Explaining variations in responsiveness to external pressure: Japan's aid policy and bureaucratic politics

Abstract

AbstractAlthough preceding studies on Japan's foreign aid tend to report that Japan's aid policy is receptive to US pressure, it remains unclear which direction the US wishes Japan to assist its aid programs and how bureaucratic politics of Japan reduces the magnitude of US influence. This paper pursues the first attempt to provide a theoretical framework for the direction of US influence on Japan's aid provision and to explore whether its impact varies across different types of aid. I utilize a new dataset on Japan's Official Development Assistance from 1971 to 2009 and employ both ordinary least squares and two-stage least squares regressions to handle the issues of reverse causality and joint decision-making. The combined results of quantitative and qualitative analyses suggest that the US tends to urge Japan to complement its aid efforts rather than to substitute them as substitution will allow Japan to increase its clout in strategically important recipients and the US attempts to minimize this risk by asking Japan to disburse aid in tandem. I also find that the allocation of Japanese grants is more receptive to US pressure than that of loans because the former is left to the discretion of the Ministry of Foreign Affairs that uses external pressure to win bureaucratic turf wars, whereas loans are determined through consultations among multiple agencies with constituencies that prioritize Japan's domestic interests. The findings are robust across different model specifications and different samples.