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Changing the rules to unleash innovation in development

I am honored that my blog received a guest post from The Organisation for Economic Co-operation and Development (OECD).

By Jon Lomøy, Director of the OECD Development Co-operation Directorate (DCD)

Innovation isn’t something that springs to mind when speaking of statistical systems. But right now, the OECD is looking to do just that: innovate the way it measures and monitors external development finance in order to boost both its volume and effectiveness.

The official development assistance (ODA) measure developed by the OECD, which has been used for over 50 years to monitor development finance, defines how funds must be delivered in order to be recorded as ODA. These volumes, in turn, are used to measure the effort providers of development assistance make and to score them against their commitments.

Reporting rules can, therefore, make a big difference to how development programmes are designed and to the amounts of money they mobilise. There is a real temptation for providers to design programmes to maximise recorded development flows, letting this take precedence over the focus on what will produce best results. For example, we know that some development finance institutions may not lend support to private investors backing development-related projects simply because the cost of doing so would not be counted as ODA.

Updating the way development finance is reported can, therefore, spur innovation. As with any accounting system, it is essential that clear and robust rules are in place. Yet problems arise if the rules are restrictive to point of reducing flows – and the effectiveness of our development efforts.

This is important particularly for the economies that, without ODA, would be starved of external sources of finance. These are typically the least developed countries, which are often conflict affected and face the biggest development challenges. Encouraging flows to these countries can not only help to fill this gap, but can also be done in such a way as to maximise other resources available to them.

April 7th, 2014 05:02 PM
Author whsaito
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Uneventul trip to “Race against time” in 10 minutes

Finally back home in Tokyo – and picking up the pieces. What was supposed to be an uneventful (and quick) trip to the US ended up suddenly turning into a race against time. I arrived in the US (San Francisco) on Thursday for a quick meeting and to return on Saturday on a 7:30pm flight (JL001) back to Tokyo. Since I had most of Saturday open, I thought I’d do a quick trip to Napa and buy some wines. However, before that, I decided to have lunch (1:15pm) at In-and-Out Burger (who wouldn’t). So I quickly parked the car, went inside, enjoyed my Double-Double and returned to the parking lot and my car.

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When I arrived (1:30pm), I realized my rear passenger side window was broken. Initially, I wasn’t too worried assuming that the car next to me dinged my car and hit the window. Since “it’s a rental” and I had full coverage, I wasn’t too concerned. However, about a minute later, I realized that is where I kept my PC bag (yes, stupid me). I thought I was thinking a little by not putting it in the front passenger seat, but I guess it didn’t matter. Now yes, it was not my first time to experience theft like this – I travel so much that statistically, it is inevitable to have problems abroad. I’ve been a victim (twice) of pickpockets (all in Italy) but was always amazed (not pissed or angry per se) that I did not notice them at all. Last year, I had my brand new watch stolen because the wrist band wasn’t set correctly and I put it in my bag, which a bellman promptly took out of the bag while checked (just felt sad because I never really got to wear the watch).

September 23rd, 2013 10:16 AM
Author whsaito
Category Uncategorized
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Initial proposal to national strategy commission (Part 3 of 3)

This is the third and final part of the proposal I sent to the national strategy commission of the government of Japan (The start of the proposal can be found here).

Developing the Process and Environment that Addresses the Larger Picture

  1. A society that can “do more with less” must be created. Thus, innovation through the development of an entrepreneurial mindset is the only solution.
  2. Diversity, in all its forms, must be encouraged at every level.
  3. Creativity, innovation, and entrepreneurial activities all impart some level of risk. Therefore a better concept and understanding of risk must be developed in Japan.
  4. Successful and innovative companies from around the world, and from Japan immediately after WWII, all share the quality of strong teams. To help mitigate risk and to execute innovation effectively, team work becomes increasingly important.
Innovation through an entrepreneurial mindset
Jean-Baptiste Say, a French economist in the 1800s simply defines entrepreneurship “as a shift of economic resources out of lower and into higher productivity and greater yield.” Since Japan’s population is already decreasing, it must utilize entrepreneurial values to maximize their productivity and efficiency through innovation.
It is important to understand here that “entrepreneurship” does not imply starting a “venture”. Entrepreneurship is a way of thinking – a mindset – which is useful to solve a myriad of problems. It is a way to increase value and efficiency, as well as being able to differentiate “wants” and “needs” within a global market.

In the long run, by promoting innovation and entrepreneurship, this mindset will improve government, large businesses, and even create some new ventures. Most importantly, it will create new, taxable, high margin, and yen resilient industries which will reduce the deficit, create positive trade, and create a multitude of new jobs.

Diversity does not simply mean a wider variety of races and ages, or more women in the workforce.
June 13th, 2012 07:46 PM
Author whsaito
Category Uncategorized
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Initial proposal to national strategy commission (Part 2 of 3)

This is a continuation from Part 1 of the proposal I sent to the national strategy commission of the government of Japan.

The Symptomatic Issues

Japan’s problems cannot be solved separately from one another. The causes and consequent problems must be approached in their entirety as closely interlinked issues that have been developing prior to 3.11.

With a fertility rate at just 1.35 per person, 40% of the population will be over 65 years old by 2060 and the total population reduced by 30% to 86.75 million people. The difficulties that stem from these demographic issues will only continue to increase for following generations under the present circumstances. As a result, Japan must devise methods that will enable its population to be more efficient with fewer resources. Japan must be willing to venture into new sectors that are knowledge based and that will build on the tools that Japan has available as a first world country. Currently, however, the burdens simply continue to grow.

While foreign investment returns have managed to offset the trade deficit and the current account still supports a surplus, the latter narrowed to a record low by 43.9% to 9.629 trillion yen in 2011. The Japanese deficit has now reached a record 958 trillion yen. This amounts to 7.6 million yen for every man, woman and child, compared to the U.S. 3.8 million yen per capita. In the U.S., this large number fuels heated debates and disruption, but in Japan the issue has barely been raised and the populace seems to be accepting it quite complacently. With projections of the deficit increasing by another 13%over the next year to 1,085 trillion yen – the equivalent to the GDP of Switzerland – the country will soon not be able to maintain the deficit at “local” rates and will have to seek foreign investors at significantly higher global rates.
May 17th, 2012 05:50 PM
Author whsaito
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The Bellwether Series 2012: Japan

I was asked by the Economist Group as a guest delegate to an Economist Conference held at the Hotel Okura in Tokyo on May 16, 2012. I always enjoy the Economist magazine but their conferences (which I participate in from time-to-time) are put together very well.

Anyway, I thought I ‘d blog about some points I found interesting during the conference. Obviously, to those who know me, I talk about many of these topics on a continual basis.

  • Interesting answer to when JGB holdings becomes a problem (“clear and present danger”) is when the Japanese economy actually recovers. Interesting/good point since the capital requirements of a growing economy would increase interest rates. (Ken Takamiya, Nomura Securities)
  • ‘X-day’ would come in about 5 years. While it won’t be as severe as Greece, it will come. But the bigger problem is political deadlock in not being able to do anything. (Toshihiro Ihori, Tokyo University)
  • The ratio of national civil servants = 90:1 in France (highest), 30:1 in Japan = low. Interesting point. (Dan Slater, Economist)
  • Not a single hand raised in terms of the audience feeling that ‘X-day’ would occur in the next few years.
  • As a growth strategy, Japan should lead to create a platform to increase economic benefit within Asia. Government should help banks and industry to expand into the growing Asian market. We also need to change the ‘mindset’ in regards to entrepreneurship and how failure is interpreted. In a recent visit to the US, Furukawa heard that people tend to get follow-on investments if they failed a few times because of the experience they gained and that they have a higher probability of succeeding the next time. [sounds familiar -ws] (Motohisa Furukawa, GoJ)

(To be updated)

May 16th, 2012 02:53 PM
Author whsaito
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Initial proposal to national strategy commission (Part 1 of 3)

As I mentioned in an earlier post, I was named to be part of the national strategy commission for the Prime Minister of Japan. Since then, I have received numerous comments via the “crowd sourcing” SNS method I proposed. The comments, both positive and negative, on what Japan needs and what should be done continue to this day. Through this process and after discussions and working with the other commission members, I made the following proposal (translated from Japanese but otherwise unedited) to the commission as part of the initial feedback process.

Japan’s most pressing issue is its aging and shrinking population. Coupled with a negative trade balance, growing deficit, strong yen, and the poor performance of Japanese companies – both domestically and overseas – Japan may soon lose its position as the third largest economy in the world. These interconnected issues must be addressed immediately, and fundamental systemic faults within the government, corporations, industry, and education must be changed. Innovation, diversity, real risk management, and teamwork must be fostered at all these levels. By doing so, my belief is that Japan will be able to facilitate its transition into a vibrant knowledge-based economy by 2050.

Systemic Faults and the Root of the Problem
The government has of course undertaken efforts to address some of these issues. Nevertheless, none of these strategies have been very successful at improving Japan in the past two decades. While some strategies were supposedly implemented, the majority of them failed to understand the true “essence”of the problem and procured zero results, or made matters even worse.

Thus, we ought to focus now on “going back to basics.” We must work to re-create a resilient system that addresses to think in absolutes, but to develop the flexibility of thinking in shades of gray and making room for compromises.

May 15th, 2012 02:42 PM
Author whsaito
Category Uncategorized
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The One Year Anniversary of 3/11

As many of you have commented, I have not been blogging very much this past year. Obviously, as the world knows, Japan has suffered tremendously in the last year due to the Great East Japan Earthquake. The triple disaster has changed everyone’s lives forever.

In this last year, I have personally gone through many changes. Thankfully and luckily, most have been good. However, as fate would have it, I have also immersed myself into the very heart of Japanese government and am finally understanding what is important and what is not, and try to apply all my experiences and talents to really try to improve this place we call Japan. As I walk to “work” every morning and see buses full of children, full of hope and dreams, getting ready for their tour of the National Diet. This daily scene reinforces why I am trying so hard to fix this place – for them, our future.

For those who passed away or are still suffering from this tragedy, I would like to offer my prayer and deepest condolences.

March 11th, 2012 02:08 PM
Author whsaito
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Solving a country’s problem through SNS "Crowd Sourcing"

Last week, I was named to the national strategy commission by Prime Minister Noda of Japan. The commission was empaneled to focus on existing problems in Japan and to find practical solutions by the year 2050. My area of focus is on economic prosperity. I assume they are expecting my background in entrepreneurship, innovation and global perspective to be incorporated.

Therefore, I wanted to be entrepreneurial in framing the problem, innovative in receiving ideas and solutions, and global in implementing them. To do this, I am using my vast social network to “crowd source” from everyone about some problem issues they perceive as well as practical ideas/solutions for them.

Looking forward to hearing from you all!

February 6th, 2012 10:01 PM
Author whsaito
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Getting ready to tape 3-hour NHK special (broadcast 1/1/12) on disparities of Japanese (

December 10th, 2011 12:53 PM
Author whsaito
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Preparing for my speech at the Swiss Chamber of Commerce tomorrow on “Reigniting the Entrepreneurial Spirit in Japan”

July 12th, 2011 12:44 PM
Author whsaito
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