>One of the main road in Cambodia has been reconstructed thanks to a Japanese
>loan. The money was used mostly to pay Japanese engineers, Japanese
>machinery, Japanese materials etc... Only the low level work was handled by
>Cambodian workers.
>
>Does this means that Japan's loan has basically been used to support
>Japanese economy right now (Cambodia is paying Japanese staff and Japanese
>factories with the loan) but also that Cambodia will have to pay back the
>money (with interests) 15 years from now, thus paying twice the price of an
>overpriced road ??? Of course all this happended with few, if any,
>technology transfers, and besides for the road itself and the low-wage
>workers' salary nothing is left of the loan (no or few investment in local
>industry to produce necessary materials for the construction).
>
>Did I misunderstand anything ?
That's pretty standard - most of the proceeds of development loans return to the First World countries in the form of procurement contracts. The UN Development Program put out a booklet a few years ago - wish I still had a copy, but I wrote it up in an LBO at the time, I'll see if I can dig it out later - showing essentially that the rich countries made a profit on their development aid.
Doug