Paper short abstract:

Shifting focus from aid to development tends to legitimize the strategic use of aid to catalyze private investment in developing countries. This paper analyzes an aid-financed railway construction project in Bangladesh to explore what redistributive justice such financing is intended to serve.

Paper long abstract:

Development finance in a post-aid world is intended to move beyond aid and to enhance development effectiveness. The use of foreign aid to finance the construction of urban infrastructure in developing countries is thus viewed as one effective way of catalyzing development by stimulating private investment. This trend may be more pronounced in Asia where Japan and China compete in infrastructure investment. Japan presided over the Leading Group on Innovative Financing for Development in 2019 and is shifting its traditional development finance approaches towards blended finance initiatives. The narrative of ‘horizontal partnership’ between countries of the Global North and South legitimates the expectation of mutual benefits arising from aid-financed infrastructure projects facilitating business investment.

Financing the construction of public infrastructure such as railways as a development project can bring multiple developmental benefits. Offered as a package, a railway project mobilizes not only materials and technologies from a donor country but an amalgam of administrative and financial techniques. It creates jobs, improves air quality, and serves to democratize people’s use of time, energy, and space. Yet there are questions about how resource allocation is negotiated among stakeholders including governments, private companies, local communities and citizens, as well as Northern taxpayers. This paper explores the question of redistribution by looking into Japan’s financing of the Dhaka Metro Rail and argues that the developmental benefits for Bangladesh must be weighed against Japan’s developmentalist foreign aid policy as a means to revive its railway industry, and against its modernizing overtones.