1. investment in human resources in the broad sense, including education and training, meeting the needs for food and health care, and efforts to eradicate AIDS and narcotics problems;
2. strengthening of political systems, government mechanisms, and legal systems in which democracy and respect of human rights are secured;
3. effective use not only of central governments, but also of local organizations and self-government, nongovernmental organizations (NGOs), and the private sector; and
4. the establishment of open and competitive market economy structures to mobilize individual initiative and dynamic private enterprise.

This document is the report of our study on many related questions in the context of this international debate:

1. Why is it necessary to incorporate the concepts of participatory development and good governance into the implementation of Japan's aid to developing countries?
2. How should they be incorporated?
3. What should be taken into account in the actual process of aid planning and implementation?
4. What specific types of aid will promote participatory development and good governance in developing countries?
5. What are the relevant challenges and points to be borne in mind when implementing aid?

What is participatory development?

The objective of economic and social development in developing countries is to set in motion a process of self-reliant and sustainable growth through which social justice can be achieved. Development within a developing society aims, we believe, at building into society the mechanisms that will ultimately permit self-reliant growth without foreign assistance, at sustaining stable growth patterns for economic development in harmony with the environment, and at providing equal and appropriate opportunities to take part in development to overcome income gaps, regional disparities, and inequalities between men and women.

For this to be possible, the central focus of development is not necessarily to boost production of material goods; instead, it should be to foster and enhance people's capability to have a role in their society's development. To this end, people should be willingly involved in a wide range of development activities, as agents and beneficiaries of development. It is this participation that is important. We believe it is needed both as a goal and as a tool of development.

Our study committee regards participatory development as an approach to development that is designed to enhance sustainability and self-reliance and to achieve social justice through improvements in the quality of people's participation. For us, the focal point of participatory development should be the qualitative enhancement of participation in local societies which can be defined as groups of rural communities and as administrative and developmental units.

The government-led development approach adopted by many developing countries beginning in the 1950s and 1960s was, on the one hand, effective and efficient as a method of planned and concentrated investment of scarce resources into industry. Given insufficient participatory capabilities of local people and local societies, however, it tended on the other hand to put the intended beneficiaries of development these very local people and societies in a passive position. This government-led approach to development left intact, or even widened, deep-rooted problems including economic and social disparities between social classes, between genders, between regions, and between urban and rural areas, in effect reinforcing the position of the classes and regions that benefited from development. Regrettably, this has undermined and counteracted the effectiveness and sustainability of development projects and of development itself.

Participatory development is not an attempt to replace the top-down development approach with a local-community-led approach. Rather, it is a viewpoint that simultaneously stresses the need for the government-led approach in terms of national-level economic planning and coordination of development planning and the demerits of widening disparities and worsening poverty inherent in that approach when used alone. Participatory development attempts to introduce a bottom-up style of development in order to remedy the government-led approach's shortcomings, specifically by focusing on qualitative improvements in local society's participation.

This participation must not be transient; it must entail the sustainable upgrading of participation quality. For this to happen, the underlying conditions must be met to facilitate the long-term process of participation and its self-reliant sustainability. The long-term process of participation cited here is: raising the awareness of local people, forming community groups, upgrading their requisite resource management abilities, and creating norms or internalizing their mechanisms, and improving capabilities for external negotiations. The shaping and planning of this participatory process requires both a long-term vision and a willingness to selectively improve and bolster traditional community systems as tools of development. Support from NGOs is needed to help accumulate the organizational learnings and experiences of local groups and to train leaders.

To create the conditions for promoting sustainable participation, governments must create and adapt basic legislation and institutions that guarantee political and economic freedoms as well as strive to meet a broader range of basic human needs (BHN: food, housing, health and medical care, education, etc.). Governments also need to relax regulations in order to remove obstacles to economic participation, improve financial management, build infrastructure, and train business people and entrepreneurs. These are important components of good governance (discussed below), which is the basis of participatory development.


What is good governance?

As the basic premise for discussing good governance, this study committee has decided to define governance from its functional aspect: whether governments achieve their stated objectives effectively and efficiently? We regard "good governance" as such that should help countries to achieve sustainable and self-reliant development and social justice. Good governance can therefore be understood as comprising two concepts: the ideal orientation of a state that works best to achieve self-reliant and sustainable development and social justice; and the ideal functioning of government that operates most effectively and efficiently.

The key point of the former, i.e., the ideal orientation of a state, hinges on whether the state's basic attitudes are democratically oriented. Elements contributing to this include, for example, the legitimacy and accountability of the government, the securing of human rights, local autonomy and devolution of power, and civilian control of the military.

The latter, the functioning of the government, depends on whether a government has the requisite political and administrative structures and mechanisms and the capability to function effectively and efficiently. Elements contributing to the latter concept of good governance include the basic laws and institutions of a nation, the administrative competence and transparency, decentralization of its administration, and the creation of an appropriate market environment; all of these are needed to support people's participation in every aspect of politics, the economy, and society. These are therefore necessary components of good governance as "the government functioning as the basis for participatory development."


The relationship between participatory development and good governance

Participatory development and good governance are related in the following way: participatory development, with its central focus on raising the quality of participation by local societies and thus better achieving self-reliant and sustainable development and social justice, is one important form of people-oriented development. Good governance is the foundation of participatory development inasmuch as it provides the government functions needed to promote participation and create the environment in which participatory processes take place.

Yet good governance as a function of government does not refer solely to support for participatory development: as participatory processes evolve, good governance develops into such functioning that supports wider and more mature people's participation. In this sense, participatory development promotes good governance in its turn. The projection of the concept of good governance onto the national system--an orientation of a state--then progressively boosts people's trust in their government, inasmuch as, through good governance, government services improve in effectiveness and efficiency. Thus in the long run, good governance evolves into stronger aspirations for further democratization. The strength of a state's desire for democracy also influences the process of formation of political and administrative structures and government's capability to translate this national stance into action. In turn, this, too, influences the evolution of participatory development. Participatory development and good governance are consequently interrelated, as are the two component elements of good governance, the ideal orientation of the state and the ideal functioning of government.

How should participatory development and good governance be made a part of Japanese ODA?

Participatory development and good governance should not be added as a new field of Japanese ODA but should underlie all aid as part of its conceptual basis.

A tide of political democratization and economic liberalization based on competitive principles has been sweeping the world and stimulating, in its wake, the drive toward a new role for government. A shift is also occurring in development strategies, away from a single focus on economic growth and toward greater emphasis on sustainable development. Many countries, moreover, are becoming aware (albeit to varying degrees) of the need to provide opportunities for broader participation as a complement to government-led development approaches. Yet in consideration of the present widening disparities in developing countries such as those between the rich and the poor groups of society, it is necessary to review past methods of promoting economic and social development in developing nations.

The points to examine are namely: (i) whether local societies, the assumed beneficiaries of development, have adequately reaped the rewards, and whether the capability of local people and communities to participate has been fostered in such a way as to compensate for the deficiencies of the government-led approach, (ii) whether arrangements within the framework of top-down decision making and the government functions that support it could have worked to narrow gaps and promote participation by local societies, and (iii) whether development aid has stimulated developing countries themselves to remedy the distortions at their roots.

Japan's aid projects have been implemented in a wide range of fields and are producing tangible results. These projects have involved the cultivation of human resources, for development practitioners and leaders engaged in development tasks in developing countries, improvement of social services, and infrastructure building. More recently, they have expanded to include areas recognized as being especially important in development: environmental conservation, the rectification of regional disparities, and the fulfillment of basic human needs (BHNs). In order for Japan to ensure that its development aid takes root more firmly and contributes more significantly to the realization of social justice and sustainable and self-reliant development by developing countries in the future, it is important for Japan to include the concept of participatory development in the scope of its aid and to implement aid in such a way that developing nations' governments promote participatory development voluntarily and are capable of carrying out good governance.

In other words, it is extremely important to clarify how the results of development projects have contributed to human development in aid planning, implementation, and evaluation. To clarify this, it is necessary both to strive to more accurately understand the economic and social conditions and needs of the intended ultimate beneficiaries and reflect them in aid planning and implementation and to give support for the building of community organizations and institutions to enable more people to take advantage of aid achievements and participate in development themselves at the local and regional level. It is also important to assist recipient governments to create organizations and institutions that will enable them to promote policies that improve people's social capabilities. Aid to strengthen the public sector must create the structures and foster the competence needed by governments to assume roles as effectively and efficiently to promote their people's broad-based capabilities and to respond to the people's expression and will.


Basic perceptions of participatory development and good governance in Japanese ODA

Japan's basic aid philosophy, which is based on previous efforts made at Japanese project sites and concepts basic to Japanese aid in the ODA Charter approved by the Japanese cabinet in June 1992, are summarized in the following four points:

1. Japan's ODA must seek to improve economic and social capabilities for people as agents of development through broad-based participation in aid implementation in developing nations (the participatory development approach). Aid aiming at social justice and at ensuring the sustainability and self-reliance of development is aid that will build the foundations for democracy in developing countries.
   
   
2. As stated clearly in the ODA Charter, aid must respect developing countries' ownership of development by assisting their self-help efforts. That is why it is extremely important for development to be conducted through aid recipients' own initiatives and capabilities. For this to be possible, it is necessary to provide aid to the point where governments can better equip themselves to promote their own participatory development. At the same time, aid project goals must be set with an awareness of the degree to which inhabitants, local communities, and other independent organizations are taking part in development and how much progress has been made toward such participation.
   
   
3. In light of the historical, social, and cultural diversity of developing countries, the ideal form of democracy will not be the same for each developing nation. To promote democratization, it is therefore necessary to be aware of the differences in initial conditions, pace, and methods of development. It must also be realized that a country's democratization should be realized by its people, at the pace and in the manner decided by its people. For this reason, Japan's aid must focus on building the foundations of democratization in developing countries through aid to promote participatory development and encourage good governance.
   
   
4. In order to incorporate participatory development and good governance into aid, Japan must fully understand the individual diversity of cultures, traditions, and social structures of communities in developing countries and respect beneficiaries' initiatives. It must be understood that the effects of enhancing people's sustainable participatory capabilities and of government services do not become visible in the short run. In order not to impede development's sustainability and self-reliance in pursuit of short-term aid efficiency, aid schemes and systems must incorporate a long-term perspective and flexible values.

Promoting democratization, securing human rights, and reducing excessive military expenditures

The ODA Charter advocates as a basic principle of aid the paying of careful attention to recipient nations' democratization, securing of basic human rights and freedoms, and trends in military expenditures. How should Japan's aid respond to these points from the perspective of participatory development and good governance?

It is vital for developing countries to build a basis on which to promote more genuine democratization, respect for human rights, and reduction of excessive military expenditures. In accordance with its ODA Charter, Japan must continually bear in mind democratization trends in a developing nation as a whole and operate positive and negative linkage, as it has in the past. At the same time, it must carry out "promotional aid for democratization" to support the building of a basis for democratization and more effective responses to encourage developing countries to promote democratization themselves.

Promotional aid for democratization aid refers to Japanese constant support for the construction of an appropriate basis for contributions to promotion of democratization, securing of human rights, reduction of excessive military expenditure, etc., that are tailored to that country in line with Japan's approach to participatory development and good governance. As we will explain later, this is done both through aid to promote participatory development in recipient countries and through aid to promote good governance for the basis of participatory development.


How Japan should implement aid for participatory development and good governance

In order to discuss specific Japanese ODA programs to support participatory development and good governance in developing countries, it is necessary to distinguish the parts that should become objectives of aid in the framework of Japan's ODA from the aid specifically designed to promote participatory development and good governance.

Japan's development aid objectives have two aspects, one focusing on economic and social development, the other on democratization. We believe that Japanese aid, the product of these objectives, should contribute to recipients' self-reliant and sustainable development and greater social justice; it should also contribute to the formation of a state whose legitimacy derives from the people's will, while securing for human rights, accountability for state actions, and the potential for achieving devolution of power.

In other words, Japan should conduct aid for ensuring participatory development and good governance with the goal of realizing sustainable, self-reliant development and social justice and as a step toward fostering equal opportunity for participation and the people's well-being, i.e., laying the basis for democratization

1. aid to promote participatory development,
2. aid to promote good governance as the basis for participatory development, and
3. aid for good governance to promote democratization.

The first category, aid to promote participatory development, consists of three subcategories of goals. The first consists of strengthening people's groups and other grassroots organizations that form the basis for participation and establishing and enhancing their own production and development capacity, independent management abilities, and skills in external negotiations. The second is to amplify the self-reliant capabilities of socially disadvantaged people, including rural and urban poor, who more than any other group tend to be excluded from development, by improving their access to basic education and creating job opportunities. The third is to promote recipient governments' potential for participatory development, i.e., their competence and willingness at the central and local government levels to listen to the voices of local people and increase their opportunities for participation.

The second category, aid to promote good governance as the basis for participatory development, has five subcategories of goals supporting good governance needed to secure the resources and opportunities for people's participation that underlie participatory development:

• establishing laws and institutions,
• strengthening administrative competence,
• clarifying and ensuring the transparency of administrative responsibility,
• promoting decentralization, and
• building a market environment.

The components of the third category, aid for good governance to promote democratization, vary depending on the directions, speed, and process of democratization chosen by the country; it should not be the imposition of "democracy" under external pressure. Here, we are thinking about aid to back up democratization efforts when a specific developing country has identified institutional and political transitions aimed at the achievement of democratization through, for example, the resolution of a civil war or the introduction of multiparty system, and has directly requested aid for that purpose. Three aid goal subcategories are conceivable: assistance in establishing electoral systems, stronger protection for human rights, and the establishment and strengthening of freedom of speech and the press.

We have compiled here some examples that can be referred to in the formulation of specific aid programs in accordance with the three above-mentioned aid categories.

Given the diversity of developing countries, it would be impossible for every conceivable type of aid to be fully covered by these sample programs; in some cases, different programs of aid need to be integrated simultaneously, instead of responding to a need through a single program one by one. Some countries may indeed no longer require the types of aid mentioned in these examples. Individual consideration therefore is necessary to determine which actual aid programs should be selected or combined and in what sequence they should be implemented in the relevant developing country in accordance with its initial economic, social, and political conditions and the stage of people's participation in its development.


Issues and considerations in aid implementation

The following issues and considerations should be examined in connection with the incorporation of the above-described basic perceptions into Japan's ODA and the provision of specific types of aid:

• Emphasis on dialogue between developing countries and other donor nations and organizations,
• Establishment of a basis for strengthening ties with local NGOs,
• Consolidation and application of Japan's experience in good governance,
• Development of standards and methods for evaluating participatory development and good governance aid,
• Monitoring and information gathering about democratization trends in recipient nations to implement aid in accordance with the basic principles of the ODA Charter,
• Training of participatory development and good governance staff,
• Promotion of more open Japanese ODA implementation structures,
• Improvement and application of Japanese ODA implementation methods designed to support local residents' self efforts toward participatory development,
• Introduction of social analysis to promote participatory development in the aid project cycle.