official aid
In the 1960s, a five year plan was launched that focused on developing Korea’s economy, causing changes in the composition of development assistance Korea requested and received. Grant aid was reduced to US$1.76 billion in the 1960s while credit loans designed to build a solid economic foundation began pouring into Korea. Korea’s development strategy was to obtain concession foreign loans to be used for the construction of social overhead capital (SOC) and industrial development. In the 1970s, Korea built upon its economic foundation and achieved rapid economic growth by pursuing and export-oriented policy. At the same time, the funding sources for economic development change from official loans to private loans.
Based on its history as a recipient, Korea knows that aid does not always produce immediate economic growth. Korea achieved rapid growth in 1970s, based partially on international aid concentrated in 1950’s.
While still in an early stage of development itself, Korea began supporting other developing nations. In 1963, Korea’s first development cooperation program was launched with the support of the USAID in the form of international training programs. Next, in 1965, the Korean government began providing its own funding for the invitation trainees. Then, in 1967, the Ministry of Foreign Affairs allocated a budget of 900 million won (US$1.9 million) to provide Korean-made equipment. This was Korea’s first grant aid program.
In the 1980’s, Korea’s assistance programs were further expanded. The Korea Development Institute (KDI) established the International Development Exchange Program (IDEP), and the Ministry of Construction began to participate in international cooperation by inviting construction technicians and engineers from developing countries for training in Korea and by offering technical cooperation. In addition, the Ministry of Labor supported the establishment of a vocational training center in Indonesia. In 1987, Korea recorded a sizable balance of payments surplus, allowing the government to set aside a budget of 30 billion won (US$38.7) for the establishment of the Economic Development Cooperation Fund (EFDC). The EFDC’s purpose was to provide bilateral loans to assist developing countries.
Source: Lee, Ho-Chul. 1997. Korea's efforts in official development assistance. Seoul: Korea International Cooperation Agency.
