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Development Overview

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Overview of Korea’s development experience

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Development Overview
Official Aid General

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General

ODA Policy

1. Korea’s ODA Policy

In 2005, the Korean government announced the Comprehensive Plan for Improving ODA of Korea and set up a target to reach an ODA/GNI ratio of 0.1% by 2009. The plan reflects the government’s efforts to expand ODA volume in line with the MDGs and to harmonize ODA-related policy makings.

The Commission on International Development Cooperation chaired by the Prime Minister of Korea was launched in January 2006 with the purpose of reviewing governmental policies and plans on development cooperation. In 2007, the ODA Mid-term Strategy 2008-2010 was approved by the commission, which set the primary objective of Korea’s ODA as contributing to the achievement of the development goals and building institutional capacities of developing countries in order to reduce poverty and achieve sustainable development in those countries.

As the year 2010 is the mid-point of reviewing the MDGs, the mid-term strategy makes it its first priority to concentrate on actively participating in the mid-term review and achieving the mid-term goals. The strategy also calls for attention towards improving the basic human needs of least developed countries such as those in sub-Saharan Africa by expanding Korea’s ODA. Support will also be substantially increased to areas such as human resources development, healthcare, governance improvement, information technology, and rural development as part of an effort to eradicate poverty and achieve socio-economic development.

The strategy also aims to align Korea’s development cooperation policies with other national strategies to maintain consistency and induce synergy effects. It also plans to expand the involvement of the private sector including the civil society in various ODA projects so as to utilize their expertise and raise public awareness. Especially, when conducting grass-roots level projects in countries with no official diplomatic relations, the Korean government will increase the participation of non-governmental organizations that have much field experience.

The strategy also plans to encourage monitoring and evaluation by the civil society, which, in turn, will enhance transparency and accountability. The ODA white paper will be produced as well to publicly announce the results of development assistance and utilize those results to improve Korea’s ODA practices.

Meanwhile, despite the 20-year history in development assistance, Korea still has no high-level policy statement governing its ODA. As of today, there are two legislative acts, the Economic Development Cooperation Act (enacted December 26, 1986) and the Korea International Cooperation Agency Act (enacted January 14, 1991), which only broadly state the development objectives. As such, the government began the task of drafting a policy statement called the Policy Statement of Korea’s International Development Cooperation, which is set as a long-term task. It will include Korea’s ODA philosophy and objectives, detailed policy priorities, and implementation plans. The final version of the policy statement will be drafted by the end of 2008 reflecting the results of the discussion held at the third meeting for the Commission on International Development Cooperation held in January 2008.

The meeting suggested Korea’s ODA philosophy as securing the basic needs for all mankind and thereby contributing to the world’s peace and co-prosperity. Also, Korea’s ODA objectives were set as contributing to poverty reduction and sustainable development of the international community.

Source: The Export-Import Bank of Korea. 2008. EDCF Your development partner 1987-2007, History book. Seoul.
 

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2. EDCF Policy


As specified in the EDCF Act, the EDCF was established “in order to support industrial development and economic stability of developing countries and to stimulate economic cooperation between these developing countries and the Republic of Korea including the increase of economic exchange between them.” In line with this objective, the Basic Principles of the Management of the EDCF, approved by the Fund Management Council in 1987, guides the EDCF as follows: First, in the early stages, the EDCF will focus more on supporting sectors through which great economic impacts can be achieved from the cooperation with partner countries, and later on, its support will shift more towards meeting the development needs of countries through aid. Second, regional allocation will be based on strategic and cooperative needs rather than simple distribution by region.

First, efforts will be made to enhance aid effectiveness by utilizing technical assistance elements such as assistance for feasibility studies. In 2006, the Korean government established the Medium Term EDCF Strategic Management Plan 2006-2009 to enhance mid-term predictability and to more effectively utilize the EDCF. The plan was revised every year and the latest plan, revised in 2008, consists of the following goals for 2008 to 2012: First, the EDCF will increase its assistance volume in accordance with the government’s ODA expansion plan. In this regard, increased contributions from the governmental budget account are planned as well.

Second, in line with the principle of ‘focusing strategy’, the EDCF will select priority partner countries with high development cooperation prospects where aid effectiveness can be maximized with the limited financial resources. Based on the partner country’s development plan, the EDCF will provide goal-oriented and results-based development assistance and enhance aid effectiveness by staying in tune with the partner country’s development strategy and by harmonizing aid with other donor countries.

Third, the EDCF will be committed to global issues such as climate change and food crisis, and within this context, concentrate especially on sectors in which Korea has a comparative advantage. By carrying out these commitments, the EDCF will help Korea to bolster its position as an established member of the international community.

Fourth, the Knowledge Sharing Program, which was designed to share Korea’s development experience gained from its rapid economic growth and social development with developing nations, will be further developed to meet the socio-economic and development needs of developing nations, thereby providing a more customized set of contents. The EDCF’s loan programs will also become more synchronized with other grant assistance programs of various governmental agencies and ministries.

Fifth, the EDCF will increase its support for public-private partnership (PPP) projects to provide more customized services that meet the various demands and project-specific needs in which the private sector is believed to be relatively more experienced.

Meanwhile, to improve aid effectiveness, the EDCF will gradually increase the proportion of untied aid, which is currently 3%, with the aim of reaching the level of other advanced donors.
Finally, the plan for 2008-2012 also suggests that the EDCF strengthen its cooperative ties with the MDBs through co-financing, and work closely with bilateral aid agencies of developed countries through MOUs as well as joint research, studies, or evaluations. Expanding the CCSP and encouraging more Framework Arrangements that commit assistance three to four years in advance are also recommended to improve aid predictability.
 
Source: The Export-Import Bank of Korea. 2008. EDCF Your development partner 1987-2007, History book. Seoul.