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South Korea Urged to Keep Increasing Development Aid

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By Tae Han Goo

SEOUL (IDN) – South Korea, often cited as a leading example of how sound economic policies can drive growth and development, blazing a trail from poverty to advanced industrialisation throughout the 1970s and 1980s, will have a greater impact on international development cooperation if it manages to produce a clear plan to increase aid volumes in line with its stated ambitions, according to a new OECD Review.

All the more so because building on its reputation as a development success, the country – officially known as the Republic of Korea – now plays a highly valued role on the global stage, sharing its knowledge with others and helping to bridge the divide between developing and developed country interests.

In the 1950s, South Korea was one of the poorest countries in Asia. Meanwhile, it is a major international economic power: it has the twelfth largest economy in the world and the third largest in Asia, behind only Japan and China (fourth behind China, Japan, and India by purchasing power parity). Its largest trading partner and export market today is China. As one of the Four Asian Tigers, it achieved rapid economic growth through exports of manufactured goods.

The latest DAC Peer Review of Korea notes a steady rise in Korean aid – from USD 1.2 billion to USD 2.25 billion – in the six years since the former recipient country joined the OECD Development Assistance Committee (DAC) as a donor in 2010, fourteen years after having become a member of the 34-nation Organisation for Economic Co-operation and Development.

Globally, South Korea focuses on inclusive growth, crisis prevention and development effectiveness, while in developing countries, its support includes highly concessional loans for national priorities such as renewable energy and roads.

South Korea is also well focused on countries most in need, with 54% of its bilateral aid going to land-locked, small island or fragile states, notes the OECD Review. The top five recipients of Korean aid in 2015 were Viet Nam, Tanzania, Cambodia, Bangladesh and Afghanistan. Seoul also sends large volumes of private investment, non-concessional lending and remittances to poor countries.

Having hosted the Busan Fourth High Level Forum on Development Effectiveness in 2011, South Korea is a committed champion of the principles of effective development cooperation. Through its missions in Paris and New York it continues to raise awareness among governments about the Busan Partnership Agreement and advocates for its full implementation as part of the global effort towards achieving the Sustainable Development Goals (SDGs).

The OECD Review praises South Korea for taking partner government requests as the starting point for its project selection. Additional scrutiny by South Korea of the process through which government requests are generated would make its development programmes more effective and help to ensure attention to sustainability, reducing poverty and the principle of “leaving no-one behind”, as envisaged in the SDGs, adds the Review.

The OECD Review takes note of the fact that a slowing economy has prompted South Korea to trim its 2020 target for official development assistance (ODA) to 0.20% of gross national income (GNI) from 0.25% previously and compared to 0.16% today. The country’s aim is to reach 0.30% of GNI by 2030, but it has not set out a roadmap for achieving this. By comparison, the average ratio of ODA to GNI for DAC donors was 0.32% in 2016, and six DAC members have now reached a UN target of 0.7%.

“Setting out a clear plan and a detailed timeline to increase aid flows over the next decade would help Korea’s officials and development partners in their planning and could prevent what may look like a diminished level of ambition affecting Korea’s ability to meet its international commitments,” said DAC Chair Charlotte Petri Gornitzka, presenting the Review in Seoul on February 7. “Korea puts more focus than the average donor on supporting the least developed countries, but it also needs to plan for ODA growth.”

The Republic of Korea provided USD 2.25 billion in net ODA in 2016 (0.16% of GNI), up from USD 1.92 billion (0.14% of GNI) in 2015. This does not include the bilateral assistance Korea provides to the Democratic People’s Republic of Korea. If South Korea’s economy continues to grow at current rates, it would need to provide net ODA of USD 3.2 billion in 2020 to meet its 0.20% target – a jump of 40% from 2016 levels, says the OECD Review.

While the country has made progress in removing conditions tying its aid to Korean companies, the Review points to some backtracking of late and stresses the need to untie aid to the maximum extent possible. In other areas, the Review finds South Korea fully implemented eight and partially implemented 13 out of 24 recommendations in its first Peer Review in 2012.

Each DAC member is reviewed every five years in order to monitor its performance, hold it accountable for past commitments and recommend improvements. Reviews use input from officials in the Review country and partner countries – Cambodia for this Review – as well as civil society and the private sector. [IDN-InDepthNews – 22 February 2018]

Related article: South Korea’s Foreign Aid: Evolution and Potential

Photo: Night at Seomyeon, Busan, South Korea. Credit: Flickr, author Carey Ciuro. Creative Commons.

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