Emerging Development Donor Profile: South Korea

By Samantha Prior

South Korea is often viewed as a developmental success story; over the last fifty years it has been successfully transitioning from aid recipient to aid donor. In 2010 South Korea became a member of OECD, marking a significant step in its efforts towards becoming a major aid donor. Here are some notable statistics that give a sense of Korea’s evolution from recipient to donor:

Overall growth is stunning:  In the post-war period South Korea was one of the world’s poorest countries with a per capita income of $64, and received large amounts of aid, specifically from the U.S. (12.7 billion between 1945 and the late 1990s, according to the Korean government), to repair its broken economy. The South Korean economy has steadily improved over the last 50+ years (it is currently the world’s 12th largest economy), which enabled it to start giving aid in the end of the 20th century. The Korea Eximbank’s Economic Development and Co-operation Fund (EDCF) was created in 1987, followed by the Korea International Co-operation Agency (KOICA) in 1991.

GDP growth

ODA is rising as a ratio of GNI:  In 2013, South Korea disbursed $1.74 billion in net ODA, which accounted for 0.13% of GNI that year. In comparison with other Asian donors, South Korea has a ways to go before reaching the donor level of regional leaders China and Japan. China had an estimated foreign aid disbursement of US$ 7.1 billion in 2013, and Japan’s net ODA disbursement was $11.79 billion that same year. Yet South Korea is striving to close the gap. Upon joining the OECD, South Korea set a goal to grow its aid to more than 0.25% of GNI by the end of 2014, which it was unable to accomplish. However, it remains steadily on the course to increasing its ODA, with intent of 10% growth over 2015 to $2.2 billion. The global target for all OECD-DAC members is 0.7 percent of GNI; however, only a few European OECD members have actually met this mark, which some view as more of a “long-term objective” rather than a concrete deadline.

Net ODA

Korea delivers both bilateral and multilateral aid: In 2010 the Korean government devised its Strategic Plan for International Development Cooperation (Strategic Plan) at the 7th meeting of the Committee for International Development Cooperation (CIDC), which laid out a basic framework for Korea’s international development cooperation policy.  The Strategic Plan aims to maintain the bilateral to multilateral ODA ratio at 70:30.

ODA by type

Korea is focused in its own region: With regard to regional allocation of ODA, Asia received the largest portion of South Korean bilateral ODA (about 50%) during 2006-2010, with a planned increase to 55% by 2015. Africa received about 15% bilateral ODA in 2006-2010, with a planned increase to 20% by 2015. Initial data indicates that 2015 ODA disbursement will follow similar regional trends, with the majority to the Asia-Pacific region, followed by Africa.

ODA by region

Infrastructure dominates spending profile: Korea appears to prioritize infrastructure spending, both social and economic, when disbursing its bilateral ODA. In 2013 the education and health sectors were the top sectors for social infrastructure funding ($337.05million and $306.96million respectively). With regards to economic infrastructure, the priorities were transport and storage ($311.57million) and energy ($159.82 million).

ODA by Sector

Despite its steady shift from aid recipient to aid donor, the future of South Korea’s development assistance is not clear. While it will likely remain an important emerging donor, its approach to ODA post-2015 is much less certain. Currently KOICA represents a microcosm of the country’s ODA, with a budget of about $6.8 million for 2015 (out of a planned overall ODA expenditure of $2.2 billion). The majority of KOICA’s money will go to global programs and assistance to international organizations (39%). Assistance to Asia-Pacific and Africa follows at 21% and 16%, respectively. In recent comments, the director of KOICA indicated a need to make “honest and objective assessments on its achievements” and highlighted the importance of going where the “government’s policy direction” goes. The South Korean government is expected to formulate a new five year development cooperation basic plan, which will theoretically shed light on the future of the country as a donor.

Samantha Prior is a researcher with the Project on U.S. Leadership in Development at CSIS.

One thought on “Emerging Development Donor Profile: South Korea

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