Special Workshop 2012.6.1

1. Special Workshop 2012.6.1 Korea’s Development Cooperation and Direction of ODA Yoo Soo Hong

2. ODA □ ODAs are official flows to or for developing countries that are provided: • for developmental purposes • by the official sector (Government, public funds) • as grants or • as “soft loans”

3. Examples of ODA Activities • Development projects – schools, clinics, water supply systems, etc. • Emergency aid for natural or mkan-made disasters • Contributions to multilateral development agencies • Food aid, emergency and developmental • Aid to refugees • Debt relief outlined by Paris Club Agreement • Officially financed Ssholarships for students in developing countries

4. Non Eligible ODA Activities • Military or security assistance • Cultural programmes for the donor’s nationals resident in other countries • Aid from NGOs financed from private sources • Foreign direct investment • Official export credits or other commercially motivated transactions • Guarantees on private export credits or investments • Reduced tariffs or other concessions on imports from developing countries

5. Official Development Assistance, 1998-2008(Net Disbursements, in billions of US Dollars) By All Donors Source: OECD Database

6. Korea’s participation in OECD DAC in 2010 the world's successful case Aid Donor Aid Recipient Korea’s Per Capita Income Today Yesterday 1960 2008 U$ 78 U$ 19,200 Foreign Aid U$ 33.1bn Korea’s Success Story in ODA

7. Joining DAC of OECD • Korea plans to triple its economic aid to poor countries around the world to 0.25 percent of gross national income (GNI) by 2015 to help achieve more balanced global economic growth. • Korea's entry into the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) on Nov. 25, 2009 suggests Korea has joined the league of the world's wealthiest countries. • Korea is the second Asian country after Japan to become a DAC member. • The membership is expected to help it deepen economic partnerships with underdeveloped countries, which will emerge as Korea's major trade partners in the long term. By participating in various development programs in the countries, Korea can promote social and cultural exchanges as well.

8. Korea will provide $100 million in food aid to countries suffering from food shortages and droughts in 2010-2012, while gradually increasing its assistance to underdeveloped nations. • Korea hopes to help developing countries lift themselves out of famine and poverty, and to this end, share Korea’s past development experiences. While financial support is important, finding the right development model that befits each country can be a more fundamental way of overcoming poverty. • Whether in the form of low-interest loans, grants-in-aid, or technical cooperation, ODA helps developing countries in moving forward.

9. Sharing Experience • Korea is the only country that successfully turned into an industrialized country through receiving ODA. • Korea should share its experiences. Developing countries are also seeking Korea's know-how in economic development, education and IT. Experts advise that this expertise could help set up a unique ODA model for the country. • Simply giving out money could result in aid dependency of recipient countries, diminishing production incentives and failing to pull them out of poverty. In other words, ODA should be in harmony with the recipient country's development strategies.

10. Determinants of Development Aid Considerations for ODA Determination Source: KOICA (http://www.koica.go.kr. 2008).

11. Major Donor Countries Source: OECD

12. ODA to GNI Ratio Source: OECD

13. Evolution of Korea’s ODA (mil. US$, %) Sources OECD.dat.

14. Korea’s ODA by Type Source: KOICA

15. Korea’s ODA Trends Source: KOICA

16. Korea’s ODA by Region, 2006-2009

17. Korea’s ODA by Purpose

18. Korea’s Sectoral ODA

19. Korea’s ODA Future Commitments

20. Development Aid Under Attack • Aid to developing countries is strongly criticized. • Scholars and policymakers increasingly express doubt that development aid will • Increase economic growth • Alleviate poverty • Promote social development • Foster democratic regimes • Or, have a positive sustainable impact

21. Capacities for Utilizing AID InstitutionalCapacities Policies, strategies andimplementing tools are inplace to ensure efficientcoordination andmanagement of aid. Human Capacities Skilled, trained personnelare in place to implementpolicies and strategies,and to maintain thegovernment-donorinterface. “Capacities” Structural / Economic Capacities Capacity of the recipient country’s economyto absorb additional aid with minimaldistortion (“Dutch disease”) etc.

22. Capacities by Entity • Recipient government • Capacity to own, manage and implement. • Donor agencies • Human and institutional capacity to deliver assistance in an effective manner. • Other key stakeholders (e.g. civil society, private sector) • Capacity to complement government; advocate for effective use of aid, and exert ownership over development processes.

23. Capacity Building Dimensions • National policy institutions • S&T organizations -- -- universities, public and private R&D institutes/technology diffusion institutions • Enterprises – both users of knowledge and creators of new knowledge • Labor Force

24. Capacity Building Stages and Model Creation Improvement Assimilation Acquisition S&T & R&D Stages Imitation internalization generating Developing Country Newly-Industrializing Country Advanced Country Development Stages

25. References Sawada, Yasyuki. 2010.”Official Development Assistance” Views from Japan and East Asia”. Spire Research and Consulting. 2007.“The Rising Tide of Asian Investment in Asia”. (Google) Todo, Yasuyuki. 2010. “Is Foreign Aid a Vanguard of FDI?” The University of Tokyo and RIETI.