Although mankind has achieved economic prosperity at an unprecedented level, 20 percent of the world's population still lives on less than $1 a day. The significance of Official Development Assistance(ODA) is increasingly gaining recognition in the international community as its efforts to eradicate poverty result not only in the protection of basic human rights, but also in the construction of a healthy governance system, the spread of democracy within the recipient country, and ultimately the contribution to world peace.
From a recipient to a donor
Korea shares with other East Asian newly industrialized countries the unique experience of overcoming poverty and achieving economic growth in just a few decades. Effective use of the enormous amount of foreign aid was crucial to Korea’s sustained economic growth. Between 1945 and the early 1990s, Korea received a total assistance of 12.69 billion USD from the international community. Korea’s graduation from the World Bank lending list in 1995 marked the de facto end of Korea’s history as a recipient of ODA. As such, Korea was finally able to make a transition from an aid-receiving country to an emerging aid-donor country.
The volume of Korea’s ODA to developing countries has steadily grown since 1987. In 2007, the total amount of Korea's ODA was more than 680 million USD, a 31.5% increase from that of 2006 at 517 million USD.
Korea's ODA implementation system
Grants, composed of grant aid and technical cooperation programs, are implemented by the Korea International Cooperation Agency (KOICA) under the policy guidelines of the Ministry of Foreign Affairs and Trade. While grant aid program is wholly controlled by the KOICA, some technical cooperation programs are engaged by other government agencies and organizations. Concessional loans are managed by the Economic Development Cooperation Fund (EDCF) programmed by the Export-Import Bank of Korea (EXIM Bank) under the supervision of the Ministry of Finance and Economy. For effective adjustment and discussion among agencies, the Commission on International Development Cooperation and its Working Committee are in place.
Recent efforts to enhance Korea's ODA
o Korea is currently in the process of drafting its basic ODA policy document and of legislating its Framework Act on ODA.
o In step with efforts of the global community in discovering ‘innovative development financing’ for poverty eradication in least developed countries, the Korean government introduced the ‘Air Ticket Solidarity Levy’ (named ‘Contribution to International Poverty Eradication’ in Korea) in October 2007. It levies 1,000 KRW(roughly $1) on international flight tickets to finance eradication of poverty and disease in developing countries.
o To provide rapid assistance activities to the disaster-affected regions, Korea has enacted the Overseas Emergency Relief Act in October 2007 as the foundation for the creation of a pan-government assistance mechanism.
o To help developing countries to achieve their development goals with a sense of ownership and responsibility, it is crucial for donor countries to build global partnership for aid effectiveness. In October 2007, Korea sent a delegation to the Second International Conference on Development Cooperation with Middle-Income Countries in El Salvador where special development needs and most appropriate set of policies and instruments for this group of countries were discussed. In addition, Korea held bilateral ODA Policy Consultations with some developing countries, including that held between Korea and Vietnam in January 15, 2008. To strengthen Korea's commitment to strengthening and supporting the multilateral system, Korea is now participating as an observer to the Multilateral Organizations Performance Assessment Network (MOPAN).
Future direction of Korea's ODA
Korea is striving to help meet the Millennium Development Goals (MDGs) as set out by the United Nations. To this end, Korea plans to expand its ODA to achieve the ODA/GNI target of 0.1 percent by 2010 and of 0.25 percent by 2015. Korea will also endeavor to gradually increase the portion of grant aids of total ODA in order to meet the demand of least developed countries and alleviate the economic burden of recipient countries. Untying aid to meet the standards recommended by Development Assistance Committee of the Organization of Economic Cooperation and Development at 90 percent for grants and 40 percent for concessional loans will be applied to Korea's mid-term ODA plan.
Korea will take steps to strengthen its policy-making and implementation capacity as a donor. It will actively support the swift legislation of the Framework Act on ODA to achieve policy coherence among ministries and aid implementation agencies. Strengthening the mechanism for assessing aid performance is also in the agenda for improving Korea's ODA. Furthermore, Korea will formulate an original Korean assistance model that transmits the country's successful development experience aligned to the recipient country's national development strategies.
Forming strong partnerships with recipient countries as well as donor countries is essential to increasing aid effectiveness. Active participation in policy dialogues with recipient countries will be sought. Also, to better coordinate with other donor countries in achieving the goal of poverty eradication, Korea is making preparations to join the Development Assistance Committee (DAC) of the OECD by 2010.
