve the situation, Japan's financial and technical assistance is essential. Many products in their current forms are not fit for sale on a commercial basis. Thus, kaihatsu-yunyū enjo would provide concrete measures to improve quality and price by assisting to rationalise production and distribution” (Hara 1966, pp. 61–62; see also Chap. 8).

Both kaihatsu-yunyū and kaihatsu-yunyū enjo were inherently about the development of Southeast Asia as a stable source of raw material supply and its position as Japan’s second-largest export market. They were indispensable parts of Japan’s economic cooperation in the form of capital, technology, and trade in the 1950s and the 1960s.

4 Concluding Remarks: The Legacy and Significance of Kaihatsu-Yunyū

Kaihatsu-yunyū and kaihatsu-yunyū enjo are both Japanese policy tools built around the contemporaneous needs of Japan (and of the US and Southeast Asian counterparts). The Goa formula emerged out of the geopolitical contexts of the 1950s in which Japan’s economic cooperation began its life. In the 1960s, kaihatsu-yunyū enjo also increased to better respond to the changing international political economy—including the issue of underdevelopment in the global South and growing appetite for kaihatsu-yunyū FDI by Japanese business. Such a rapid increase of kaihatsu-yunyū FDI along with growing trade imbalance was not without its consequences, as it attracted severe criticism positing Japan’s neo-colonial economic dominance in Southeast Asia (Shimomura, 2018, p. 361). And, it caused a growing backlash in the region through outbreaks of fierce anti-Japanese protests in the 1970s and 1980s (Yano 1978; Iwaki 1985; Tsurumi 1974). Recognising the impact of business-led economic cooperation and its discontents particularly in Southeast Asia, the Japan International Cooperation Agency (JICA) reflected upon how to remedy such problems caused by kaihatsu-yunyū FDI in Southeast Asia: “we—as part of Japanese government—aim to guide Japanese business not only to rectify imbalance and inequality caused by business-led economic cooperation but also to prevent subsequent criticism on Japanese economic expansion. In doing so, Japanese business can truly contribute to the economic development and stability of local people's lives/livelihood in the partner country—based on cooperation and reciprocity with the partner country” (JICA 1999, p. 56).

Some commentators further noted how kaihatsu-yunyū FDI by Japanese business was seen to plunder local resources and devastate the local environment and livelihood (Ikenoue and Ono 1998; Murai 1988; Tsurumi 1974, 1982; Shimomura 2022).14 Political economic impacts on the local community were also noted by Indian researchers on Japan’s kaihatsu-yunyū activities in Goa. For example, Murthy (1978, p. 618) commented that “Japan’s failure to denounce Portuguese colonialism left a sense of disappointment amongst the Indian intelligentsia.” Further, Routledge (2000) observed possible political economic impact of Japan’s kaihatsu-yunyū projects in Portuguese Goa. Goa’s state economy has been largely dominated by six major families of businessmen and traditional land owners.15 Their power was strengthened by the Portuguese colonialist who attempted to “buy” Goan families allegiance with private mine ownership (Routledge 2000, p. 2649). Between 1951 and 1961 (during the Portuguese rule), Japan’s kaihatsu-yunyū projects in Goa accounted for 66％ of all its kaihatsu-yunyū projects in India. Hence, Japan’s kaihatsu-yunyū projects in Portuguese Goa further strengthened both the power and profitability of these families’ business, which exacerbated inequality and left an enduring legacy.

Since the 1970s, in response to the anti-Japanese riots and international criticism/pressure, Japan’s kaihatsu-yunyū seemed to quietly dissolve into the supply chains of the Japanese economy (JICA 2009, 2013; Murai 2007). The word kaihatsu-yunyū ceased to appear in MITI’s white papers after 1977. The fading of kaihatsu-yunyū in official discourses partly stemmed from the changing interests of Japanese business, which became internationally competitive with stronger networks of suppliers. Thus, they no longer looked for new opportunities for the old-style kaihatsu-yunyū using the Goa formula in the 1990s. At JEXIM, the number of new credit lines extended to exports and imports drastically dropped (close to zero), to the point where some even proposed abandoning the words “export and import” from JEXIM’s name (Ishikawa 2006, pp. 144–145; Kusano 2006). JETRO’s Institute of Developing Economies (IDE-JETRO) library includes a total of 84 studies or reports on kaihatsu-yunyū, all of which were published between 1964 and 1990, with nothing appearing after 1990 (IDE-JETRO Library Catalogue 2022).

Kaihatsu-yunyū is a Japanese tool for economic cooperation that was built upon an intricate nexus between aid, trade and investment (see Chap. 13). Both aid and investment were instrumental in establishing, expanding, and promoting trade for Japan as a resource-impoverished, semi-developed country that needed to “trade or die.” The features of kaihatsu-yunyū helped semi-developed countries better navigate their integration into the global economy (Sato 2013; Kim 2016). Two contemporary examples highlight the continuation of kaihatsu-yunyū enjo-like development cooperation, and its potential benefit to semi-developed countries.

Firstly, “Aid for Trade” (AfT) launched in 2005 at Hong Kong World Trade Organisation Ministerial Conference, has some features that share striking resemblance with kaihatsu-yunyū enjo. AfT, like kaihatsu-yunyū enjo, provides both the financial and technical assistance to reduce transaction costs and enhance productivity in order to expand trade and alleviate inequality in developing countries (Berrittella and Zhang 2012, p. 2, see also Stiglitz and Charlton. 2006; Calì and Velde. 2011; Cadot et al 2014; Hühne et al. 2013). Thus, AfT includes assistance for (1) trade policy and regulation; (2) trade development; (3) trade-related infrastructure; (4) building productive capacity; (5) trade-related adjustment; (6) other trade-related needs (OECD 2011, p. 15). One noteworthy difference between kaihatsu-yunyū enjo and AfT is that the former was “amiss” in the 1960s, whilst the latter enjoys a popular reception today.

Finally, kaihatsu-yunyū and kaihatsu-yunyū enjo—amongst Japan’s key developing strategies of the 1950s and 1960s—were seen to provide some “useful” ideas for other semi-developed countries (see Zhu et al. 1986; Korea Economic Research Center 1974). Some of the essential features in kaihatsu-yunyū have been learned and adapted by the semi-developed country China in its Angola model. The Angola model is a financing arrangement in which the Export–Import Bank of China extends soft loans for infrastructure development in African countries (and beyond) in exchange for natural resources as collateral (Corkin 2011, 2016; Sato 2020). The main objectives of China’s resource-backed concessional credits were, like Japan’s kaihatsu-yunyū, not solely confined to securing Africa’s raw materials—but designed to pursue more comprehensive economic and resource security through diplomatic and trade expansion (Inada 2012, pp. 39–40).

Notes

  1. 1.

    At that time, the term ‘aid (enjo)’ was used synonymously with ‘economic cooperation’ that combined the flows of capital, technology and trade.

  2. 2.

    The term was coined by Shigeo Nagano, then president of Fuji Iron and Steel Company, who advocated its strategic value for Japan’s reconstruction (Caldwell 1972, p. 25). This context-specific term encompasses reparation, direct private investment, yen credits, deferred payments and technical cooperation (Caldwell 1972, p. 27). It showcases how Japan then envisaged its position in relation to/with the developing world (see JEXIM 1961).

  3. 3.

    In Dragon's Gift (Brautigam 2009)—a study of China’s growing SSC engagement with African countries, the word Japan appears more than 100 times.

  4. 4.

    Nichi-in-Tūshō was specifically set up to import pig iron from the India-UK-Japan joint venture company, Indian Iron & Steel Co., Ltd that was established in 1918 (Nagashima 2021).

  5. 5.

    For example, the case of the 1951 Goa project provided mining equipment (electric shovels, dump trucks, drills, compressors, etc.); processing equipment (crusher, belt conveyor, picking conveyor, etc.); operation equipment (self-propelled barges, grab cranes); power generation equipment (diesel generators), and others (repair shop, water supply system, motor boats, etc.) (Hara 1966, p. 87).

  6. 6.

    Then chief of the Trade Promotion Bureau at the Ministry of Trade and Industry (MITI) explained how MITI and Ministry of Finance were in close communication on an ad hoc basis to better support Japanese companies through JEXIM's loans (National Diet 1951).

  7. 7.

    See JEXIM (1961, pp. 192–193) for how the once simple and small JEXIM’s organisational structure became larger and more complex between 1951 and 1963 with overseas offices in Karachi (1954–1957), Bangkok (1957), New York/Washington D.C. (1957/1960), Rio de Janeiro (1958), New Delhi (1959), and West Germany/Dusseldorf (1961/1962).

  8. 8.

    Yūshi-baikō was soon overtaken by other forms of overseas resource investment—particularly the equity participation.

  9. 9.

    However, since the late 1960s, the traditional method of equity ownership has become the more dominant one, which overtook that of the Goa formula.

  10. 10.

    For example, between 1952 and 1954, the GNP per capita in Malaysia was USD 310 and the Philippines was USD 150.

  11. 11.

    Moreover, there was a structural shift in Southeast Asian countries’ import needs toward capital goods as they endeavoured to spur industrialisation and the export of light industry goods (Asai 1997). Such a shift in the region accelerated Japan’s heavy-chemical industry drive even if its capital goods and related technology were not on par with that of the West (Caldwell 1972, p. 26).

  12. 12.

    Under MITI’s jurisdiction.

  13. 13.

    The Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) is an international forum to discuss/promote development assistance and to increase the quantity and quality of such aid. Japan has been a member since 1961.

  14. 14.

    Interview with Professor Yasutami Shimomura, 20 July 2022, Tokyo, Japan.

  15. 15.

    They include Dempo, Chowgule, Salgaonkar, Timblo, Bandodkar, and Menezes.