From emerging donor to global development partner

 Membership of the DAC galvanised strong collaboration between Korea and the OECD on development co-operation

 ODA grew rapidly as Korea built its development co-operation system

The Republic of Korea first reported official development assistance (ODA) equal to USD 24 million in 1987, steadily growing to USD 159 million in 1996 when Korea joined the OECD and USD 752 million in 2005. Net ODA continued to grow rapidly to USD 1.2 billion in 2010 when Korea joined the DAC and reached USD 2.3 billion in 2020 on a flow basis. Since its accession to the DAC, Korea’s ODA has increased significantly by 76% in real terms.

 

Figure 1. Korea’s official development assistance, 1987-2020

Source: OECD (2021), Creditor Reporting System (database).

 Korea primarily supports least developed and lower middle-income countries

Since joining the DAC, the majority of Korea’s bilateral ODA has consistently supported least developed and lower middle-income countries (Figure 2). In 2019, Korea provided USD 2.0 billion in gross bilateral ODA, with 49% allocated to Asia (USD 1 billion) and 25.2% to Africa (USD 516.3 million).

 

Figure 2. Bilateral ODA by income group 2009-2019

Source: OECD (2021), Creditor Reporting System (database).

 Korea offers a mix of concessional loans and grants

In 1987 the Economic Development and Co-operation Fund (EDCF) was established to provide concessional loans to developing countries. The Fund was administered by the Export-Import Bank of Korea (Korea Eximbank) which was in turn accountable to the Ministry of Economy and Finance. Then in 1991, the Korea International Co-operation Agency (KOICA) was created to implement grants under the guidance of the Ministry of Foreign Affairs and Trade (MOFAT, now the Ministry of Foreign Affairs) as well as dispatch volunteers. It began co-operating with non-governmental organisations (NGOs) in 1995, started peace-building activities in 2002 and in 2004 provided disaster relief and rehabilitation in response to the tsunami in South Asia. KOICA expanded its activities to include global citizenship education, programmes for countries affected by conflicts and fragility, innovation and technology-oriented solutions in partnership with a wide range of stakeholders in subsequent years.

The Committee for International Development Co-operation (CIDC), led by the Prime Minister and comprising Ministers and civil society representatives, was created in 2006 to elaborate policies and plans for Korea’s development co-operation. The CIDC, the ministries of Economy and Finance and Foreign Affairs, Korea Eximbank/EDCF and KOICA comprise the core of Korea’s development co-operation system. In addition, 40 other ministries and agencies offer grants and technical co-operation mobilising their own expertise, under the coordination of the CIDC.

 

Figure 3. Total ODA disbursed through government agencies, 2019

Source: (OECD, 2021), Creditor Reporting System (database).

 DAC membership offers the opportunity to improve, to learn and to share experience

As a member of the DAC, Korea undertakes to review and be reviewed by its peers. Peer reviews serve the dual purpose of accountability and learning. In reviewing Korea, members offer suggestions for improvement and an opportunity to learn from other experiences. In turn, acting as a reviewer has given Korea the opportunity to share its rich experience and learn from an in-depth look at the development co-operation system of other DAC members.

Prior to joining the Committee in 2010, Korea requested the DAC to undertake a special review of its development co-operation. Reviewers from Australia and Canada, with the support of staff from the OECD’s Development Co-operation Directorate, consulted with the Korean government, NGO representatives and academics and offered recommendations for improving Korea’s development co-operation framework and architecture; ODA volumes, channels and allocations; organisation and management; aid effectiveness; and humanitarian action. While not a formal part of Korea’s accession process it did nevertheless contribute to Korea’s progression as a donor (OECD, 2008).

A first formal peer review of Korea’s development co-operation was undertaken by Australia and Germany in 2012. It recognised that since joining the DAC, “Korea had worked hard to strengthen its aid and to contribute to global development efforts”. At the DAC meeting to consider the review’s main findings and recommendations, members expressed admiration for Korea’s “success in transforming itself in a short space of time from an aid recipient…to an important aid donor…seen by developing countries, particularly those in East Asia as a source of knowledge and ideas on development drawn from actual experience” (OECD, 2013). The DAC recommended 24 actions Korea could take to improve its development co-operation.

A second formal peer review of Korea’s development co-operation was undertaken by New Zealand and the United States in 2017. Eighty-seven percent (21) of the 24 recommendations made in 2012 had been fully or partially implemented. The review noted that “Korea leads by example, bringing its direct knowledge and expertise to bear on how aid can drive economic and human development. As a result, Korea’s role in development co-operation is highly valued, allowing it to play a key bridging role on the global stage, particularly on issues of development effectiveness and inclusive growth” (OECD, 2018). The DAC made 12 recommendations for improvement.

Korea has reciprocated, offering its experience to other DAC members. In 2013, together with New Zealand colleagues and an observer from the People’s Republic of China, representatives from MOFA and Korea Eximbank reviewed Switzerland’s development co-operation. Following this first experience as a peer reviewer, in 2016 representatives of MOFA and KOICA joined colleagues from the European Union to review the biggest DAC member, the United States of America, and in 2019 MOFA staff joined French colleagues in reviewing Sweden’s development co-operation.

 Korea is an active contributor to the DAC and to global development co-operation

Korea’s unique experience enables it to play a pivotal role, not only within the DAC but also in global development co-operation fora. Its experiences as an aid recipient, with South-South co-operation and in becoming a high-income country lend weight to Korea’s contributions. Korea was the perfect country to host the 4th High Level Forum on Aid Effectiveness, engaging the broadest ever range of stakeholders (Box 1).

A founding member of the G20, Korea worked closely with Canada to develop a working agenda for the G20 whose leaders’ summits have been held annually since 2010. The G20 Summit hosted by Korea in 2010 adopted the Seoul Development Consensus for Shared Growth and a Multi-Year Action Plan on Development, laying the foundation for developing countries to achieve sustainable growth through capacity building.

Korea has also played a leading role at the United Nations. For instance, as President of ECOSOC in 2015-2016, Korea contributed to establishing the architecture for implementing and monitoring the 2030 Agenda for Sustainable Development. As Chair of the UN Peacebuilding Commission in 2017-2018, Korea strived to broaden the partnership with regional organisations and international financial institutions in order to strengthen discussions on the peace and development nexus. Korea was also among the first group of DAC members to present a voluntary national review on implementation of the Sustainable Development Goals (SDGs) to the High Level Political Forum on Sustainable Development in 2016 (Government of Korea, 2016). Korea’s active contribution to the DAC reflects its ability to act as a bridge between developed and developing countries. It served a two year term as Vice Chair of the Committee (2019-2021), has co-chaired the International Network on Conflict and Fragility (INCAF) Task Team since November 2019, and served as the first Co-Chair of the Community of Practice on Private Finance for Sustainable Development (CoP-PF4SD) following its launch in January 2020.

Korea’s engagement with the Multilateral Organisation Performance Assessment Network (MOPAN), launched in 2002 as a network of like-minded donor countries interested in monitoring the performance of multilateral development organisations at country level, also demonstrates its contribution to global development cooperation. Having a common interest in knowing more about the effectiveness of multilateral organisations, through joint assessments of these organisations, MOPAN members exchange information and expertise in monitoring and evaluation. Having joined MOPAN in 2008, Korea was selected to Chair the network in 2016.

Korea had joined the OECD’s Development Centre already in 1992. Over the years, it has played an important role in the Centre’s Governing Board and initiatives, sharing lessons from its own development experience and contributing to policy dialogue in areas such as innovation and industrial policies or rural development. For example, as a result of the adoption of the OECD Strategy on Development, the Korean Development Institute played a key role in establishing the Policy Dialogue on Global Value Chains, Production Transformation and Development. Korea has also actively supported the Centre and the OECD’s growing engagement with Southeast Asia, facilitating policy dialogues to identify good practices and policy solutions for developing countries. In particular, it has been a leading contributor to the Economic Outlook for Southeast Asia, China and India 2021 the SIGI 2021 Regional Report for Southeast Asia, Social Institutions and Gender Index and the Multi-dimensional Review of Viet Nam

 Korea has improved its development co-operation in line with peer review recommendations

 Investments in oversight have helped with co-ordination

Korea has adjusted its legal and institutional framework to further strengthen oversight and co-ordination. Since 2020, a dedicated Office for International Development Co-operation in the Prime Minister’s Office has increased capacity to support the CIDC. In addition, two supervising agencies, the Ministry of Economy and Finance (MOEF) and Ministry of Foreign Affairs (MOFA), are given authority to run strategic meetings, focusing on their respective areas, to implement ODA in a systematic, coordinated, and efficient manner.

 Significant efforts to respond better to partner country demand and contexts

The DAC special review commended Korea for signing the Paris Declaration in 2005 and participating in the 2006 and 2008 monitoring surveys and encouraged Korea to further align its ODA with partner countries’ national systems and to co-ordinate and harmonise with other donors. The 2012 peer review recommended that Korea integrate aid effectiveness principles and internationally-agreed targets into all development co-operation strategies, particularly country partnership strategies, and improve its performance in a number of areas–on untying aid, use of programme-based approaches, medium-term predictability and use of country systems.

By the 2018 peer review, Korea had improved its performance on all of the indicators from the 2016 GPEDC monitoring round and was using country systems for EDCF concessional loans. KOICA had also taken steps to increase the use of country systems and programmatic approaches for grants. The review recognised that the second cycle of five-year country partnership strategies for Korea’s priority countries were a significant improvement on the first round, but could be further developed.

Responding to partner countries’ demands and context and ODA predictability are important for Korea given that its level of country programmable aid (84.2% of gross bilateral aid in 2019) is second highest amongst DAC countries. While the 2018 GPEDC monitoring round found that use of country-led results framework and medium-term predictability had slipped slightly, Korea had nevertheless further improved its use of country systems and its annual predictability. Dialogue with partner country governments has strengthened and Korea has increased the sustainability of its interventions and their responsiveness to local needs.

 Continued efforts to improve the aid transparency

Korea’s continuous effort to improve the aid transparency also yielded fruitful results. For instance, since joining the International Aid Transparency Initiative (IATI) in 2015, Korea has increased the number of documents that are publicly accessible and the reporting frequency. It is also notable that KOICA improved its grade for the Aid Transparency Index (ATI) by Publish What You fund, a global campaign for aid transparency, from poor in 2018 to good in 2020. Its statistical submissions to the OECD have similarly taken a positive direction, from “improvement needed” to “good”. As a result of these efforts, it is expected that Korea will not only contribute to enhancing donor harmonisation but also more accountability to its taxpayers.

 An important advocate for effective engagement in fragile contexts

Korea’s engagement for effective development co-operation through the 2011 Busan Forum also marked a turning point for support to fragile and conflict-affected settings. The broad endorsement of the New Deal for Engagement in Fragile States strengthened the guiding principles for international engagement in fragile contexts. In addition, the Busan Partnership Agreement expanded the understanding of fragility and resilience issues by placing them in a more multidimensional perspective—and beyond the shocks caused by violence and conflict. This more comprehensive approach transcends risks related to pandemics, climate change, economic downturns, food and fuel price crises, and natural disasters. As such, the Busan Outcome Document is a clear precursor to the current OECD multidimensional fragility framework.

Since November 2019, Korea has assumed the position of co-chair of the INCAF Task Team, further consolidating its strong role in the global advancement of more effective support to fragile and conflict-affected contexts. Korea has developed a whole-of-government strategy to enhance the coherence and complementarity of its activities across the humanitarian-development-peace (HDP) nexus in contexts of crisis and fragility, in line with the related DAC Recommendation. In parallel, KOICA has put in place an HDP Nexus Implementation Plan.

On the international scene, Korea is promoting the role of women in conflict prevention, sustainable development and peace, as well as their protection in fragile and conflict-affected situations. It continues to advance the women, peace and security agenda at operational and normative levels through the Action with Women and Peace initiative, launched in 2018, which includes the ODA programme to increase women's resilience in conflict-affected situations and an international discussion platform to share experiences and lessons learned.

 Systematically learning from and sharing information about development co-operation

KOICA has amended its monitoring and evaluation frameworks and ways of working to ensure that monitoring and evaluation activities are feasible and relevant within the context of the COVID-19 pandemic. This approach has ensured that Korea is able to deliver high quality monitoring and evaluation activities that are relevant to its needs and those of its partner countries.

KOICA and Korea Eximbank play active roles in the OECD/DAC Network on Development Evaluation (EvalNet) through their participation in meetings and engagement in online learning platforms, sharing lessons learned and good practices. In accordance with best international practice, Korea has prioritised institutional learning from evaluations and systematically tracks how evaluation findings inform programme design and delivery. The CIDC sub-committee on evaluation provides strategic oversight and approval of Korea’s evaluations.

 Increasing the focus and quality of its multilateral funding

Korea first adopted the Multilateral Cooperation Strategy in 2016 following the recommendations in the DAC peer review. The strategy, which identifies five key UN agencies for strategic partnerships and sets priorities for Korea’s engagement with multilateral development banks and international financial institutions, has helped Korea to be more focused in how it engages with the multilateral system, both in terms of finance and policy dialogue. The Korean government is in the process of updating the strategy based on a comprehensive evaluation of Korea’s multilateral co-operation to date.

 Dedicated instruments to mobilise private sector engagement

Korea puts a strong emphasis on the private sector as a partner in financing sustainable development. Korea launched the Economic Development Promotion Fund (EDPF) administered by Korea Eximbank, which provides concessional loans to private entities or projects in developing countries. This fund made its first commitment in 2019 and was reported as a private sector instrument to the DAC last year. Using this fund as a tool for blended finance along with other public resources including EDCF, Korea continues to strengthen its efforts to mobilise private sector engagement for sustainable development in developing countries.

Korea has also contributed to strengthening the discussions on private sector engagement, including through its strong support of the OECD’s work on Private Finance for Sustainable Development. Notably, Korea served as the first Co-Chair of the Community of Practice on Private Finance for Sustainable Development (CoP-PF4SD), a platform for discussion and information sharing on topics around blended finance and impact. Launched in January 2020, the community of practice has constituted a forum for DAC members to exchange views and experience with stakeholders from the private sector, development finance institutions, multilateral development banks and civil society on blended finance and impact. As Chair, Korea has contributed to this, steering and advancing topics on blended finance and the climate transition and providing guidance, knowledge and enthusiasm.

In 2020 and 2021, Korea supported the Blended Finance and Impact Week, which brought together over 1,000 participants. This included the official launch of the OECD DAC Blended Finance Guidance, which is underpinning the work of the community of practice. Korea is also investing in internal capacity building and partnered with the OECD to run a 9-day knowledge exchange and capacity building session on blended finance for Korean officials from MOEF, MFA, Korea Eximbank, KOICA and staff of Korea’s Permanent Delegation to the OECD in June 2021.

 Civil society policy provides a foundation for strengthened partnerships

Korea’s civil society funding has increased in the last decade. Korea has effectively followed up on a recommendation from the 2018 peer review in its engagements with Korean civil society organisations (CSOs) that work in development co-operation and humanitarian assistance. For example, the government worked closely with the Korea NGO Council for Overseas Development Cooperation to develop the Policy Framework for Government-Civil Society Partnerships in International Development Co-operation, which was adopted in 2019. At the level of the OECD, Korea supported the advancement of the DAC Recommendation on Enabling Civil Society, which was adopted in July 2021. Korea’s experience and expertise working with social enterprise partners in civil society will be informative for the DAC as it takes steps to implement the Recommendation.

 Leveraging experience in triangular co-operation

Korea went through an impressive transition from being a beneficiary of ODA and a provider of South-South co-operation to becoming a DAC member and a champion of triangular co-operation—using its unique knowledge and experience with both co-operation traditions. Korea understands very well the concerns and needs of beneficiary partners and knows from experience that investing time in creating trusting relationships is not a cost, but a real investment in development partnerships to achieve the SDGs. It works closely with the OECD’s Development Co-operation Directorate in exchanging experiences and good practices globally and with other DAC members and is a valued member of the Global Partnership Initiative on Effective Triangular Co-operation.

Several Asian countries–Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam–provide development co-operation, working through South-South and triangular co-operation, offering technical co-operation and sharing knowledge. Korea offers an example to these emerging providers and is well placed to support the OECD’s work with Asian providers to contribute to a more transparent and accountable global approach to development co-operation.

 Tackling global sustainable development challenges together

The OECD and the DAC have identified five key challenges for delivering on the SDGs during the decade of action. Korea can make key contributions to tackle each of those challenges.

1. Mobilising and aligning finance for the 2030 Agenda. To reverse the devastating effects of the crisis and again make progress on the SDGs, far greater resources are needed. This includes ODA, as a critical source of funding in challenging contexts, as well as the alignment of other resources with the SDGs. As one of the world’s largest economies, Korea’s contribution can make a substantial difference such as looking to expand ODA growth towards the goal of 0.7% of GNI and continue the efforts to mobilise private financing and building on growing domestic interest in sustainable investments, Korea can also take action to ensure that public and private funds contribute to the SDGs.

2. Making development co-operation more effective, impactful and inclusive including through partnerships and innovation. As a long-standing international champion for effectiveness, Korea is well-placed to bring together global partners to build a new understanding of what it means to deliver effective development co-operation. From its own experience, Korea brings valuable insights on partnerships with emerging donors and can exchange with partners on how to best integrate the concerns of developing countries into its efforts on policy coherence for sustainable development.

3. Preventing and addressing fragility and crises. Drawing lessons from the COVID-19 response, the OECD’s Development Co-operation Report 2020 stressed that collective action for the protection of global public goods is critical to help avoid future crises (OECD, 2020). Korea’s bridging role and strong international advocacy for sustainable development at the UN, the G20 and other fora will be critical to foster collective action that builds resilience and enhances the international community’s capacity to co-ordinate and respond swiftly and flexibly to crises.

4. Tackling poverty and inequalities, achieving gender equality, and enabling inclusive governance in order to leave no one behind. The 2021 DAC mid-term review welcomed that Korea is making its co-operation more responsive to partner country contexts (OECD, 2021). Continuing in this direction will help Korea target poverty and strengthen country systems, another key action the OECD identified for greater resilience. At international level, Korea’s soft power will be needed to promote a recovery that is sustainable and inclusive in both OECD countries and developing countries.

5. Promoting climate objectives and sustainable management and use of natural capital. As one of the world’s leading economies, Korea is a key player in tackling climate change and protecting the environment. It has started stepping up “Green ODA” and should continue these valuable efforts to invest in low-emissions, climate-resilient economies and climate adaptation. At home, Korea has announced a Green New Deal as part of the recovery from the pandemic. By moving towards carbon neutrality, Korea will also make a major contribution for developing countries, which will be greatly affected by climate change.

Advancing these actions is both an individual and a collective responsibility. The OECD counts on Korea to continue to do its part to ensure that our collective efforts are much greater than the sum of their parts.