OECD Development Co-operation Peer Reviews: Korea 2018

Chapter 2. Policy vision and framework

Framework

Peer review indicator: Clear policy vision aligned with the 2030 Agenda based on member's strengths

Korea has overarching legislation for development co-operation which is updated regularly and sets out the purpose of development co-operation in clear terms. At a political level, Korea has demonstrated strong support for the 2030 Agenda for Sustainable Development and this is already reflected in its operational policies. Two strategy documents describe Korea’s approach to development co-operation across government and set performance targets across a range of criteria. Korea’s implementation agencies and partners would welcome more clarity on which document to consult when designing programmes.

Korea has clear and effective legislation to guide its development co-operation

As noted in the 2012 peer review (OECD, 2012), Korea’s legislation for development co‑operation is robust, providing the longer-term authority, mandate and direction for delivering its aid programme. The 2010 Framework Act outlines the basic principles of development cooperation – in particular, defining the purpose of Korea’s ODA - and assigns responsibilities to various bodies, with the Committee for International Development Cooperation in a lead role (Chapter 4). The Framework Act clearly identifies poverty reduction and humanitarian assistance as the core motivation for Korea’s development assistance.1

In addition to the Framework Act (National Assembly, 2010), two documents drive decision making – the Strategic Plan for International Development Cooperation (GoK, 2010) and a rolling five-year mid-term strategy.

Approved in the same year as the Framework Act, the 2010 strategic plan highlights how Korea’s own experience as a recipient country is a driver for its development co‑operation and includes ambitious targets for Korea’s ODA.

The current mid-term strategy for development cooperation spans the period 2016-20. The document clearly aligns Korea’s development co-operation policy to the 2030 Agenda for Sustainable Development (GoK, 2015a). Under three pillars of “integrated, substantive and collaborative ODA”, it outlines mechanisms to ensure consistency among the various agencies co-ordinating development co-operation across government, enhance the quality of aid, and expand partnerships with the private sector and civil society. The mid-term strategy, which includes an updated list of partner countries and updated ODA targets, helps to frame key decisions and identify Korea’s policy priorities. It is a particularly useful reference for the Korean International Cooperation Agency (KOICA) and Korea Exim Bank (KEXIM) in partner countries. A next step would be to provide more guidance for the increasing volume of resources managed by other ministries and directed towards global public goods. Implementing partners would also welcome more clarity on which parts of the 2010 strategic plan are superseded by the mid-term strategy.

Korea has recently introduced a number of more operational strategies – for example, on humanitarian assistance, multilateral aid and gender equality – which apply across government. These are consistent with the mid-term strategy and help to create common ground for Korea’s various implementing agencies.

Finally, in an effort to better capture Korea’s development co-operation objectives across government, a “Better Life for All” initiative, launched in 2016, introduced flagship programmes to address rural development (“Saemaul Undong”), gender equality and education (“Better Life for Girls”), health (“Safe Life for All”), science technology and innovation (“STI for Better Life”) and climate adaptation and mitigation (“Climate Compatible Development”) (KOICA, 2017a). Although nominal budgets were attached to each initiative,2 no resources are earmarked for them. As a result, “Better Life for All” may be an effective communication and branding tool but does not appear to have permeated through the system as a policy instrument. In June 2017, Korea’s development committee agreed that the “Better Life for All” initiatives will now be re-oriented to align more closely with the Sustainable Development Goals (GoK, 2017b).

In addition to the documents outlined above, each incoming Korean President sets development priorities. The most recent are laid out in President Moon’s 2017 Action Plan (GoK, 2017a), which elevates the role of the private sector in delivering development co-operation and anchors aid policy in Korea’s national interests.

Korea’s policies may be open to interpretation by government agencies

Although Korea has developed clear and robust legislation, its policy documents can be interpreted differently by the various implementing ministries and agencies managing Korea’s ODA grants (Chapter 4). The mid-term strategy is closely followed by the Ministries of Foreign Affairs and Strategy and Finance, and their respective implementing agencies KOICA and KEXIM, while other agencies and ministries tend to refer more to the 2010 strategic plan. This was illustrated when a significant budget was approved under the previous administration for activities under the Korean Aid Programme3 which included showcasing Korean food and culture. While these activities are consistent with the 2010 strategic plan, they are inconsistent with the purpose of official development assistance set out in Korea’s legislation and the subsequent 2011-15 mid-term strategy and the programme has since been discontinued. Korea’s policy framework would thus be further strengthened by clarifying the status of its 2010 strategic plan and where this plan has been superseded by the 2015-2020 mid-term strategy.

Principles and guidance

Peer review indicator: Policy guidance sets out a clear and comprehensive approach, including to poverty and fragility

Since 2016, Korea has adopted the Sustainable Development Goals as the high level outcomes of its development co-operation, while carving out a clear (albeit wide ranging) thematic and geographic focus. In addition, Korea is paying ever more attention to the quality of its programmes and has increased its focus on countries most in need. While it has made significant progress in developing guidance on gender equality, disability, climate change and environmental sustainability, greater attention to these issues is not yet translating into increased funding. Stronger incentives are needed to encourage staff to use the guidance.

Korea’s 2016-20 mid-term strategy identifies the 17 Sustainable Development Goals as the overarching outcomes for Korea’s development co-operation. Korea aims to work towards them by sharing its own development experience and by connecting individual projects with relevant goals, working in some of the world’s poorest countries in key sectors where it has relevant skills (GoK, 2015a).

Korea focuses its efforts on social sectors and economic infrastructure in countries most in need

Korea’s approach to development co-operation, discussed in detail in Chapter 5, is characterised by the emphasis it places on its partner countries’ requests, and an increasing focus on countries most in need. The high proportion of grants directed to least developed countries and Korea’s concentration on social sectors and economic infrastructure in these countries demonstrate a strong focus on poverty.4 However, as discussed in Chapter 5, when selecting and designing projects within these countries, Korea does not demonstrate a consistently strong poverty focus.

In line with the Busan partnership agreement on effective development (HLP, 2011), Korea has increased its attention to fragile states. The Ministry of Foreign Affairs leads the peace and security elements of Korea’s foreign engagement and KOICA’s recent mid-term framework for fragile states reflects a good understanding of the challenges and priorities in fragile contexts (KOICA, 2017b). As KOICA translates this framework into programming, there will be opportunities to link the ministry’s peace and security work with its development strategy in fragile states, particularly when it comes to choosing where to work and what programmes to support. Guidelines on fragile states developed by KEXIM’s Economic Development Cooperation Fund (ECDF) provide differentiated approaches for concessional loans to fragile states; any country eligible to receive ODA can apply for concessional loans so long as these loans do not undermine their financial sustainability or longer-term development prospects.5 Korea is stepping up its commitment of time and resources to international networks dedicated to developing policy for fragile states such as the international network on conflict and fragility (INCAF). These networks can offer lessons on what is working and not working, as well as increase Korea’s international visibility.

Guidance for cross-cutting issues is in place but is not yet fully applied

Over recent years, Korea has introduced a large body of operational guidance, which helps to clarify its approach to sustainable development, including to poverty, fragility, gender equality, disability and climate change.

As noted in Chapter 1, Korea has mobilised its political leadership on green growth and climate change and this is reflected in its relatively high levels of direct funding for climate change. Korea’s concessional loans for developing countries encourage green projects – e.g. renewable energy, energy efficiency and eco-friendly initiatives – by offering lower interest rates on loans or grants for feasibility studies. In addition, Korea is taking positive steps towards mainstreaming environmental issues and climate change within all its loans and grants. Both KEXIM Bank and KOICA have developed relatively detailed guidance on environmental sustainability. KEXIM has developed a safeguards policy (EDCF, 2016) adapted from World Bank and Asian Development Bank standards. These safeguards place responsibility for compliance firmly with the borrower but also require KEXIM Bank to carry out environmental and social reviews as part of due diligence. However, Korea’s country partnership strategies do not require climate risk analysis, with the result that climate adaptation is not systematically considered in areas such as food security, infrastructure or health. Korea could do more to analyse where its programmes could have a positive impact on the environment, and what longer-term impact climate change will have on its investments. In addition, it could extend its good practice on financing green growth through ODA to its non-concessional lending.

Korea has a thematic focus on maternal and child health and girls’ education and has invested significant time and effort in developing and disseminating tools and guidance on gender equality. Gender awareness guidelines, issued in 2015, apply to all of Korea’s development co-operation programmes (GoK, 2015b). These are backed up by guidance and toolkits for KEXIM Bank and KOICA and underpinned by criteria built into Korea’s systems for project management, which must be considered when projects are appraised, approved, implemented and monitored. These efforts are not yet translating into increased financial resources for gender equality – as noted in Chapter 3, financial data for 2015 indicate that 10% of Korea’s bilateral ODA targets gender equality, and that only sexual and reproductive health programmes systematically consider gender equality.

Disability is a newer cross-cutting priority for Korea, identified by the National Assembly in 2013 and reflected in the 2015 revision of the Framework Act. KOICA’s disability policy identifies people with disability as a vulnerable group, with a focus on their rights and social access, particularly special needs education and rehabilitation (KOICA, 2017c). This holistic approach is important for the “leave no-one behind” commitments in the 2030 Agenda and is likely to help Korea to analyse the differing needs of beneficiaries when designing programmes. However, as guidance on disability programmes is only just being rolled out, it would be premature for this review to assess Korea’s approach in this area.

It is not clear to what extent Korea’s relatively comprehensive guidance on poverty, fragility and cross-cutting issues is considered by other parts of government delivering Korea’s development co-operation. Systematic and meaningful application of guidance across the Korean system will require financial resources, leadership, technical expertise, strict criteria for appraising projects and a commitment to building an evidence base to monitor results. Korea’s new on-line project management system, which requires users to enter scores on gender equality and other cross-cutting issues for all projects, may provide incentives for staff to consider these issues more systematically.

Basis for decision making

Peer review indicator: Policy provides sufficient guidance for decisions on channels and engagements

Korea’s legislation and operational policies provide a reasonable basis for making decisions on what types of aid Korea provides and which countries and sectors it supports. However, they may not provide sufficient focus to achieve and measure impact. In addition, more guidance on global and regional engagements, technical co‑operation and engaging with civil society and businesses would help Korea to build partnerships that extend beyond a single project, thus retaining experience and knowledge within the system.

Korea’s 2010 Framework Act and 2016-20 mid-term strategy for development co‑operation, described above, provide a reasonable basis for deciding where Korea should focus its efforts, what areas it should support and how its official assistance should be distributed. In addition to listing Korea’s 24 partner countries and the criteria for their selection, the mid-term strategy broadly indicates priority sectors. The strategy also includes specific targets for aid volumes: the ratio of loans to grants; the ratio of bilateral to multilateral aid; and the overall split between regions, income groups and aid channels; all of which are closely monitored and drive ODA allocations (GoK, 2015a).

Korea has made considerable progress with its country partnership strategies since the last peer review and its policy documents give relatively clear guidance for how it engages in partner countries. In line with the 2030 Agenda, the next step would be to develop similar guidance for its global and regional engagements and its increasing investments in public goods.

Analysis of Korea’s grant and loan approvals reveal that officials in KOICA and KEXIM have been pragmatic in using policy documents to guide their decisions, while still allowing space for innovation in areas such as micro-finance and governance. Korea’s policy framework is nonetheless very broad and many new policies and guidance have been introduced in recent years, making it challenging for Korea to consolidate its strengths and deepen its engagements.

Korea’s preference for stand-alone projects in partner countries is consistent with its policy guidance but incurs high transaction costs

Korea disburses a large, and increasing, share of its aid bilaterally (76% in 2014 and 78% in 2015). This is consistent with its policy and based on the average multilateral share of DAC members. When combined with a preference for direct engagement in its partner countries through technical co-operation programmes and stand-alone projects, Korea’s bilateral focus requires a lot of time and administration from both officials and partners (see Chapters 4 and 5). This is offset to an extent by an increasing focus on fragile states, resources for which are largely through multilateral channels (Chapter 7). The 2016-20 mid-term strategy recognises that if Korea intends to maintain a large share of bilateral aid as its budget increases, it will need to develop new channels to disburse larger loans and grants.

It is not always clear to partners how Korea’s policies guide its decision making. For example, Korea uses sets of international data and fragility indices to define its own unpublished list of fragile states. When updating its partner countries in the 2016-20 mid-term strategy, the number of fragile countries decreased, whereas the number of non‑fragile states increased. This decision was based on Korea’s self-assessment of its capacity to operate bilaterally in certain contexts, which is good practice. However, a more transparent decision-making process would have helped to communicate to observers and partners that Korea’s choice of partner countries is not inconsistent with its stated commitment to increase its focus on fragility and its investment in fragile states, much of which relies on multilateral partnerships (Chapter 7).

A new multilateral strategy has helped Korea to focus its funding and policy engagement

Korea finalised its new multilateral strategy in 2016 (GoK, 2016). This outlines the rationale for Korea’s multilateral assistance, including how Korea’s multilateral aid complements its bilateral aid. 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. In contrast with this relatively clear policy guidance on multilateral partners, Korea’s policy documents provide little guidance on partnerships with the private sector, academics or civil society. This is discussed further in Chapter 5.

Korea is committed to working with other donors and joining broader programmes

Under the mid-term strategy pillar of “collaborative ODA”, Korea has committed to working more with other donors and KOICA has produced guidelines for developing joint projects (KOICA, 2016). Since 1996, Korea has signed agreements with 17 donor agencies and designed joint projects with France, Germany and the Netherlands. Korea’s systems allow it to delegate funds to other donors, to pool its funds with others and to contribute directly to partner countries’ budgets. There are a number of positive examples of how Korea is using these new approaches in Cambodia, particularly in rural roads and the health sector (Annex C). However, this new resolve on the part of Korea to work collaboratively comes at a time when it is finding that other donors are moving away from joint-donor, integrated programmes in many of its partner countries. In addition, Korea’s own procedures are becoming more complex for other donors to co-ordinate with (Chapter 4). While Korea is now able and willing to join existing programmes, it does not yet have the experience to design and initiate new joint-donor programmes or sector budget support mechanisms. It will therefore be important for Korea to engage actively in, and learn from, existing initiatives and discussions in order to develop a realistic plan to increase funding to joint-donor initiatives and larger programmes.

Bibliography

Government sources

EDCF (2017), “EDCF guideline for supporting least developed countries (LDCs)”, (unpublished), Economic Development Cooperation Fund, Korea Exim Bank, Seoul.

EDCF (2016), “EDCF safeguard policy”, Economic Development Cooperation Fund, Korea Exim Bank, Seoul.

GoK (2017a), “문재인정부 국정운영 5개년 계획” [Moon Jae-in government 5-year plan of state administration], National Planning and Advisory Committee, Seoul.

GoK (2017b),”2018 국제개발협력 종합시행계획”, [2018 international development co-operation integrated implementation plan], Government of Korea, Seoul, www.odakorea.go.kr/fileDownLoad.xdo?f_id=1499067172269192168139QQHCPE8AT60C55MY3L6Z.

GoK (2016), “Multilateral aid strategy”, Government of Korea, Seoul.

GoK (2015a), “Mid-term strategy for development cooperation 2016-2020”, Government of Korea, Seoul.

GoK (2015b), “ODA 사업의 성 인지적 관점 적용 지침” [2015 Guidance on Mainstreaming Gender Perspectives], Government of Korea, Seoul.

GoK (2013), “박근혜 정부 국정과제” [Park Geun Hye government national task], Government of Korea, Seoul, www.korea.kr/common/download.do?fileId=144733952.

GoK (2010), “Summary of strategic plan for international development cooperation”, Government of Korea, Seoul.

KOICA (2017a), “Better life for all”, flyers, Korean International Cooperation Agency, Seoul, www.koica.go.kr/download/2015/2015_SDGsleaflet_kr.pdf.

KOICA (2017b), “KOICA mid-term framework for fragile states 2017-2019”, (unpublished), Korean International Cooperation Agency, Seoul.

KOICA (2017c), “Summary of KOICA’s guidelines for disability-inclusive development cooperation projects”, Korean International Cooperation Agency, Seoul.

KOICA (2016), “KOICA mid- to long-term management strategy (2017-2021)”, Korean International Cooperation Agency, Seoul.

National Assembly (2010), “Framework Act on International Development Cooperation”, Act No. 12767, Oct. 15, 2014, National Assembly of the Republic of Korea, Seoul, https://elaw.klri.re.kr/eng_mobile/viewer.do?hseq=33064&type=part&key=19\ , accessed 02/08/2017.

Other sources

​HLP (2011), “Busan Partnership for Effective Development”, 4th High-Level meeting on Aid Effectiveness www.oecd.org/dac/effectiveness/49650173.pdf.

OECD (2012), OECD Development Assistance Peer Reviews: Korea 2012, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264196056-en.

Notes

← 1.  Article 3 of the Framework Act (National Assembly, 2010) states that “International development cooperation should be promoted in order to reduce poverty in developing countries, improve human rights of women, children and persons with disabilities, to realize economic development and humanitarianism, to promote economic cooperation with the partner countries, to pursue international peace and prosperity”.

← 2.  Multiannual funding targets have been set for four flagship initiatives aligned to the Sustainable Development Goals under the overarching theme of “Better Life for All”:

• USD 200 million over five years for the “Better Life for Girls” initiative which promotes girls’ education and health;

• USD 200 million over five years for the “Science, Technology and Innovation for Better Life” initiative to promote science capacity, research and development R&D, and entrepreneurship;

• USD 100 million for the “Safe Life for All” initiative to combat infectious diseases;

• USD 100 million for the “Better Education for Africa’s Rise” initiative to foster industrial and technical manpower.

← 3.  The Korean Aid Programme funded mobile health clinics and mobile activities to showcase Korean culture and foods in Ethiopia, Kenya and Uganda. It was widely criticised, see for example The Worst ODA Korean Aid www.peoplepower21.org/International/1454516.

← 4.  Korea’s list of 24 partner countries includes 12 least developed countries and 8 fragile states.

← 5.  All OECD DAC-listed countries (see www.oecd.org/dac/stats/daclist.htm) are eligible to receive ODA and to borrow from EDCF as long as the loan is not destined for commercially viable projects. In response to the 2012 peer review recommendation on debt management, EDCF has clarified its guidance on lending to least developed countries based on DAC recommendations, IMF Debt Limit Policy (DLP) and/or the World Bank's Non-Concessional Borrowing Policy (NCBP) and IMF/World Bank’s country-specific Debt Sustainability Analysis (EDCF, 2017).