Chapter 5: Korea and Development Cooperation

Contents Contents 1.Current Status of Korea’s ODA 2.Development Cooperation Diplomacy of Korea 3.How and Why Could Korea Achieve Development? 4.Korea as a Recipient 5.Korea in Transformation 6.Korea as a Donor 7.Korea’s ODA 8.Who Receives Korea’s ODA? 9.Why ODA?: Objectives of Korea’s ODA Policy 10.Korea Mediates Various Players in Development Cooperation 11.Korea as a Host in International Fora 12.What’s Ahead?

KOREA AS AN EXEMPLARY CASE Successful transformation from a war-torn and poverty-stricken country into a donor

 Rapid increase in ODA Amount USD 0.05 billion (1987) → USD 1.23 billion (2010) → USD 1.67 billion (2013) ODA/GNI 0.02% (1987) → 0.12% (2010) → 0.13% (2013) Current Status of Korea’s ODA

0.13% (24 th ) USD 1.74 billion (16 th ) Source: OECD DAC.

 Proactive diplomacy as an emerging donor Joined the OECD DAC (2010) Took an initiative in incorporating development agenda in G20 Summit (2010) Hosted the Fourth Busan High-Level Forum on Aid Effectiveness (2011) Development Cooperation Diplomacy of Korea

 Trinity for development Political leadership Highly motivated human resources Technocrat How and Why Could Korea Achieve Development?

 Governance for preventing waste of national resources Concerted efforts to reduce poverty Social governance for effective resource mobilization for development How and Why Could Korea Achieve Development?

Government initiative for industrialization enthusiasm for higher education high quality human resources technological and industrial innovation greater need for high quality human resources

 Social foundations of development Broad consensus for growth Relatively equal income distribution during the high growth period Social mobility Basis for social solidarity How and Why Could Korea Achieve Development?

 Cultural aspects High priority to education Massive investment in primary and higher education Legitimacy of bureaucracy Fair competition for recruitment of all public sector employees How and Why Could Korea Achieve Development?

,173 13,043 13,160 26,205 1,075, , GDP (100 million$) GNP (100 million$) GNP per capita ($) Trade Volume (million $) University Education (graduates) source: Bank of Korea(ECOS, Korea Statistical Yearbook (1970, 2013) Korea: 1965 vs. 2013

Changes in Industrial Structure source: Korea Statistical Yearbook(1970, 2013)

 Foreign aid was crucial in the development of Korea. 1945~1990s: USD 12.7 billion Korea and ODA

 Successfully utilized ODA as a resource for sustained economic and social development  Korea as a good model Korea and ODA

 Mostly grants Short-run relief, state rehabilitation, and defense  Concessional loans from 1959 Korea as a Recipient (1945~1960)

 Linkage between aid and economic growth Various forms of aid programs implemented  Active use of concessional loans Expansion of social infrastructure The 1 st 5-Year Economic Development Plan ( ) Promotion of export industries Average annual growth rate: 9.7%  Diversification of Donors Korea as Recipient ( )

Reflecting Korea’s economic growth, amount of aid began to decline.  Aid diversified From multiple donor countries and international institutions  Portion of non-concessional loans increased. Korea as Recipient (1976~1990)

 Ended its dependence on the World Bank’s assistance in 1995  The first developing country to join the OECD (1996)  Removed from the OECD DAC recipient list (2000) Korea in Transformation (1990s~)

 1980s KDI created International Development Exchange Program (IDEP) to provide developing countries with policy research, consultation, and educational training programs.  Economic Development Cooperation Fund (EDCF) established under the Ministry of Finance (1987)  Korea International Cooperation Agency created under the Ministry of Foreign Affairs  24 th member of the OECD DAC (2010) Korea as a Donor

 Amount USD 0.05 billion (1987) → USD 1.23 billion (2010) → USD 1.67 billion (2013)  ODA/GNI 0.02% (1987) → 0.12% (2010) → 0.13% (2013)  Aims to increase ODA/GNI ratio to 0.25%  Bilateral ODA: Multilateral ODA: 70:30  Loans : Grants: 40:60 Korea’s ODA

 130 partner countries and 26 priority partner countries.  Concentrated in Asia 55% of bilateral ODA (until 2015) Geographical proximity, cultural affinity, close cooperative relationship  To increase ODA to Africa Strengthen humanitarian assistance for poverty reduction 20% of bilateral ODA (until 2015)  To meet the demand from Central and Latin American countries Interest in Korea’s development experiences 10% of bilateral ODA (until 2015) Who Receives Korea’s ODA? Geographical Distribution

 To return the benefits that Korea received from the international society Foreign aid was crucial in Korea’s development. To increase international contribution that is commensurate to the Korea’s economic power and status  To realize enlightened, not narrow-minded, national interests To address global issues  To share Korea’s development experiences Korea’s experience from a developing to a developed country Poverty reduction and capacity building Place higher priority on the qualitative aspects of ODA rather than the quantity Why ODA?: Objectives of Korea’s ODA Policy

 Unique status and position Donors vs. recipients Developed vs. developing countries Traditional donors vs. emerging donors Government actors vs. NGOs Korea Mediates Various Players in Development Cooperation

 G20 (2010) Successfully put development issues on the G20 agenda. Elicited the Seoul Development Consensus To strengthen low-income countries’ capacity and economic growth  Busan HLF-4 (2011) Shared Korea’s development experiences with international society From aid effectiveness to development effectiveness Global partnership of multiple actors  Active participation in the Post-2015 agenda-setting Launched the Busan Global Partnership (June 2012) Korea as a Host in the International Fora

 Efforts for sustainable development Share Korea’s development experiences Incorporate recipient countries’ needs Observe and lead international norms of development cooperation  Efforts for constructing the global partnership Enhance cooperation with a variety of players and stakeholders What’s Ahead?