How Does a Transition Country Utilize Foreign Aid? Case Study Analyses of Vietnam and Myanmar

The purpose of this study is to analyze the diplomatic strategies of Japan in engagement with two Southeast Asian nations in response to China’s Foreign Policy on the Belt and Road Initiative. In particular, this paper examines how Vietnam and Myanmar, which are transition countries, utilize Chinese aid and Japan’s Official Development Assistance, focusing on changes in domestic politics. We thus explore questions as to whether Vietnam and Myanmar are intensively investing in sectors directly linked to economic growth, or distributing foreign aid to the political sector necessary to build democratic institutions. We will track these developments across a timescale divided into before and after the respective transitions of economy and/or politics in both countries. This is diachronic approach enables us track differentiation in where and the ways in which foreign aid is used. As a result, Vietnam has been utilizing foreign aid toward objectives economic growth without introducing any change to the political system. Both Myanmar and Vietnam, moreover, are actively embracing foreign policy competition between China and Japan to their own respective advantage.