Economic Assistance:

Integration of Japanese Aid and Trade Policies

NSIAD-90-149: Published: May 24, 1990. Publicly Released: Jun 26, 1990.

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Pursuant to a congressional request, GAO reviewed Japanese foreign economic assistance and trade policies and determined the extent to which Japan integrated those policies.

GAO found that: (1) Japan's economic assistance system has been more heavily influenced by commercial considerations than has the U.S system; (2) commercial considerations were a factor in Japan's focus on recipient countries' infrastructures; (3) U.S. economic assistance has many officially designated goals, but direct trade was not a prominent consideration; (4) both Japan and the United States require recipients to procure from donor-country firms a portion of goods and services obtained with assistance funds; (5) linkage provisions varied by program and by project within programs; (6) most of the tied Japanese assistance was delivered as grants, including grant funds devoted to technical assistance; (7) about 77 percent of U.S. bilateral assistance obligated through three main programs was theoretically tied in 1987, including all commodities provided to recipients as food aid; (8) substantial portions of both Japanese and U.S. assistance were used to procure goods and services from donor-country firms; (9) several aspects of the Japanese administrative system further help to ensure commercial benefits for Japan; and (10) since 1978, Japan has eliminated nearly all fully tied lending.

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