2014 Korea s Official Development Assistance White Paper. Opening a New Era of Happiness for All Humanity

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1 2014 Korea s Official Development Assistance White Paper Opening a New Era of Happiness for All Humanity

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3 Commemorative Message 3 Korea, Opening a New Era of Happiness for All Humanity Korea is the only country that transitioned from an ODA recipient to a major donor. With ODA totaling USD 12.7 billion received from the international community, Korea, which was one of the least developed countries after the Korean War, has joined the ranks of the top 10 industrial economies in the world within only two generations. Remembering the help it received in times of need, Korea is now returning the gratitude to the international society. In 2010, Korea joined the OECD DAC, a consultative body of advanced donor countries. Korea has been actively engaged in ODA activities with the CIDC at the center, chaired by the Prime Minister, based on the Framework Act. Korea provided over two trillion won in 2013 and is upgrading its efforts to share its experience and know-how in development. Korea will endeavor to open a new era of happiness for all humanity through the Win-Win ODA that reflects the needs of developing countries and promotes mutual benefits. The first Korean ODA White Paper contains our dream, hope, and future vision in the world. I hope that readers of this paper will warmly embrace the activities of the Korean government in the global community, and give their heartfelt support. Thank you very much. Chung Hongwon, Prime Minister, Chair of the Committee for International Development Cooperation

4 2014 Korea s Official Development Assistance White Paper

5 Overview of ODA C o n t e n t s 01 Overview of ODA 008 Section 1. What is ODA? 012 Section 2. Motivations and Objectives of ODA 014 Section 3. The Evolution of Global Discourse on ODA 02 The History of Korea s ODA 022 Section 1. History of Korea as an ODA Recipient 027 Section 2. History as a Donor 03 Korea s ODA System 036 Section 1. Evolution of the ODA System in Korea 038 Section 2. Coordination Mechanism of Korea s ODA 040 Section 3. Korea s ODA Implementation Process 04 Korea s ODA Policies and Strategies 050 Section 1. Historical Overview of Korea s ODA Policies 052 Section 2. Mission and Goals of Korea s ODA 054 Section 3. Policy and Strategies of Korea s ODA 05 ODA Volume and Allocation 080 Section 1. ODA Volume and Allocation of OECD DAC Countries 086 Section 2. ODA Volume and the Allocations of Korea 06 Korea s ODA and Public-Private Partnerships (PPPs) 096 Section 1. Definitions and Types of PPPs 099 Section 2. Public-Private Partnership (PPP) in Korea s ODA 07 Korea s ODA and International Cooperation 110 Section 1. Korea s Participation in International Discussions 117 Section 2. Cooperation with Donor Countries and International Organizations 128 Section 3. Cooperation with Partner Countries 08 Directions of Korea s ODA Development 132 Section 1. Accomplishments of Korea s ODA 137 Section 2. Major Issues and Future Plans of Korea s ODA

6 Official Development Assistance (ODA) refers to aid provided by the official sector such as the government s aid to developing countries for the purpose of promoting economic development and welfare. ODA includes technical assistance and funds provided to the governments and territories of developing countries or to international organizations. ODA was initiated after World War II, when many advanced industrialized countries began providing assistance for their former colonies to alleviate poverty, putting into practice the global community s collective spirit of cooperation. ODA began with declaration of the United Nations to enhance international co-operation in solving international problems of an economic, social, cultural, or humanitarian character in the UN Charter in 1945 and establishment of emergency relief organizations including the Food and Agriculture Organization (FAO), the World Health Organization (WHO) and the UN Children s Fund (UNICEF). ODA

7 01 Overview of ODA Section 1. What is ODA? Section 2. Motivations and Objectives of ODA Section 3. The Evolution of Global Discourse on ODA

8 8 Chapter 1. Overview of ODA Section 1. What is ODA? 1. International Development Cooperation and ODA Official Development Assistance (ODA) refers to aid provided by the official sector such as the government s aid to developing countries for the purpose of promoting economic development and social welfare. In its definition, ODA includes technical assistance and funds provided to the governments and territories of developing countries or to international organizations. This definition of ODA has been widely accepted since the Organization for Economic Cooperation and Development s Development Assistance Committee (OECD DAC) was launched in International development cooperation is a broader concept that encompasses ODA. It refers to the efforts and actions undertaken by the international community to protect basic human rights by tackling poverty in developing countries as well as by narrowing the development gaps that exist between developed and developing countries, and within the societies of developing countries. Poverty in developing countries is not an isolated issue of a certain developing country but rather caused by the overall political, economic, social, cultural, and historical factors in the international community, thereby requiring the entire global community s involvement in addressing it over the long run. In the past, countries tended to reduce Glossary The OECD DAC was established in 1961 as a committee of major donor countries, which aims to promote mutual cooperation, information sharing, and policy coordination among its members. It is one of the three major committees of the OECD including the Economic Policy Committee and the Trade Committee. Technical Assistance includes transfer of technology, knowledge, know-how, and production skills. Education and training, dispatch of experts, policy and skills consultation, support for survey and research, establishing funds for scientific research and technical development. Financing for Development includes ODA and other funds with the purpose of assisting development of developing countries. It includes other official funds such as export credit and investment finance, private funds such as foreign direct investment (FDI), and private donation of NGOs.

9 Overview of ODA 9 poverty through economic development. However, over recent years, consensus has formed that multilateral efforts of the international community are required to achieve not only economic growth but also overall social development. In line with these recent trends, poverty reduction efforts have been taking new approaches by focusing on the establishment of economic and social infrastructure, political stability, human resource development, and sustainable development, and seeking ways to make use of diverse development resources. Until recently, terms such as development assistance, foreign aid, and overseas aid were used interchangeably. However, more recently, international development cooperation has widely replaced other terms, as cooperation based on partnerships with developing countries began to be emphasized. 2. Key Conditions of ODA The OECD DAC proposed four specific criteria of ODA, all of which should be considered to be ODA. First, the provider of ODA should be an official public institution such as the central or local government, and its executing agencies. Second, the purpose of ODA should be primarily focused on the economic development and welfare of developing countries. In this context, assistance for military or commercial purposes is excluded from the definition. Third, ODA s recipients should be the countries listed on the DAC List of ODA Recipients or ODA-qualified international organizations (The List of ODA-eligible international organizations) as defined by the OECD DAC. Fourth, the grant element of a concessional loan should be at least 25%. 3. Classification of Types of ODA ODA can be classified into bilateral and multilateral aid, according to its delivery channels. Bilateral aid can be further divided into grants and concessional loans, depending on whether the partner country has to make the repayment or not. Grants refer to the transfer of cash, goods, and technology without any legal liabilities for repayment attached to the recipient, requiring no repayment on the ODA the partner country receives. By contrast, a concessional loan refers to a loan with more favorable conditions compared to a commercial loan for partner countries; and transfer of cash or goods that incur legal liabilities. The recipient has a legal obligation to repay the ODA given by the donor country.

10 10 :: DAC List of ODA Recipients ( ) Notes: * Territory Source: OECD-DAC 2013 No Least Developed Countries(49 countries) Other Low Income Countries (5 Countries) (per capita GNI $1,005 in 2010) Lower Middle Income Countries and Territories (40 countries)(per capita GNI $1,006-$3,975 in 2010) 1 Afghanistan Kenya Armenia Albania 2 Angola Korea, Dem. Rep. Belize Algeria 3 Bangladesh Kyrgyz Rep. Bolivia *Anguilla Upper Middle Income Countries and Territories (54 countries)(per capita GNI $3,976-$12,275 in 2010) 4 Benin Tajikistan Cameroon Antigua and Barbuda 5 Bhutan Zimbabwe Cape Verde Argentina 6 Burkina Faso Congo, Rep. Azerbaijan 7 Burundi Côte d'ivoire Belarus 8 Cambodia Egypt Bosnia and Herzegovina 9 Central African Rep. El Salvador Botswana 10 Chad Fiji Brazil 11 Comoros Georgia Chile 12 Congo, Dem. Rep. Ghana China 13 Djibouti Guatemala Colombia 14 Equatorial Guinea Guyana Cook Islands 15 Eritrea Honduras Costa Rica 16 Ethiopia India Cuba 17 Gambia Indonesia Dominica 18 Guinea Iraq Dominican Republic 19 Guinea-Bissau Kosovo Ecuador 20 Haiti Marshall Islands Former Yugoslav Republic of Macedonia 21 Kiribati Micronesia, Federated States Gabon 22 Laos Moldova Grenada 23 Lesotho Mongolia Iran 24 Liberia Morocco Jamaica 25 Madagascar Nicaragua Jordan 26 Malawi Nigeria Kazakhstan 27 Mali Pakistan Lebanon 28 Mauritania Papua New Guinea Libya 29 Mozambique Paraguay Malaysia 30 Myanmar Philippines Maldives 31 Nepal Sri Lanka Mauritius 32 Niger Swaziland Mexico 33 Rwanda Syria Montenegro 34 Samoa *Tokelau *Montserrat 35 São Tomé and Príncipe Tonga Namibia 36 Senegal Turkmenistan Nauru 37 Sierra Leone Ukraine Niue 38 Solomon Islands Uzbekistan Palau 39 Somalia Vietnam Panama 40 South Sudan West Bank and Gaza Strip Peru 41 Sudan Serbia 42 Tanzania Seychelles 43 Timor-Leste South Africa 44 Togo *St. Helena 45 Tuvalu St. Kitts-Nevis 46 Uganda St. Lucia 47 Vanuatu St. Vincent and Grenadines 48 Yemen Suriname 49 Zambia Thailand 50 Tunisia 51 Turkey 52 Uruguay 53 Venezuela 54 *Wallis and Futuna

11 Overview of ODA 11 The terms of Aid and Cooperation in this paper are interchangeable. :: Classification of Aid Bilateral Aid Multilateral Aid Types of Finance Grants: Transfers in cash or in kind for which no legal debt is incurred by the recipient Loans (Non-grant): Transfers in cash or in kind for which the recipient incurs legal debt Contributions and capital subscriptions to international organization Concessional loans to international organization Types of Aid Budget support Core contributions and pooled programs and funds Project-type interventions Experts and other technical assistance Scholarships and student costs in donor countries Debt relief Administrative costs not included elsewhere Other in-donor expenditures Multilateral aid consists of subscriptions to multilateral development banks (MDBs) such as the Asian Development Bank (ADB) and indirect assistance to partner countries through financial contributions for international organizations such as the UN to conduct activities to help partner countries achieve economic growth and social development, and to take part in cross-cutting issues on the environment, poverty, and gender inequality. ODA can also be classified into tied and untied aid, according to the bidding requirements such as limitation on competitive bidding. In tied aid, project bidding is available only to the suppliers of the donor country or a few specified countries, and puts limitations on the suppliers of goods and services. On the other hand, untied aid does not place limitations on the bidding qualifications, enabling the partner country to procure the required goods and services from practically any country around the world.

12 12 Section 2. Motivations and Objectives of ODA The primary purpose of ODA is to help partner countries achieve economic and social development and promote social welfare, but each donor country may have different motives for providing ODA. Donor countries have different national ideologies and objectives, and they also have different historical and cultural relationships with partner countries. Hence, the motives and objectives of ODA may not well be the same from country to country. However, in general terms, the main motives for providing ODA can be largely explained from political, diplomatic, economic, and humanitarian perspectives. Furthermore, interdependence brought about by globalization is increasingly perceived as another important motive for ODA. 1. Political and Diplomatic Motivation ODA is influenced by the nature of the relationship between donor and recipient countries such as military alliance, ideology, historical relations, security considerations, and international policies. During the Cold War era, the East and the West competitively provided ODA to spread their ideologies. In addition, traditional donors in Europe undertook development cooperation activities in their former colonies as compensation, and to continuously yield their influence on them. In recent years, ODA has been utilized to enhance diplomatic relations with emerging countries and to improve one s national standing and enhance national soft power in the international community. As donor countries are strategically making use of ODA in accordance with their diplomatic relations and international affairs policies, there is a great diversity in ODA recipient countries, types of ODA and support sectors. 2. Economic Motivation The economic motivation derives from the viewpoint that ODA can contribute to the economic growth of developing countries in the long run, which will, in turn, open up export markets in developing countries, eventually enabling the businesses of donor countries to enter into these overseas markets. Korea also began to recognize the importance of the economic motivation as exports to developing countries such as Southeast Asia take up a large share of its total exports. However, since the global community does not encourage providing ODA in pursuit of the

13 Overview of ODA 13 donor country s economic benefits, joint efforts by donor and developing countries to create win-win partnerships are required. 3. Humanitarian Motivation The humanitarian motivation of aid is based on the moral obligation that the international community should pursue the elimination of absolute poverty to realize the universal basic values of humankind (e.g., human rights). The humanitarian perspective recognizes the reality that poverty still widely persists while ODA has made remarkable development since the end of World War II. This perspective argues that it is a humanitarian obligation to realize the universal values of humankind by ensuring a minimum level of dignity for the people in developing countries living in poverty. This perspective has become widespread in the development cooperation sector since the Pearson Report was released in 1969, which upheld the concept of the world community. 4. Interdependent Global Community Motivation In today s world, where the mobility of people and information is greater than ever, and where interconnectedness between nations and regions is growing, an incident that occurs in one country or region has an increasingly greater impact on other nations and regions. There is growing awareness that not only transnational challenges such as environmental destruction, climate change, and diseases, but also poverty and political instability can be aggravated into global security issues such as terrorism and outbreaks of refugees. In this kind of changing environment, donor countries no longer simply view the partner countries as recipients of aid but have come to provide ODA by perceiving them as mutually dependent partners according to the international political dynamics and economic needs. Each country has diverse motivations and ODA systems based on its historical, political, social, and economic situations. In addition, each country s diverse motivations and objectives for ODA have affected how each country implements ODA. Despite these differences, the United Nations announced the Millennium Development Goals (MDGs) as a common goal for the global community to achieve, and it has urged the world to promote international development cooperation with the shared values of humanitarianism and global interdependence.

14 14 Section 3. The Evolution of Global Discourse on ODA ODA was initiated after World War II, when many advanced industrialized countries began providing assistance for their former colonies to alleviate poverty, putting into practice the global community s collective spirit of cooperation. However, during the Cold War era, aid was largely used as a tool by leading capitalist and communist countries to garner support from their bloc countries. As can be seen, ODA has continuously evolved over many decades due to changes in the global political and diplomatic dynamics s 1960s 1970s The Beginning of ODA Emergence of a New ODA Regime Rights-based Approach to ODA and Emergence of Development NGOs 2000s 1990s 1980s Golden Age of International Development Cooperation Diversification of ODA issues Decrease in ODA volume and Enhanced Capacity of Development NGOs s The Beginning of ODA The United Nations declares that it is important to achieve international co-operation in solving international problems of an economic, social, cultural, or humanitarian character in the UN Charter in The UN established emergency relief organizations including the Food and Agriculture Organization (FAO), the World Health Organization (WHO) and the UN Children s Fund (UNICEF). In the 1950s, these organizations began to provide emergency relief to newly-independent countries, which became a foundation for multilateral aid. On the other hand, bilateral aid began to expand as the United States and the Soviet Union competitively supported the post-war rehabilitation of Western Europe during the Cold War.

15 Overview of ODA s Emergence of a New ODA Regime At the 16th Session of the UN General Assembly in 1961, the United Nations designated the 1960s as the United Nations Development Decade. Through this announcement, the UN urged the advanced industrialized member countries to provide 1% of their GNP as ODA for developing countries, so that the latter might attain a 5% per annual growth rate. This heightened sense for urgency for the global community to act together to help solve the poverty of developing countries led to the establishment of the OECD DAC in It became the most important forum to raise awareness on the significance of ODA in the world, to standardize statistics on ODA in particular among its member countries, and to conduct research based on such ODA statistics for comparative analysis of donors. ODA was focused on large-scale industrial projects in the newly independent developing countries and assisted in establishing social infrastructure including roads and railroads. However, in spite of the optimism that industrialization and building infrastructure can alleviate poverty, many developing countries could not see much positive changes in their fight against poverty. 1970s Rights-based Approach to ODA and Emergence of Development NGOs The United Nations declared the 1970s as the Second United Nations Development Decade following the 1960s, and urged that donors should increase their ODA to GNI to 0.7% by the middle of the decade so as to achieve an average annual growth rate of economic growth of 6%, and 3.5% annual growth in GNP per capita in developing countries. However, the ODA volume did not reach such levels due to the two oil shocks and worldwide economic recession, and poverty worsened in many developing countries. With increasing criticism on growth-oriented foreign aid, the international community began to shift its attention toward a social developmental strategy that focuses on the basic rights of the people. The OECD DAC also began to produce policy recommendations and strategies with an emphasis on poverty reduction rather than on economic growth. In the 1970s, Non-Governmental Organizations (NGOs) started to come to the fore as important agents for international development cooperation. NGOs expanded their scope of work from emergency relief to technical training and rural development. The donor countries began to expand their ODA activities through NGOs.

16 s Decrease in ODA and Enhanced Capacity of Development NGOs Although the United Nations urged advanced industrialized countries to provide 0.7% of their GNI for ODA, they were actually freezing or even decreasing their ODA budget due to the continuing world-wide recession. Oil crises and the global economic recession have exacerbated the debt problem of developing countries, and various Structural Adjustment Programs (SAPs) were put in place in many developing countries in order to reduce the debt burden of the World Bank and IMF. These programs were developed based on neo-liberal economics, and were expected to enhance the domestic markets and bring about economic growth in developing countries. However, they failed to achieve intended outcomes, and were faced with criticisms that the programs were one-size fits all type of programs, and did not fully consider the varying domestic conditions of developing countries. Although donor countries reduced their ODA during this period, there was increasing global awareness about the need for emergency relief as major disasters and rampant poverty in developing countries were highlighted through the omnipresent global media. It was also observed that the capability of development NGOs greatly improved during this time. 1990s Diversification of ODA Issues The end of the Cold War provided a golden opportunity for the donors to focus on the needs of the recipients squarely in the center as the race between the capitalist and communist blocs ended. Many donor countries also began to realize that raising the public s awareness and participation in all corners of the society in developing countries including politics to businesses was critical for the long-term substantiality of development assistance to developing countries. Glossary Policy Coherence (for Development) refers to the coherence in a donor country of international development cooperation with other policies including trade, diplomacy, and environment, which is expected to improve the development effectiveness of international development cooperation. Good Governance has been recognized by donor countries as a critical element to achieve social and economic development in developing countries in the 1990s. This concept is understood in many ways including good public administration or good policies, but it generally indicates that a country should provide effective public policies and services, or establish an open and pluralistic society. It also contains the establishment of transparent and responsible central and local government, respect for human rights and freedom of speech, establishment of impartial and accessible judicial system, prevention of corruption, and control of excessive military expenditure.

17 Overview of ODA 17 In addition, rapid globalization brought to the fore new issues in development cooperation including environment, women, migration, labor, poverty, and health. The global community s efforts to understand the causes of and solutions to poverty also diversified. The discussion to raise both the efficiency and effectiveness of ODA became ever more important as the aid budget was decreasing in many donors due to the world-wide recession. The OECD DAC began to emphasize the significance of Policy Coherence for Development implying that aid policies can be more effective when they are linked with other policies such as financial and trade ones. The World Bank started a campaign on participatory development with a focus on recipients needs and participation in order to improve the development effectiveness, and it moved away from unilaterally imposed economic growth projects. The need to enhance good governance within developing countries received greater attention, and social development, sustainable development, ownership of partner countries, partnership between donors and recipients, and harmonization among donor countries became important new topics of the global discourse on development cooperation. 2000s Golden Age of International Development Cooperation A golden age of international development cooperation began in the 21st century as the United Nations presented the MDGs to the world. In September 2000, 189 heads of states adopted the United Nations Millennium Declaration at the 55th General Assembly of the United Nations (Millennium Summit) and announced the MDGs as the specific goals for implementation of the United Nations Millennium Declaration in June ERADICATE EXTREME POVERTY AND HUNGER achieve universal primary education promote gender equality and empower women reduce child mortality improve maternal health combat hiv/aids, malaria and other diseases ensure environmental sustainabilty global partnership for development

18 18 The MDGs are goals endorsed by the global community to fight against poverty together, and they are as follows: (1) eradicate extreme poverty and hunger; (2) achieve universal primary education; (3) promote gender equality and empower women; (4) Reduce child morality; (5) improve maternal health; (6) combat HIV/ AIDS, malaria and other diseases; (7) ensure environmental sustainability; and (8) global partnership for development. MDGs have their significance not only in suggesting specific implementation goals for development cooperation, but also in leading a worldwide consensus by the participation of various agencies including 189 member countries of the United Nations, international organizations and NGOs. With the establishment of common goals, the global community began to discuss the expansion of development financing and effective implementation strategies to achieve the MDGs. Multilateral development cooperation organizations and representatives of donors and partner countries held many follow-up meetings for aid effectiveness led by the OECD DAC. The First High Level Forum on Aid Effectiveness (HLF-1) in Rome adopted the Rome Declaration on Harmonization in Aid effectiveness became an important independent agenda through this meeting. At the Second High Level Forum (HLF-2) in 2005 (HLF-2) five key principles with twelve implementation indexes for the improvement of aid effectiveness were presented with the Paris Declaration on Aid Effectiveness. In 2008, the Fourth High Level Forum held in Accra assessed the implementation of Paris Declaration and adopted the Accra Agenda for Action (AAA) to accelerate the implementation process, which resulted in emphasizing the role of Civil Society Organizations (CSOs) as a major partner for international development cooperation. The Rome Declaration on Harmonization The global community promised to enhance aid effectiveness through the harmonization of development assistance policies and procedures, and thereby contribute to meeting the MDGs. The following three activities were announced as priority for achieving MDGs: First, we ensure that development assistance is delivered in accordance with partner country priorities and harmonization efforts are adapted to the country context. Second, we review and identify ways to amend, as appropriate, our individual institutions and countries policies, procedures, and practices to facilitate harmonization. Third, we implement progressively the good practice standards or principles in development assistance delivery and management, taking into account specific country circumstances. (OECD 2003)

19 Overview of ODA 19 The Paris Declaration on Aid Effectiveness Five core principles to enhance aid effectiveness in developmental assistance were presented in Paris. First, partner countries exercise effective leadership over their development policies, and strategies and co-ordinate development actions (ownership). Second, donors base their overall support on partner countries national development strategies, institutions and procedures (alignment). Third, donors actions are more harmonized, transparent and collectively effective (harmonization). Fourth, managing resources and improving decisionmaking for results (managing for results). Finally, donors and partners are accountable for development results (mutual accountability). The Accra Agenda for Action In 2008, the global community gathered in Accra, Ghana, and critically assessed the core principles of the Paris Declaration and set the agenda for accelerated advancement towards the Paris target. The Accra Agenda for Action addresses three major challenges to accelerate progress on aid effectiveness: First, developing country governments will engage with their parliaments and citizens in shaping their own development policies and donors will support them by making greater use of their systems to deliver aid (reinforcement of country ownership). Second, all development actors including members of the OECD DAC, other donor countries, private foundation, and civil society organization will work in more inclusive partnerships so that all our efforts have greater impact on reducing poverty (establishment of inclusive partnerships). Third, as for the aid execution, we should focus on the tangible results of development efforts to translate our actions into positive impacts on people s lives (achievement of development results). In 2011, the Fourth High Level Forum on Aid Effectiveness (HLF-4) held in Busan, Korea. In this forum, participants conducted the final monitoring on the principles and implementation plans of the Paris Declaration, seeking a new paradigm in development cooperation associated with changing circumstances of international development cooperation. The HLF-4 adopted the Busan Partnership for Effective Development Cooperation as an outcome document, which contains a new concept of global development partnership by embracing every development agencies. The Busan Partnership has expanded the existing framework of development cooperation from donors and partner countries to including emerging economies such as China, India and Brazil, private actors, and civil society. While earlier discussions on international development cooperation focused on the technical aspects of the aid delivery process, the HLF-4 diversified issues including development financing, means of cooperation, and harmonization with other policies, which in turn affect development in developing countries. The Global Partnership was officially launched in June 2012 as a follow-up implementation system of the Busan High Level Forum, which shifted the paradigm from government-oriented discussion on aid effectiveness to inclusive global partnerships for development including the parliament, civil society, and private firms.

20 Korea had a history of being an ODA recipient before its remarkable achievement. Korea began to provide aid in the 1960s when it was still receiving a lot of ODA from the international community. The first ODA activity as a donor was a training program for developing country officials in Since then, Korea s ODA activities have expanded to provide goods, funds and expertise to developing countries. ODA

21 02 The History of Korea s ODA Section 1. History of Korea as an ODA Recipient Section 2. History as a Donor

22 22 Chapter 2. The History of Korea s ODA Korea achieved rapid economic development in just 40 years since the devastation of the Korean War in In January 2010, Korea joined the Organization for Economic Co-operation and Development s (OECD) Development Assistance Committee (DAC), positioning itself as a donor of Official Development Assistance (ODA) in the international community. Before this remarkable achievement, Korea had a history of being an ODA recipient. It is an important characteristic of Korea s ODA that the country has been both a recipient and a donor, displaying how it transitioned from one of the most impoverished countries in the world to becoming an advanced industrial economy. Section 1. History of Korea as an ODA Recipient :: Korea s History as an ODA Recipient Purpose & Needs Form and Modalities Sectors Reliance on Assistance Major Donors Short-run relief Grants (100%) Relief Goods Education Land Reform Foreign Aid acted as the main source of foreign currency United States Defense Stability Reconstruction Grants (98.5%) Commodities Technical Cooperation Agriculture Goods& Food Aid Military Aid Consumer and Intermediate Goods Highly dependent on aid United States United Nations Transition Growth and Investment Concessional loans (70%) SOC Import Substitution Industrialization & Export-Oriented Industrialization Project Assistance and Intermediate Capital Goods The absolute and relative importance of assistance diminished United States Japan Excessive debt Balance between stability and growth Non-Concessional loans Sectoral Loans Removed from the IDA lending list Japan Germany IFIs Financial Crisis Bailout packages from the IMF Structural Adjustment Removed from the ODA recipient list IMF IBRD

23 The History of Korea s ODA 23 Korea received about USD 12.7 billion from 1945 to the late 1990s. Across the 1940s and 1950s, Korea was one of the least developed countries in the world. With the help of global community, Korea was able to lift itself out of poverty in the aftermath of the Korean War ( ). Korea s effective use of foreign aid has made the nation a good example of successful assistance. 1. Post-War Reconstruction and Grant Aid ( ) : Emergency Relief, and Assistance for Economic Stabilization and Military Defense The first international grant aid was given to Korea in 1945, when it was liberated from Japanese colonial rule. Since then until the late 1950s, this international aid played a key role in reconstructing Korea s economy. From 1945 to 1961, international aid provided by donor countries including the US reached USD 3 billion, representing mostly emergency relief such as food and medicine, commodity aid and investment in industrial infrastructure. Aid provided to Korea in the aftermath of the Korean War was mostly humanitarian assistance including emergency relief, which was almost the only source of foreign capital, since Korea was hardly considered a good destination for foreign direct investment. In the late 1950s, foreign aid to Korea was focused on military defense, stability and post-war reconstruction. Donors provided consumer goods to meet the basic needs of people such as food, clothing and shelter. In addition, aid in the form of intermediary goods was provided to develop light industries. In this period, aid The unloading for the United States food aid at Busan harbor in The United Nations Korean Reconstruction Agency (UNKRA) delivering relief supplies in <Source: National Archives of Korea>

24 24 played a key role in containing post-war inflation, and contributing to fiscal stability, laying the foundation for rapid economic development since the late 1960s. The proportion of grant aid to Korea provided for humanitarian purposes started to decrease in 1957 and gradually changed to concessional loans after Economic Development and Concessional Loans ( ) : Development Loans for Economic Assistance From the mid-1960s to the mid-1970s, Korea pro-actively implemented economic development policies. During this decade, foreign aid, which had been focused on emergency relief and strategic military aid in the 1950s, began to be provided in various modalities, such as technical cooperation and concessional loans. With the enactment of the Foreign Capital Inducement Promotion Act in January 1960, Korea established the legal and institutional framework to receive foreign capital. As a result, Korea began to receive foreign direct investment from countries other than the US, and donor countries began to be diversified. In the 1960s, the Korean government established its Five-Year Economic Development Plans, focusing on the development of basic industries, social infrastructure and exports. Most of the funds to implement the plans were covered by development loans. During the period of the Second Five-Year Economic Development Plans ( ), the foreign capital act was overhauled, whereby concessional loans to Korea greatly increased through diplomatic efforts. As a result of such investment efforts, Korea achieved a high annual growth rate of 9.7%. Korea Institute of Science and Technology (KIST) was founded in 1966 based on the agreement at the Korea-US summit in May 1965 to establish a research institute for industrial development. <Source: National Archives of Korea> Gyeongbu [Seoul-Busan] Expressway was built using domestic as well foreign loans. The construction began with a groundbreaking ceremony for the expressway between Seoul-Suwon in April <Source: National Archives of Korea>

25 The History of Korea s ODA 25 Pohang Iron and Steel Company (POSCO) was a state project, which was planned and implemented based on Korea s initiative. It is an example of how a development partner country can exercise ownership in its national development and overcome the lack of capital and technology. <Source: No Cut News> The inducement of foreign capital loans greatly increased during the period of the Third ( ) and the Fourth ( ) Five-Year Economic Development Plans to meet the rapidly growing demand for heavy and chemical industries. While the increased foreign capital loans laid the groundwork for continuous high growth in Korea, growth temporarily slowed in 1979 due to the Second Oil Shock and deteriorating trade conditions, resulting in a surge of foreign debt. Concerns over such debt burdens shifted the focus of loans towards overall industry restructuring and sector-wide loans, moving away from certain project-based forms of support. :: ODA flow to Korea 4,500 4,000 (USD million) 3,500 3,000 2,500 2,000 1,500 1, ~ ~ ~ ~1999 Grants Concessional Loans Multilateral Aid Bilateral Aid

26 26 Although the total volume of ODA decreased from the late 1970s to the 1980s, the proportion of non-concessional loans increased with donors diversifying into Japan, Germany, the International Bank for Reconstruction and Development (IBRD) and the Asian Development Bank (ADB). Korea continued its economic development and was able to graduate from the World Bank lending list in 1995 and from the OECD DAC List of ODA Recipients in 2000, marking the end of Korea s history as a recipient of aid. With the type of ODA differing from time to time, ODA contributed a great deal to the economic and social development of Korea. In particular, Korea made full use of concessional loans to make up for the lack of investment resources, when Korea was not yet an attractive market for foreign direct investment (FDI) and lacked needed resources. In addition, it is noteworthy that various economic stakeholders participated in the process of acquiring concessional loans, establishing and implementing strategies and plans for loans and repayment. This allowed various Korean stakeholders to learn how to self-manage their economy for long-term sustainable development. As a result, Korea not only successfully achieved economic growth in quantitative terms but also ultimately brought about qualitative changes to its economy by receiving technology transfers and improving its systems of production and employment.

27 The History of Korea s ODA 27 Section 2. History as a Donor Korea began to provide aid in the 1960s when it was still receiving a lot of ODA from the international community. The first ODA activity as a donor was a training program for developing country officials in Since then, Korea s ODA activities have expanded to provide goods, funds and expertise to developing countries. - The first training program to developing countries under the sponsorship of USAID 1963 Training Program in Korea 1967 Experts Dispatched - Invitation of trainees in cooperation with the UN and other international organizations - Aid in kind including equipment and materials 1977 Provision of Goods 1987 ECDF 1991 KOICA - Training program in cooperation with the UN and other international organizations Korea s ODA activities, up until the mid-1970s, were mainly funded by international organizations such as the UN. The volume of aid was small and only a few government ministries were sporadically involved. However, as Korea continued to achieve remarkable economic development, the demand from developing countries for ODA also grew rapidly. Thus, the Ministry of Foreign Affairs (MOFA) allocated KRW 900 million in 1977 for grant aid projects to provide Korean equip s Korea launched a training program for developing country officials in 1963 as part of the USAID s triangular cooperation program, according to the international community s growing interest in Korea s successful economic development. Since 1965, the Korean govern- Dispatched Medical Team to the National Hospital of Niamey in Niger in 1968 <Source: KOICA> ment has conducted training programs for developing country officials with its own funds, marking the first ODA program initiated by Korea. Korea started to dispatch experts in 1967, medical experts in 1968, and launched technical cooperation projects in 1969.

28 28 In response to the growing demand for Korea s ODA, the Korean government established ODA implementing agencies for grant aid and concessional loans, re s ment and machinery to developing countries. Ever since then the Korean government has continually expanded its ODA projects. Korea s ODA activities as a donor strengthened in the 1980s. In 1982, the Korea Development Institute (KDI) implemented the International Development Exchange Program (IDEP) to provide education on Korea s development experiences to government officials of developing countries. Starting in 1984, ODA activities expanded to other ministries. For example, the Ministry of Construction provided technical cooperation in construction, which is similar to the development feasibility studies of today, and the Ministry of Labor also implemented projects for establishing vocational training centers. By the late 1980s, Korea s global reputation was rising as Korea held major international sporting events such as the 1988 Seoul Summer Olympics, and its economic development continued. Thus, the international community expected Korea to begin playing a greater role. Korea also sought close cooperative relations with developing countries through ODA since Korea s high level of dependence on trade made it consider economic interests in export promotion in developing countries, as well as for its companies overseas investment opportunities. Glossary International Development Exchange Program (IDEP): IDEP is an international exchange and cooperation project which was started by the KDI in This program invites government officials of developing countries to learn about Korea s economic development experiences and to understand its economic development model. :: ODA Volume by Year ( ) (Net disbursement, USD million) Source: OECD-DAC Statistics Bilateral Aid Grants Loans Multilateral Aid Contributions Subscriptions Concessional loans _ 3. Total ODA/GNI (%)

29 The History of Korea s ODA 29 spectively, thus establishing a firm foundation for ODA. In 1987, the Ministry of Finance contributed KRW 30 billion to set up the Economic Development Cooperation Fund (EDCF) and entrusted the fund to the Export-Import Bank of Korea (Korea Eximbank). In 1991, the Korea International Cooperation Agency (KOICA) was founded to manage the grant aid under the MOFA. In 1989, the Korean Overseas Volunteer (KOV) program was established. In 1995, the Korean government initiated support programs for Korean development NGOs working in developing countries. In 1996, Korea became the 29th OECD member country as one of the first emerging economies to join and continued to expand the ODA volume commensurate to its growing global status until the late 1990s. :: ODA Volume by Year (1991~2000) (Net disbursement, USD million) Source: OECD-DAC Statistics Bilateral Aid Grants Loans Multilateral Aid Contributions Subscriptions Concessional loans Total ODA/GNI (%) Economic Development Cooperation Fund (EDCF) The EDCF was established in 1987 as a public policy fund in order to assist partner countries with industrialization and economic development, and to promote economic cooperation between Korea and the developing world. The ECDF mainly supports the building of economic and social infrastructure in developing countries through concessional loans with long-term repayment periods (24-40 years) and low interest rates ( %). The fund made commitments of KRW 9,060.1 billion for 294 ODA projects in 51 countries and disbursed KRW 3,821.5 billion from 1987 to It continually strives to meet the growing needs of the global community, with its annual new commitments exceeding KRW 1 trillion in 2008 and recording KRW trillion in Korea International Cooperation Agency (KOICA) KOICA was founded in 1991, as a government agency responsible for grant aid to support poverty eradication and socio-economic development in developing countries, enhancing international development cooperation as well as strengthening partnerships with developing countries. KOICA provides the following: project and program aid; development consulting, with the Development Experience Exchange Partnership (DEEP); capacity development programs; overseas volunteer programs such as World Friends Korea (WFK); public-private partnerships; multilateral cooperation; and humanitarian assistance. KOICA accounted for 47% of Korea s bilateral ODA budget and 79% of grant aid, and operated overseas offices in 44 countries.

30 s Korea has been active in global debates and processes for international development cooperation. In 2010, Korea became the 24th member of the OECD DAC, which is comprised of major donors and provides more than 80% of global ODA. In 2010, Korea hosted the G20 Seoul Summit and played a leading role in forging the Seoul Development Consensus. At the end of 2011, Korea hosted the HLF-4 at Busan and contributed to shaping a new global consensus to build a more effective development cooperation system. Korea has strengthened the framework for its development cooperation by publishing policy documents including the Improvement Plan in Korea s ODA Policies to Developing Countries (2003), the Comprehensive Plan for Improving Korea s ODA (2005), and the ODA Mid-Term Strategy (2007). In 2006, the Committee for International Development Cooperation (CIDC) was founded based on the Presidential decree to enhance consistency in ODA policies. The Korean government has also focused on securing new means of development financing, sustaining its increase of the ODA volume. In 2007, the Global Poverty Eradication Contribution Fund, through an air ticket solidarity levy, was introduced as an innovative ODA resource which collected contributions (KRW 1,000) from every traveler using international flights. This fund is used primarily for dealing with diseases and eradicating poverty in the least-developed countries. With the enforcement of the Framework Act and Presidential Decree on International Development Cooperation in 2010, Korea leveled up its ODA by designing various policies and strategies to improve the quality of its ODA. The Republic of Korea became the 24th member of the OECD DAC with unanimous approval by all DAC member states at a special session for Korea s accession to the DAC.

31 The History of Korea s ODA 31 Chair of the DAC, Eckhard Deutscher, is handing the letter of invitation for Korea s DAC membership to the Ambassador Kim Choong-soo, and OECD Secretary- General Angel Gurría and Deputy Minister for Multilateral and Global Affairs of MOFA Oh Joon are celebrating. The Framework Act aims to provide the legal foundation for policy coherence and aid effectiveness of Korea s ODA. It includes the main goals, definitions, mission and principles, as well as the implementation system, which emphasizes the role of the CIDC in its move toward an integrated system of ODA planning and implementation. With this act, Korea reaffirmed its commitment to improve the development effectiveness based on more systematic ODA policies and institutions within Korea, also expressing its strong will for international development cooperation with the global community. In 2012, Korea received the first official Peer Review since joining the OECD DAC, which allowed an opportunity to review its ODA implementation system and to further commit to improve its aid effectiveness. Glossary OECD DAC Peer Review: The OECD DAC conducts periodic reviews of the policies and programs of each member once every four or five years. Peer review reports provide comparative analysis on the member countries ODA policies, which helps share the experience on the effective implementation system and contributes to establishing consensus and rules among OECD DAC members. :: Major Activities and Characteristics of Korea as an ODA Donor Period 1960s 1970s 1980s Major Activities and Characteristics 1963 Conducting the first training program for trainees of developing countries under the USAID s aid plan and sponsorship Launching the training program for trainees of developing countries with Korea s own funds First dispatch of technical experts funded by the Korean government Launching the invitational training program for technicians Starting aid in kind by the Ministry of Foreign Affairs Launching the research cooperation program with KAIST Launching the International Development Exchange Program (IDEP) Launching the training program for construction workers by the Ministry of Construction (MOC) Start of Grant-type technical cooperation in the construction sector by the MOC. Launching projects for the establishment of vocational training centers by the MOC. Establishment of the Economic Development Cooperation Fund (EDCF). First commitment of EDCF Loan (Nigeria). Commissioning technology transfers to the Science Foundation by the Ministry of Science and Technology (MOST) and Ministry of Foreign Affairs (MOFA). Start of Grant-type technical cooperation for communications technology by the Ministry of Information and Communication.

32 32 Period 1980s Major Activities and Characteristics Announcement of the establishment of the Korean overseas volunteer program by the Korean government. First Loan Agreement of ECDF loan (Nigeria). First disbursement of EDCF loan. Start of Technical cooperation by the Economic Planning Board (EPB). First dispatch of Korean overseas volunteers by the Korean National Commission for UNESCO (4 Asian countries, 44 persons). Establishment of the Korea International Cooperation Agency (KOICA) First dispatch of KOICA volunteers (7 countries, 37 persons). 1990s 1992 Conclusion of Co-financing Arrangement with the World Bank Conclusion of Co-financing Arrangement with the Asian Development Bank (ADB) Enactment of legislation for the international development cooperation workers 1995 Opening of the International Cooperation Training Center (ICTC). Start of support for NGOs by KOICA. First commitment of a joint project between EDCF and KOICA (Vietnam) Joining the OECD Signing the MOU between Korea Eximbank and the KOICA. First dispatch of Youth Volunteers by the Ministry of Education First commitment of EDCF co-financing with Inter-American Development Bank (IDB) First dispatch of IT Volunteers by the Ministry of Information and Communication (MOIC) Launching the Special Assistance Program to Afghanistan by KOICA Launching the Special Assistance Program to Iraq by KOICA Launching the Knowledge Sharing Program (KSP) by the Ministry of Finance and Economy (MOFE). First dispatch of KOICA Senior volunteers. Start to support KOICA-NGO volunteers Conducting the reconstruction program for regions affected by the 2004 Tsunami disaster. Start to support the United Nations Volunteers (UNV) program Establishment of the Committee for International Development Cooperation (CIDC) under the Prime Minister s Office. Dispatch of Techno Peace Corps (TPC) by the Ministry of Science and Technology. 2000s 2007 Introduction of an air-ticket solidarity levy entitled "Global Poverty Eradication Contribution EDCF s annual new commitments exceed KRW 1 trillion Decision to join the OECD DAC (25th, November). Approving the Framework Act on International Development Cooperation (Framework Act). World Friends Korea (WFK) is founded, which is a consortium of all volunteers spread out in different government ministries. Becoming the 24th OECD DAC member. Promulgation of the Framework Act and the Presidential Decree. Implementing the Strategic Plan for International Development Cooperation (Strategic Plan). G20 Seoul Summit, where the Korean government played a key role in forging the Seoul Development Consensus. Forming the Inter-Agency Committee on Grants hosted by the MOFA First dispatch of World Friends Advisors and Senior Experts The Fourth High Level Forum (HLF-4) on Aid Effectiveness in Busan (November 29-December 1, 2011). Establishing the legal foundation for MOUs between MOFA and other Ministries to integrate development cooperation efforts (the first MOU was signed with the Ministry of Public Administration and Security on August 29, 2011). Holding the ODA Council (chaired by the Korean Ambassador) at Korean embassies in partner countries. Budget integration of governmental volunteer programs into World Friends Korea. Launch of the Busan Global Partnership for Effective Development Co-operation. Launch of the Development Alliance Korea (DAK). First OECD DAC Peer Review on Korea (July 11-15, 2012). Establishing Korean ODA Model. Developing the comprehensive plan to utilize recommendations from the OECD DAC Peer Review (August 2013). Adopting Activation Plan for Collaboration in ODA, and the Preview of the ODA Projects 2 years prior to the implementation. Launching ceremony of the Post-2015 Korea Forum (August 26, 2013). Completing formulation of Country Partnership Strategies (CPS) for all 26 priority development cooperation partner countries.

33 The History of Korea s ODA 33 World Friends Korea (WFK) Volunteers: A Better World through Sharing and Learning WFK Volunteers Program is a flagship citizen-participation program, which dispatches Korean nationals to partner countries for the purpose of sharing expertise, knowledge, and experience in order to assist with their social and economic development. The Korean government announced the establishment of the Korean overseas volunteer program in April 1989, and the Korean National Commission of UNESCO started this program by dispatching 44 volunteers to four Asian countries. Since then, the Korean overseas volunteers programs have mushroomed in many organizations including KOICA (which took over the UNESCO volunteer program); National IT Industry Promotion Agency (NIPA); National Research Foundation (NRF); Korean University Council for Social Service (KUCSS); Asia-Pacific Satellite Communication Council (APSCC); World Taekwondo Peace Corps; and National Information Society Agency (NIA). Most of them were unified under the single brand of the World Friends Korea (WFK) in Welcoming ceremony of the WFK in Through WFK Programs, volunteers participate in various activities in education, health, information & communication technology (ICT), and rural development sectors in order to share their expertise and knowledge with the aim of reducing poverty and bringing about sustainable development in developing countries. Between 2009 and 2013, a total of 20,000 volunteers were dispatched for two years to partner countries and provided technical support and engaged in cultural exchange programs. These volunteers helped improve the quality of life of the people in the partner countries, contributing toward a better understanding between Korea and the partner countries. :: The list of WFK Volunteering Programs Name of Program World Friends KOICA Volunteers World Friends Advisors / World Friends Korea Senior Experts World Friends Techno Peace Corp World Friends IT Volunteers World Friends Youth Volunteers World Friends Taekwondo Peace Corps Eligibility for Volunteers and Key Features Korean nationals over 20 years of age; two-year stays in developing countries. Retired persons (or soon to retire) with over 10 years experience and a Bachelor s degree in the needed field. Six months to 1 year stays in developing countries. Policy consultation and technology transfer in governmental ministries and public organizations in developing countries. Persons with experience in the science and technology field; Dispatched to academic research institute for 1 year. In charge of education and research cooperation in the science and technology field. In charge of IT education and joint project work Short term periods (1-3 months) to train IT personnel in developing countries, thus reducing the digital divide. University students; Short-term period. Education volunteers, special major-related volunteers (Robotics, IT, Medicine, etc.), and cultural exchanges for 2-3 weeks. Goal is to spread the spirit of Taekwondo, Korean language, and Korean Culture. Dispatched for shortand long-term appointments.

34 The coordination mechanism for ODA in Korea includes three levels, which are the overall policy-making and coordinating institution, supervising ministries and implementing agencies. The CIDC is the overall coordination committee chaired by the Prime Minister, and composed of 15 Ministers, the heads of KOICA and Korea Eximbank, respectively, and several civilian experts. The project implementation procedures are different in detail for each implementing agency, but they generally follow the process: preparation appraisal, approval, implementation, and post-project evaluation and management. ODA

35 03 Korea s ODA System Section 1. Evolution of the ODA System in Korea Section 2. Coordination Mechanism of Korea s ODA Section 3. Korea s ODA Implementation Process

36 36 Chapter 3. Korea s ODA System Section 1. Evolution of the ODA System in Korea With the establishment of the Economic Development Cooperation Fund (EDCF) in 1987 and the Korea International Cooperation Agency (KOICA) in 1991, the Korean government began to provide Official Development Assistance (ODA) more systematically. Additionally, the Korean government has worked hard to upgrade its ODA system to conduct more effective aid. Korea has provided ODA by concessional loans and grants; thus, it is important to coordinate loans and grants in order to improve aid effectiveness. Accordingly, Korea s ODA system has required a sound coordination mechanism between the policies and programs/projects in concessional loans and grants. In 2010, the Korean government established an integrated ODA policy-making and implementation system with the Committee for International Development Cooperation (CIDC) at the center based on the Framework Act. The evolutionary process of Korea s ODA system can be classified into three major periods: The first period is from 1987 to 2005, when the Korean government established a basic system as an ODA donor with the establishment of EDCF in 1987 and KOICA in However, the concessional loans and grants were implemented separately, and the government did not have a coordination mechanism nor a national-level approach or strategy for ODA.

37 Korea s ODA System 37 The second period is from 2006 to 2009, when the Korean government went through a transition to establish a coordination mechanism for concessional loans and grants. The CIDC was created based on the Comprehensive ODA Improvement Plan in November The CIDC was chaired by the Prime Minister, and its role was the overall control and coordination between concessional loans and grants. In January 2008, the Mid-Term ODA Strategy was designed for each partner country. However, the CIDC s legal foundation was weak, and there was no organizational structure to support the functions of the CIDC. Thus, the CIDC was not able to neither effectively coordinate overlapping projects nor manage the fragmentation between concessional loans and grants. The third period was after 2010, when the ODA coordination system was more firmly established with an organizational structure to support the functions of the CIDC. In January 2010, the Framework Act on International Development Cooperation (Framework Act) was promulgated, which provided the legal foundation for the CIDC and an organizational structure with the establishment of the ODA Policy Bureau in the Prime Minister s Office (PMO). While the ODA Policy Bureau was established to serve as a hardware for coordination, the Strategic Plan for the International Development Cooperation (Strategic Plan), which was announced in October 2010, provided the software for coordination between concessional loans and grants.

38 38 Section 2. Coordination Mechanism of Korea s ODA :: Korea s ODA Coordination Mechanism (2013) ODA policy making and coordinating instition Committee for International Development Cooperation (CIDC) (Chair: Prime Minister) Working Committee (Chair: Vice Minister, Prime Minister s Office) Evaluation (Chair: Deputy Minister for National Agenda) Office for Government Policy Coordination (Chair: Secretariat of the CIDC) Supervising Institutions Ministry of Strategy and Finance (Supervises concessional loans and multilateral aid to MDBs) Working level Coordination consultation Other Ministries Working level Coordination Ministry of Foreign Affairs (Supervises grant aid and multilateral aid to the UN and other international organizations) Implementing Agencies EDCF(Korea Eximbank) Working level Coordination KOICA The coordination mechanism for ODA in Korea includes three levels, which are the overall policy-making and coordinating institution, supervising ministries and implementing agencies. The CIDC is the overall coordination committee chaired by the Prime Minister, and composed of 15 Ministers, the heads of KOICA and Eximbank, and several civilian experts. The CIDC is the highest-level government body that deliberates and decides on key issues related to ODA and coordinates strategies and policies of ODA in order to facilitate a more effective and systematic implementation of ODA. The CIDC was established under the PMO according to the Presidential Decree in 2006, and was provided a legal status with the promulgation of the Framework Act in It operates two sub-committees, which are the Working Committee and the Sub-Committee for Evaluation. The PMO acts as the secretariat for the CIDC, and helps with the daily operation of the CIDC and its sub-committees by working on policies, evaluation, and project coordination of ODA. As supervising Ministries, the Ministry of Strategy and Finance (MOSF) and Ministry of Foreign Affairs (MOFA) supervise bilateral concessional loans and bilateral grants, respectively. These Ministries establish mid-term ODA Policies and annual implementation strategies, and monitor the implementation progress. In addition, the MOSF supervises multilateral cooperation with multilateral development banks

39 Korea s ODA System 39 (MDBs) for multilateral aid, while MOFA supervises multilateral cooperation with the UN and other international organizations. The MOSF operates EDCF by the mandate of the Fund Management Council (Chair: the Minister of the MOSF) and entrusts Korea Eximbank with the operation and management of the fund including the identification, implementation, and evaluation of projects. In addition, the MOSF has established the Inter-Agency EDCF Committee (Chair: the first Vice Minister of the MOSF) to enable information sharing regarding project identification and selection, as well as to promote coordination, across disparate Ministries and agencies, the public and private sectors, and concessional loans and grant programs, MOFA oversees and coordinates grants by formulating mid-term policies, annual plans, and regional and country-specific plans, and implements ODA projects through KOICA, which is the implementing agency of grants. MOFA plays a key role in coordinating overlapping projects in order to reduce redundancies and to improve effectiveness through the Inter-Agency Grants Committee (Chair: the 2nd Vice Minister of MOFA) and its sub-committees. MOFA acts as a channel for cooperation with other donors and international organizations (e.g., OECD, UN and etc.). ODA implementation agencies include the Korea Eximbank, which is in charge of EDCF operation and administration entrusted by the MOSF in accordance with the Economic Development Cooperation Fund Act, and KOICA is responsible for grants and technical cooperation based on the Korea International Cooperation Agency Act. EDCF provides concessional loans including development project loans, equipment loans, and public-private partnership loans, which aim to build infrastructure such as roads, water and sewage systems, and hospitals that serve as the foundation for the economic development of partner countries. On the other hand, KOICA operates the project aid, development consultation (DEEP), invitational training programs, World Friends Korea (WFK) volunteers and dispatch of Korean experts, and its five priority sectors include education, health, governance, agriculture and fisheries, and industry and energy. In addition, other government ministries, local governments, and public institutions also conduct various modalities of international development cooperation based on their expertise, in the form of project aid, invitational training program, the dispatch of volunteers and experts, and multilateral cooperation. With increasing participation by other government agencies, it has become ever more important to coordinate and supervise aid implementation.

40 40 Section 3. Korea s ODA Implementation Process 1. Policy-Making Process for ODA Korea s major ODA policies are decided at the CIDC, with the Prime Minister as the Chair of the CIDC. Based on the Framework Act (Article 7.2), the CIDC is composed of 25 members including the Prime Minister, Ministers of related ministries, heads of ODA implementing agencies, and civilian experts and holds meetings approximately three times a year. The CIDC deliberates and decides upon the framework plans and annual comprehensive implementation plans and evaluates the ODA policies and the progress of ODA projects based on the Framework Act. Major ODA policies are adopted at the CIDC meetings when the Chair and members of the CIDC submit policy items for deliberation, and over half of the present members agree on the policies. The Working Committee discusses the agenda in advance of the CIDC meeting, and pre-coordinates the policies among its 25 members, which include the Vice Minister of the PMO as the chair along with director-level senior officials in relevant ministries and civilian experts. The Sub-Committee for Evaluation deliberates on the evaluation items prior to the CIDC meeting. This Sub-Committee is composed of senior-level officials of the MOSF and MOFA, executives of EDCF and KOICA, and civilian experts chaired by the Deputy Minister for National Agenda of the PMO. The Sub-Committee for Evaluation appoints 9 civilian experts among 15 committee members in order to ensure professional expertise in evaluation. In addition, the Sub-Committee for Evaluation itself sometimes conducts evaluation on urgent items in need of improvement for the integrated implementation of ODA, and deliberates and approves evaluation results of ODA conducted by implementation agencies. The decisions of the Sub-Committee for Evaluation can be adopted as ODA policies through the discussion of the Working Committee and the CIDC. In summary, major ODA policies are decided through consensus with the airing of different opinions by relevant ministries, implementation agencies and civilian experts. The decisions adopted by the CIDC are legally-binding and monitored every six months.

41 Korea s ODA System 41 The CIDC held the seventeenth meeting in January 2014 since the first meeting in March 2, It adopted major ODA policies including the Mid-Term ODA Policy ( ), Annual ODA Implementation Plans, Country Partnership Strategies (CPS) for 26 priority partner countries, accession to the OECD DAC, the Strategic Plan for International Development Cooperation, Establishment Plan for the Korean ODA Model, and the Activation Plan for Collaboration in ODA among ministries. :: Results of the CIDC Meetings Meeting Meeting 1 (March 2, 2006) Meeting 2 (July 20, 2007) Meeting 3 (January 8, 2008) Meeting 4 (August 14, 2008) Meeting 5 (May 1, 2009) Meeting 6 (December 18, 2009) Agenda Approval of the Annual ODA Plan for 2006 Establishment of Korea s Humanitarian Assistance System Approval of the Whole-of-Government Strategy for Public Awareness of ODA Approval of the Formulation and Operation of the Working Committee of the CIDC Approval of the Mid-Term ODA Policy for Approval of the Annual ODA Plan for 2007 Establishment of the Roadmap to Join the OECD DAC Report of Successful Cases of ODA policies (Introduction of the Air-Ticket Solidarity Levy and Overseas Emergency Relief Act) Approval of the Annual ODA Plan for 2008 Establishment of the Mid-Term Country Assistance Strategy for Establishment of the Basic Plan for Sharing Korea s Development Experiences Establishment of the Roadmap for Untying Aid Establishment of the Plan for the Basic ODA Policy Documents Approval of the Roadmap to Join the OECD DAC Approval of the ODA Scaling-Up Plan Report of the Air-Ticket Solidarity Levy Operation Approval of the Annual ODA Plan for 2009 Approval of the ODA Advancement Plan Report of Hosting the 4th High-Level Forum on Aid Effectiveness in Korea for 2011 Approval of the Annual ODA Plan for 2010 Approval of the Whole-of-Government Strategy for Public Awareness of ODA Establishment of the Integrated Priority Partner Countries and Country Assistance Strategy Report of the Integrated ODA Evaluation System Promulgation of the Framework Act (July 2010) Meeting 7 (October 25, 2010) Meeting 8 (December 21, 2010) Meeting 9 (March 3, 2011) Meeting 10 (August 26, 2011) Approval of the Strategic Plan for International Development Cooperation Approval of the Formulation Guidelines for the Mid-Term ODA Policy Designation of the ODA Statistics Management Agency Establishment of the Plan for the Operating Regulation of the CIDC Approval of the Integrated ODA Evaluation Plan Report of a Trust Fund (Better Education for Africa's Rise Project) to the UNESCO Approval of the Mid-Term ODA Policy for Report of the Integrated Evaluation Result in 2010 Report of the Preparation for the High Level Forum on Aid Effectiveness in Busan, Korea Approval of the Annual ODA Plan for 2011 Approval of the Integrated Evaluation Plan for 2011 Report of Major Issues of ODA - (Appendix) ODA Project Models - (Appendix) Country Partnership Strategies for : Vietnam, Ghana, Solomon Islands Report of Comprehensive Evaluation Results and Future Plans for 2012 Major ODA Sectors Report of the preparation for the High-Level Forum on Aid Effectiveness in Busan, Korea

42 42 Meeting Meeting 11 (December 26, 2011) Meeting 12 (March 26, 2012) Meeting 13 (September 14, 2012) Meeting 14 (December 28, 2013) Meeting 15 (February 15, 2013) Meeting 16 (August 23, 2013) Meeting 17 (January 13, 2014) Agenda Approval of the Annual ODA Plan for 2012 Establishment of the Coordinating Mechanism to Improve Whole-of-Government Approach among ODA Agencies Report of Monitoring of the Trust Funds with International Organizations Report of the Result of the High-Level Forum on Aid Effectiveness in Busan, Korea Report of the Preparation for the OECD DAC Peer Review in 2012 Report of the Strategy to Improve the Knowledge Sharing Program (KSP) Report of the Integrated Evaluation Results in 2011 and Approval of Integrated Evaluation Plan for 2012 Approval of the Establishment of Country Partnership Strategies for 2012 Approval of the Country Partnership Strategy for Bolivia Approval of Establishment Plan of the Korean ODA Model Establishment of the Action Plan of Korean ODA Approval of the Country Partnership Strategies for Sri Lanka, Indonesia, Azerbaijan, Ethiopia, and the Democratic Republic of Congo Report of the Follow-Up Plan for the Global Partnership for Effective Development Cooperation Approval of the Annual ODA Plan for 2013 Report of the Integrated Evaluation Result in 2012 Approval of the Country Partnership Strategies for 5 Countries including Bangladesh Report of Plans for Applying the Evaluation Results of the OECD DAC Peer Review Report of the Integrated Evaluation Results in 2012 and Approval of Integrated Evaluation Plan for 2013 Approval of Activation Plan for Collaboration in ODA Application Plan for the OECD DAC Peer Review Results and Recommendations Approval of the Country Partnership Strategies (CPS) for 12 Countries including Laos Report of the Major ODA Issues Approval of the Annual ODA Implementation Plan for 2014 Report of the Integrated Evaluation Result in 2013 Enactment and Amendment of Regulations on the Evaluation of International Development Cooperation Report of the Implementation of Busan Global Partnership and Related Future Plans 2. Process of Coordination for ODA Projects Although the CIDC decides the major policy directions of ODA, ODA projects are implemented by implementing agencies. Therefore, it is important for more effective aid that each implementing agency should conduct ODA projects according to the policy directions decided at the CIDC. The PMO and the Ministries supervising concessional loans and grants coordinate the project planning and implementation. According to the Framework Act, ODA projects are coordinated as part of the process for preparing the Annual Implementation Plan. The coordinated projects are presented to the CIDC for final approval before they are included on the list of ODA projects for the following year. In the coordination process, supervising Ministries and PMO eliminate projects that are not in line with Korea s overall ODA policy directions, adjust projects that may be overlapping to prevent waste of budget, and recommend implementing

43 Korea s ODA System 43 agencies link projects that have the potential for synergy if implemented simultaneously. In order for these decisions and recommendations to be taken, ODA implementing agencies must submit their ODA implementation plans of the following year to their supervising Ministries in charge of concessional loans and grants, respectively. The supervising Ministries then preliminarily screen the next year s project lists and eliminate projects that are not in line with the ODA policy directions via consultation with relevant agencies. The results of this deliberation are submitted to the PMO, and the PMO confirms the final list of ODA projects to be submitted and approved by the CIDC according to the feasibility of coordination and linkage between grant and loan projects and takes a final decision on projects that are deemed controversial at the initial stage of the coordination. This whole process is finished by the end of June when the Ministries should submit their draft budget to the MOSF. Each ODA implementing agency prepares a budget for the following year s ODA projects, which have been included in the final list of ODA projects for the following year, and submits it to the budget office of the MOSF. :: Coordination Procedure for ODA Project Planning 1. Notifying the Guideline to Draft Annual Implementation Plans to Implementing Agencies February: Supervising Ministry Implementing Agencies 2. Establishing and Submitting the Implementation Plans April: Implementing Agencies Supervising Ministries 3. Holding the Inter-Agency Committee Meeting for Grants April- May: MOFA 4. Holding a Coordination Meeting for Concessional Loans and Grants May-June: PMO 5. Notifying Coordination Results Early June: PMO Implementing Agencies 6. Submitting Budget Request based on the Coordination Results End of June: Each Ministry MOSF 7. Budget Allocation and Deliberation (The Government Proposal) July - October: MOSF 8. Submitting the Implementation Plan based on the allocated Budget November: Implementing Agencies 9. Submitting Implementation Plans for Grants and Loans November: Supervising Ministries 10. Preparation the Annual Implementation Plan November - December: PMO 11. Deliberation and Approval of the Annual Implementation Plan December: CIDC * The coordination procedure of project planning

44 44 3. ODA Implementation Procedures by Aid Types The project implementation procedures are different in detail for each implementing agency, but they generally follow the process: preparation to appraisal to approval to implementation to Post-Project evaluation and management. The implementation procedures of loans and grants or multilateral cooperation are introduced below in detail. :: Coordination Procedure for ODA Project Planning Preparation Appraisal Approval Implementation Post-Project Evaluation and Establishment of ODA Strategies for each countries Project Identification Feasibility Study for an ODA Project Consideration of the Study Result Approval of the Support for the ODA Project All Stages of the Project Implementation Process including Procurement and Disbursement Management Post-Project Evaluation and Feedback 1) Implementation Procedure for Concessional Loans Concessional loans are implemented with the following process: project identification &preparation => loan request => project appraisal => Korean government s decision on EDCF loans => loan agreement => project implementation => project completion and evaluation. In the project identification and preparation stage, the concessional loan projects, which are closely aligned with the partner country s development plans and strategies, are selected as priority projects. Candidate projects are selected through regular policy dialogue with the partner country government. The prospective borrower country s government should makes an official loan request to the Korean government by submitting the required documents including an application form, feasibility study, and implementation plans to the Korean embassy in that country. Upon receipt, the Korean embassy forwards the request to MOSF, and the MOSF then requests project appraisal by Korea Eximbank. Based on the results of the appraisal, the MOSF makes a final decision on the loan request and notifies the borrowing country through MOFA. Then, the Korean government and the borrowing country s government concludes an Agreement (A/G) which outlines the basic framework of the EDCF loan and an Arrangement (A/R) stating the basic financing terms and conditions for each individual project. Finally, the contract becomes effective when Korea Eximbank and the partner country government sign a Loan Agreement (L/A).

45 Korea s ODA System 45 Conditions of the Concessional Loans The Korean government classifies partner countries into five groups according to income levels, and differentiates the interest rate and repayment period among the groups. Every year, the Korean government adjusts its classification in line with the income classification of countries made by the World Bank. The conditions for the concessional loans are adjusted according to the above classifications as follows: 1) Interest Rate: 0.01%-2.5% per annum; 2) Repayment Period: Up to 40 years; 3) Grace Period: Less than 15 Years; 4) Repayment of Principal: Bi-Annual Installments; and 5) Interest Payment: Every 6 Month (the first month s interest is waived). The Korea Eximbank strongly urges the borrower to hire consultants during project implementation, which will enable a more effective project preparation, implementation and efficient usage of the budget of the concessional loan projects. The consultants are to be hired in accordance with project implementation experience, adequacy of implementation method and plan, sufficient human resources to implement the project, sound financial condition, and technological condition. The implementation of a project is monitored by regularly requiring the partner government to submit a progress report from the time of initial loan disbursement to project completion. The report covers such items as the project implementation status, execution schedule and actual execution of funds, and the implementation schedule. Upon project completion, the partner country government submits a Project Completion Report to Korea Eximbank as required by the contract and Korea Eximbank conducts a completion evaluation. Two years after the completion evaluation, Korea Eximbank performs an ex-post evaluation to examine whether the project has successfully produced the anticipated outcomes, and to assess the socio-economic impact of the project. In addition, Korea Eximbank provides feedback based on the results of the evaluations and checks the implementation of the feedback recommendations. 2) Implementation Procedure of Grants Grant projects are implemented with the following process: project identification => acceptance of an official project request => feasibility study => selection of candidate projects => confirmation of project details => consultation between the Korean government and the partner country government => selection of implementing organization and project implementation => project evaluation => ex-post management.

46 46 The Korean government discusses the identification of new grant projects with the partner country government based on the Korean government s the Mid-Term ODA Policies and the CPS. Priority is given to projects that directly target poverty reduction of the partner country, and that closely align with the partner country s national development plan. The partner country submits an official request about the projects selected in the consultation between the two governments through diplomatic channels. The implementing agency received the request through MOFA reviews the request with feasibility study including dispatching experts to the field. The agency specifies project details based on the study result and then assesses economic, technical, financial and environmental aspects of the project. Those candidate projects prepared by each implementing agencies and ministries are examined through the annual Inter-Agency Grants Committee chaired by MOFA to enhance aid effectiveness and to improve the financial efficiency of the ODA budget. The committee adjusts projects to avoid duplication of geographical location and contents. The grant projects that were examined and approved at the Inter-Agency Grants Committee are further discussed based on the consultation with the partner country government, and the final project contents are recorded as part of the Record of Discussions (R/D). The two governments sign the R/D and the framework agreement for grants. For the implementation of the project, the implementing agency selects a project management consultant and relevant companies according to the project details and monitors their activities. The implementing agency conducts interim, end-of-project (within one year of the completion of the project) and ex-post evaluation (more than one year after the completion of the project) on project planning, implementation, and outcome. This evaluation scheme allows the Korean government to assess the socio-economic impact of the project, and to effectively utilize the evaluation results for future projects. In addition, ex-post management ensures long-term effectiveness of aid projects.

47 Korea s ODA System 47 3) Implementation Procedure of Multilateral Aid Multilateral aid of the Korean government is implemented by MOSF and MOFA. MOSF supervises cooperation with the Multilateral Development Banks (MDBs) including the World Bank and the Asia Development Bank. Korea Eximbank is responsible for appraisals of projects that are supported by the trust fund of the Korean government. The procedure of multilateral cooperation with MDBs is as follows: project identification (MDBs/partner country government) => proposal to MOSF (MDBs) => appraisal (Korea Eximbank) => approval (MOSF) => signing of the contract and project implementation (Implemented by the Partner Developing Country). Once partner countries or MDBs identify a project which is suitable to the trust fund, both parties have a consultation, and then the MDBs submit an official request to MOSF after an internal approval process. After the Korea Eximbank examines the project taking into account the suitability of the purpose, feasibility, and expected effects of the project in a comprehensive manner, MOSF approves the project based on the appraisal result of the Korea Eximbank. MDBs hire consultants through an international competitive bidding, and then the developing partner country implements the project. On the other hand, MOFA handles multilateral cooperation with the United Nations and other international organizations. The procedure for project implementation is as follows: project identification (Korean overseas embassies, the Multilateral organizations or the Korean government ministries) => feasibility study by the relevant ministry or implementing agency => project coordination (Multilateral Assistance Sub-Committee) => approval (CIDC) => implementation. Projects are identified by the submission of a proposal by the Korean government, or direct requests of multilateral organizations, and the relevant implementing agency conducts a feasibility study. When the feasibility study results are positive, the Multilateral Assistance Sub-Committee of the Inter-Agency Grants Committee, which is chaired by MOFA, engages in a coordination process. Once this coordination process is completed, the CIDC finally approves the project, which then starts in the following year. The implementation agency conducts an evaluation of the project after completion.

48 The Korean government promotes its international development cooperation by respecting for global norms and standards in international development cooperation and by sharing Korea s successful development experiences with developing countries. The Korean government will continue to increase its ODA volume and ODA/GNI ratio by 2015 and improve its ODA system to help Korea s partner countries to attain poverty reduction and capacity building. The CIDC recently agreed that the main policy direction of Korea s ODA should reflect the needs of developing countries and at the same time offer development cooperation based on Korea s comparative advantage and strengths, thereby providing a Win-Win ODA. ODA

49 04 Korea s ODA Policies and Strategies Section 1. Historical Overview of Korea s ODA Policies Section 2. Mission and Goals of Korea s ODA Section 3. Policy and Strategies of Korea s ODA

50 50 Chapter 4. Korea s ODA Policies and Strategies Section 1. Historical Overview of Korea s ODA Policies Since Korea s global stature rose with its accession to the Organization for Economic Co-operation and Development (OECD) in 1996 and with its GDP per capita reaching over USD 10,000 in the 1990s, its Official Development Assistance (ODA) volume has grown, and more ministries and public agencies have been showing interest in ODA. The Korean government launched the Comprehensive Plan for Improving Korean s ODA, which is the first document of the Korean government on the policy directions and strategies for ODA in November This plan analyzed the problems of Korea s aid policies and suggested measures to improve Korea s ODA system by enacting the Framework Act and establishing a policy-making and coordination committee for an integrated ODA system. The plan also reviewed the possibility of increasing the volume of ODA and of joining the OECD DAC. Based on this plan, the Korean government established the Committee for International Development Cooperation (CIDC) chaired by the Prime Minister in January 2006, promulgated the Framework Act on International Development Cooperation (Framework Act) (enacted in July 2010), and became a member of the OECD DAC in 2010, after the OECD DAC Special Review in In October 2010, the Korean government established the Strategic Plan for International Development Cooperation (Strategic Plan) to share the vision of international development cooperation stipulated in the Framework Act and to present medium and long-term ODA goals and measures to enhance aid effectiveness. Based on this Strategic Plan, Ministry of Strategy and Finance (MOSF) and Ministry of Foreign Affairs (MOFA), which are the Supervising Ministries, established the first Mid-Term ODA Policy for in December This policy includes five-year mid-term plans for each channel. It contains plans and strategies for resource distribution by region, for untying aid, for the decentralization of ODA

51 Korea s ODA Policies and Strategies 51 implementation, for public-private partnerships and cooperation between concessional loans and grants. Finally, the Country Partnership Strategies (CPS) for all 26 priority partner countries was established to promote integrated approach for concessional loans and grants. In 2012, the Establishment Plan for Korean ODA Model was prepared as a practical strategy for the Strategic Plan. There were 159 programs classified into economy, society, administration and governance, and the plan included cross-cutting issues based on Korea s 60 years of development experience, contributing to the self-reliance and sustainable development of developing countries. This plan also suggested implementation strategies including strategic concentration, field-based and performance-oriented ODA, participation and cooperation, and continuous expansion of ODA infrastructure, which in turn helped establish a policy identity of Korea s ODA. In 2013, the Activation Plan for Collaboration in ODA was established, which promoted communication and cooperation between ODA agencies as well as linkages between grants and concessional loans. This plan articulates the participation and cooperation strategy, which is one of Korea s ODA implementation strategies, including diverse measures to improve information sharing and cooperation between agencies throughout the implementation process. Based on this Activation Plan, a preview procedure (two years before project starts) is introduced to improve the ODA implementation. These efforts can be seen as an attempt to enhance ODA effectiveness by strengthening the integration of the implementation system between grants and concessional loans. Korea s ODA policies and strategies have been developed to overcome the ineffectiveness of ODA caused by the participation of diverse agencies, and to enhance cooperation and harmonization between related agencies. As a result, these policies and strategies take advantage of Korea s development experience and the respective advantage of grants and concessional loans.

52 52 Section 2. Mission and Goals of Korea s ODA The mission and goals of Korea s ODA policies can be found in the Framework Act. The Act (Article 3) describes that the basic mission of international development cooperation is to reduce poverty in developing countries, improve the human rights of women and children, achieve gender equality, realize sustainable development and humanitarianism, promote economic cooperation, and pursue peace and prosperity of the international community. This mission forms the basic foundation of Korea s ODA, which guides the decision-making process of the ODA policy and its implementation. The Framework Act proposes realizing Korea s ODA goals as follows (Article 3.2): 1) Achieve poverty reduction and improve the quality of life of people in developing countries; 2) Improve the institution and legal framework for development in developing countries; 3) Foster friendly and cooperative relations and mutual exchange between Korea and developing countries; and 4) Contribute to solving global problems (Article 3.2). In addition, the Act provides the principles for ODA as follows (Article 4.1): 1) respect the principles of the UN Charter; 2) support partner countries self-help efforts and capabilities; 3)value the necessity of partner countries development ; 4) expand opportunities to share development experiences; and 5) promote harmony and cooperation and consider the foreign policy of the Korean government. The Framework Act emphasizes the importance of aid effectiveness and its related principals by including them in the Framework Act (Article 4.2). This article stipulates that Korea should endeavor to maximize aid effectiveness through the coherent strategy and implementation of international development cooperation with better coordination between bilateral and multilateral aid, as well as between grants and concessional loans (Article 4.2).

53 Korea s ODA Policies and Strategies 53 :: Mission, Goals, and Principles of Korea s ODA Mission Poverty reduction in developing countries Improvement of human rights of women and children in developing countries Gender equality Sustainable development and humanitarianism Promotion of economic cooperation with developing countries Peace and prosperity of the international community Goals Achieve poverty reduction and improve the quality of life of people in developing countries Improve the institution and legal framework for development in developing countries Foster friendly and cooperative relations and mutual exchange between Korea and developing countries Contribute to solving global problems Principles Respect the principles of the UN Charter Support partner countries self-help efforts and capabilities Value the necessity of partner country s development Expand opportunities to share development experiences Promote harmony and cooperation Consider the foreign policy of the Korean government

54 54 Section 3. Policy and Strategies of Korea s ODA 1. Basic Direction The Korean government promotes its international development cooperation by respecting global norms and standards and by sharing Korea s successful development experiences with developing countries. Thus, it enacted the Framework Act and the Presidential Decree, and established the Strategic Plan, providing the legal basis and basic direction of its ODA policies. The Strategic Plan for International Development Cooperation Hope for aid-recipient countries, a model for the global community, and national pride to the Korean people Combination of partner country s development needs and Korea s strength ds and development demand and Korean traits Consistent implementation based on country strategy Aid provided with humility and respect Basic framework for international development cooperation OECD DAC member / ODA volume and ratio / Integrated ODA system Three main strategies for enhancing international development cooperation Elaborating Development Cooperation Contents Category of Development Experiences - Organization of development experiences - Policy consulting Category of Project Technology - Competitive technology (ICT, Agriculture etc.) - Project and technical cooperation Category of Emotive Experiences - Collecting and sharing touching cases of ODA implementation Improving the ODA Implementation System Policy & Strategy - Regional strategies - Priority partner countries and integrated CAS Project Implementation - Project identification and selection - Enhancing effectiveness of aid projects - Strengthening cooperation with partner countries Evaluation Section - Integrated evaluation system - Result-based evaluation result - Feedback Strengthening Korea s Participation in International Activities Strengthening Korea s Participation in International Activities - Multilateral ODA strategy - Cooperation with other donor countries Increasing participation in international organizations - More staff in international organizations - Participation in ODA procurement market More staff in international organizations - Participation in international standard-setting process Strengthening humanitarian assistance Selecting an aid-orphan country and creating a best practice with an comprehensive approach Expansion of the Basis for International Development Cooperation Obtaining a National Consensus / Involving the Public in Development Cooperation / Developing Human Resource for ODA

55 Korea s ODA Policies and Strategies 55 The Korean government will continue to increase its ODA volume and ODA/GNI ratio by 2015 and improve its ODA system to help Korea s partner countries attain poverty reduction and capacity building. The Korean government suggests the following three main strategies for ODA system improvement: 1) Elaborate Development Cooperation Contents to apply Korea s development experience to its ODA contents; 2) Improve the ODA Implementation System to enhance ODA effectiveness; and 3) Strengthen Korea s Participation in International Activities, which includes participating actively in global norm creation in international development cooperation and enhancing humanitarian assistance commensurate with Korea s global standing. The CIDC recently agreed that the main policy direction of Korea s ODA should reflect the needs of developing countries and at the same time offer development cooperation based on Korea s comparative advantage and strengths, thereby providing a Win-Win ODA. :: Major ODA Policy Documents in Korea Title Date Contents Framework Act on International Development Cooperation (Framework Act) Strategic Plan for International Development Cooperation (Strategic Plan) Mid-term ODA Policy Country Partnership Strategies(CPS) Establishment Plan for Korean ODA Model January 2010 October 2010 December September 2012 Mission - Poverty reduction in developing countries, - Improvement of human rights of women and children in developing countries - Gender equality, - Sustainable development - Humanitarianism, - Promotion of economic cooperation with developing countries - Peace and prosperity of the international community ODA system - Enhance aid effectiveness through a integrated system with the CIDC as the center to coordinate between concessional loans and grants, and bilateral and multilateral aid Goals: Increase the ODA/GNI ratio, concessional loan-to-grant ratio, and the ratio of untied ODA by 2015 Three main strategies for improving international development cooperation: contents development, effective restructuring of the ODA system, and strengthening participation in international activities Mid-Term strategies to realize the Strategic Plan by grants with UN and other international organizations and concessional loans with MDBs Grants: Expand policy consulting projects, increase the proportion of project aid, improve invitational training programs, establish an integrated management system for volunteer programs, expand the budget for emergency relief and increase untied aid Concessional Loans: Increase support to Green Growth in order to build resilience and growth capability for climate change, establish Public-Private Partnership (PPP) in combination with KSP, introduce program-based concessional loans and increase untied aid Establish integrated country partnership strategies to improve ODA implementation Complete the CPS for all 26 priority partner countries by 2013, starting in 2011 with Vietnam, Ghana, and Solomon Islands Korea s development experiences, which provide inspiration for developing countries self-reliant and sustainable development, are articulated into 159 programs Offer ODA implementation principles (Effectiveness, Harmonization, Sincerity, Reciprocity) and ODA implementation strategies (strategic concentration, field and result-based ODA, participation and cooperation, expansion of ODA infrastructure)

56 56 Title Date Contents Plans to Improve the Effectiveness of ODA through August 2013 Improve the process for ODA implementation and enhance the basis for cooperation among ministries and implementation agencies 2. ODA Volume and Allocation Korea has been striving to achieve the Millennium Development Goals (MDGs) and alleviate poverty, in its role as a responsible member of the global community. Korea expands the ODA volume commensurate with its global economic standing considering the global norms and expectations as well as its domestic conditions. The Park Geun-hye administration announced that one of its major tasks is to continue increase in ODA volume and to conduct exemplary and integrated development cooperation, with a commitment to increase Korea s ODA to 0.25% of GNI. The ODA volume in 2014 is about KRW 2,230 billion, about 2.2billion USD (0.16% of GNI), and it would reach KRW 3,500 billion, about 3.5 billion USD, if Korea s ODA reaches its goal of 0.25% of GNI. Korea commits to expand its ODA volume in spite of difficult economic circumstances due to the global financial crisis. By 2015, Korea s ODA ratio by channel will be sustained at 70:30 for bilateral and multilateral aid, and at 40:60 for concessional loans and grants based on net disbursement. Korea s bilateral vs. multilateral aid has been maintained at 70:30 since 2000, which is similar to the OECD DAC member average. Meanwhile, the proportion of concessional loans was slightly larger than the global average, and it reached 64% in Thus, the Korean government has continued to increase grants vis-àvis concessional loans since 2003 and is recently maintaining approximately 40:60. Korea plans to maintain a strong concentration in Asia with an increasing share for Africa. Korea has focused its ODA on Asia due to geographical proximity and cultural familiarity. The Korean government will maintain around 55% of bilateral ODA for Asia until 2015, and will provide ODA based on the level of poverty and development, and on ability to repay the loan of each partner country. In Africa, the Korean government will enhance humanitarian aid in order to reduce poverty, to enhance cooperation for self-reliant development and to build the foundation for economic growth. By 2015, the Korean government plans to allocate 20% of bi-lateral ODA to Africa and to expand cooperation with heavily indebted poor

57 Korea s ODA Policies and Strategies 57 countries. In addition, Korea will provide 10% of bi-lateral ODA to Central and South America given their strong interest in Korea s development experience. Korea will also provide 10% of its ODA to the Middle East and CIS (Commonwealth of Independent States) by 2015, and will continue to expand its support for fragile states and provide tailored ODA to meet the needs of its priority partner countries. Lastly, about 5% of bilateral aid will be allocated to Oceania and other countries, which are designated as under-aided countries. These nations will be provided with expanded humanitarian assistance, Korea s development experiences, technical cooperation, and infrastructure as a comprehensive development. 3. Cooperation Strategies by Type Korea provides mid-term strategies to implement the Strategic Plan by grants and multilateral cooperation with UN and other international organizations, and concessional loans and multilateral cooperation with MDBs. This policy document includes the objectives, ODA volume and implementation plans, and is subject to revision every five years. 1) Mid-term Strategy for Concessional Loans The importance of establishing an economic foundation to resolve the root cause of poverty has been raised since it was discussed at the G20 Seoul Summit. Thus, the Korean government set goals of its concessional loans as contributing to promoting economic growth and to activating private sectors in developing countries and establishing cooperative economic relationship with partner countries. :: EDCF Loan Commitments and Disbursements (Unit: KRW 1000 million) Accumulated Year 1987~ Total Amount of Commitments (approved) Amount of Disbursements (implemented) 33,299 10,353 11,666 12,127 10,946 78,391 17,732 2,371 3,128 4,107 5,097 32,435 It is important to expand ODA support based on the need of developing countries and to provide linkages to other foreign economic policies (e.g., trade, direct investment, taxes, finances, etc.) in order to establish long-term and stable economic partnerships with developing countries. Thus, the Korean government plans to provide concessional loans of about KRW 4,400 billion (about 4.4 billion USD) from 2011 to 2015 based on the basic framework of the Strategic Plan (2010). Korea s con-

58 58 cessional loans continue to show a heavy concentration in Asia with 60% of new commitments to the region, though they try to diversify the regions with 20% of new commitments to Africa, 10% to Central and South America, and other regions. Korea will also strategically concentrate its ODA based on the partner countries development priorities and Korea s comparative advantages, in order to enhance the development outcomes and promote strong partnerships with partner countries. Korea will focus its concessional loans on the transportation, energy and agriculture sectors, which facilitate partner countries economic growth, and Korea will also focus on other important areas such as climate change and environment. Korea adopted a program loan in 2011 pursuant to a plan to enhance the effectiveness of concessional loans. Program loans are different from project loans in that they are meant to provide budget support to developing countries needing funds to implement their development plans. Program loans are a more advanced type of loan which works through the budget system of developing countries, thereby improving the predictability of aid and increasing untied aid, which are all in line with the global community s efforts to enhance aid effectiveness. For example, Economic Development Cooperation Fund (EDCF) approved a program loan for the Support Program to Respond to Climate Change (SP-RCC) in Vietnam (USD 30 million) in 2012, and will continue its support along with the Japan International Cooperation Agency (JICA) and the Agence Française de Development (AFD) by The Korean government will improve its aid effectiveness with improved linkages between concessional loans and grants. For example, KOICA s feasibility study can lead to an EDCF project, or the output of EDCF projects can be strengthened with technical support through grant aid. In addition, Korea will work on fostering the basis for economic growth by linking a concessional loan project to a Knowledge Sharing Program (KSP), which provides know-how and development experiences to developing countries. This could enhance the capabilities of the developing partner countries to design their own development policies, thus providing the foundation for self-reliant growth. Furthermore, the Korean government seeks to strengthen its cooperation with other donor countries and international organizations in order to complement the small volume of ODA and insufficient knowledge about developing countries. The Korean government established consultation channels with advanced donor countries

59 Korea s ODA Policies and Strategies 59 including Japan, France and Germany, and it holds the Asian Development Forum on a regular basis in order to strengthen its global cooperation network. The Vice-Minister of MOSF, Kyung-ho Choo, delivered a congratulatory speech (July 2013). Knowledge Sharing Program (KSP) The Knowledge Sharing Program (KSP) is a knowledge intensive development and economic cooperation program, which offers comprehensive policy consultations tailored to the needs of partner countries and capacity building opportunities based on the needs of developing countries and Korea s development experience. Three main pillars of the KSP are policy consultation, joint consulting with international organizations and modularization of Korea s development experience. The policy consultation focuses on the needs of partner countries, and provides consultation on the topics identified by the partner countries. The joint consulting is drawing great attention since it is seen as a best practice combining Korea s development experience with the international organizations development expertise and network. The modularization of Korea s development experience is a program that organizes Korea s development experience into eight areas including economic policy, administration/ict, agriculture, health and medicine, industrial energy, human resources, land development, environment and establishes comprehensive contents for development knowledge. The outcome of a KSP project is released as a policy report and utilized for knowledgebased development cooperation programs. These programs aspire to meet the increasing demand to learn about Korea s development experience and to support economic and social development of developing countries. Finally, there is a plan to establish a feedback mechanism for the evaluation result in order to improve the ODA evaluation capability. Large-scale public investment projects require not only a post-evaluation but also a thorough preparation. Thus, the Korean government plans to reinforce the Project Cycle Management (PCM), which will provide performance targets over the entire process from the pre-test to post-evaluation and feedback. In addition, Korea will enhance the objectivity and reliability of the evaluation results by establishing an independent evaluation team and inviting external experts to the evaluation as well as partner country stakeholders.

60 60 Exemplary Cases of Korea s Concessional Loans (1) Thien-tan Water Supply Project in Vietnam Bien Hoa city in Dong Nai province is a major industrial zone of Vietnam s growth triangle, which is an ideal central location for major industrial city with abundant human resources, transportation networks, and proximity to large consumer groups. However, businesses hesitated to move here due to the lack of a water supply. Water supply for citizens also fell below the national average, and about 70% of the residents did not have access to water. Furthermore, even the supplied water smelled of chlorine and had low pressure during peak times. Thus, the Korean government decided to provide USD 33 million of EDCF loan for the Thien-tan Water Supply Project in order to improve living conditions and facilitate local industrial development. This project includes expansion of water-intakes and purifying equipment, and the extension of water pipes. After completion of the project, water supply increased about 5 fold, from 36,000 m³/day to 187,000m³/day and water quality also greatly improved. As a result, around 50% of residents in Bien Hoa city can benefit from reliable and treated water, and most importantly, the businesses in the hub city became able to have access to clean water for 24 hours. After the project was completed, 844 foreign enterprises have invested in Bien Hoa city, and the GDP of Dong Nai province increased from USD 954 million in 2001 to USD 2,257 million in 2006, which is two years after the water supply project. During the same period, foreign investment increased from USD 180 million to 465 million. The Thien-tan water supply facility provides over 50% of total water usage, benefiting enterprises and 296,000 residents in Dong Nai province. Meanwhile, the rapid population increase and the need for more water led to start the second Thien Tan Project, which required USD 26 million, similar to the first project. (2) Educational Informatization Project in Uzbekistan An elementary school student in Nukus city started to dream about becoming a photographer when he learned a photo editing program on a personal computer for the first time. A middle school student studies English with the multimedia education program and says, I want to speak English very well to explain Uzbekistan s history and culture to foreign tourists who come to Samarkand. In April 2012, the Educational Informatization Project was completed by installing computer rooms in 1,770 primary and secondary schools in 14 states and by establishing the Center for ICT Development in Education (CICDE). This is the first educational informatization project with the EDCF loans, USD 30 million, and KT and KERIS implement the project for 4 years. At the summit meeting in 2005, the Uzbekistan government requested the Korean government to provide an EDCF loan to improve the IT capability of its educational institutions, which the Uzbekistan government considered a key factor behind Korea s rise as a major ICT power. Although Uzbekistan has abundant natural resources, including gas (17th largest reserves in the world), oil (45th) and gold (5th), it had a relatively weak foundation in ICT-based education with less than 1 PC per 100 students and less than 18.1% of primary and secondary schools with computers. The Korean government expanded the project scale from the initial request of the Uzbekistan government into an educational informatization project in order to provide a more comprehensive educational capacity building package. This involved educational multimedia content development through establishing an educational e-portal and the CICDE, which were all led by the Uzbekistan Ministry of Education. The Ministry noted that the 19-inch LCD monitors and other ITC equipment were of higher quality than what these schools had in the past, and highly appreciated Korea s strong educational contents as well as hardware in IT. ❶ ❷ ❸ 1 Water treatment plant 2 Water quality test laboratory 3 Water being treated 1 Multimedia Contents Development Center 2 Computers in the Classroom laboratory

61 Korea s ODA Policies and Strategies 61 (3) Ratnapura-Bandarawela Road Improvement Project, in Sri Lanka Sri Lanka is famous for Ceylon tea, which makes it the second largest black tea producer in the world and the largest tea exporter. Black tea is the major export item and is mainly produced by the inland farmers. Under the national development plan for social stability through road improvement, the Sri Lanka government requested an EDCF loan to establish a stable transportation system to help increase the farmers income. This project aimed to accommodate the growing volume of freight transportation and enhance road safety, promoting balanced development of surrounding regions. schools in Colombo, are no longer worried. The travel time to surrounding areas reduced to half, and Sri Lanka s capital Colombo has become incorporated into a one-day life zone. In August 1996, an EDCF appraisal mission visited Sri Lanka to assess the feasibility of the Road Improvement Project from Ratnapura, which is located about 100km south from the capital Colombo, to Bandarawela, the gateway to inland areas. Ratnapurahas was well known for its precious stone mining industry, large population and heavy traffic, as well as its potential for further economic growth with an industrial complex for small-and medium-size enterprises in the nearby towns of Avissawella and Sitawaka. This project did not just repair the road but also repaved both lanes, installing the shoulder and drainage facility, and revamping six bridges. Thus, the project greatly enhanced the logistics for the entire region. Video Clip of the Road Improvement Project in Sri Lanka This project contributed greatly to the balanced development of the region, by effectively addressing the increasing traffic from adjacent areas and connecting the production areas to other region s economic centers. The road extension was completed in 2008, and the vehicle speed and the accessibility to neighboring regions were improved, which contributed to the local economy and the quality of people s lives. The local farmers are able to reduce travel time from 6 to 4 hours between Bandarawela and Ratnapuratoto in delivering agricultural products such as tea, vegetable, and rice. The quality of people s lives has been enhanced with better supply of basic necessities thanks to improved roads and expanded public transportation. Since Sri Lanka is heavily dependent on economic activities of the capital, the roads are critical to go to hospitals, schools, workplace, and the market. Parents, who have children commuting

62 62 2) Mid-term Strategy for Grants The Korean government provides bi-lateral grants in order to achieve MDGs and to contribute to global poverty alleviation and sustainable development. In addition, Korea tries to achieve global peace and prosperity by strengthening humanitarian assistance and peace building efforts in disaster and conflict regions as well as to spread universal values regarding the environment, women, human rights and democracy. To this end, the Korean government is improving its ODA system for bilateral grants, based on global rules and norms such as the recommendations of the OECD DAC and the Paris Declaration principles for aid effectiveness. As of 2015, the Korean government plans to provide 50% of bilateral grants to Asia, considering the geographical proximity and cultural familiarity. Another 25% goes to Africa, where there are many least-developed countries, 10% to Central and South America, which shows a strong interests in Korea s development experiences, 10% to the Middle East and CIS, and 5% to Oceania. To enhance aid effectiveness, the Korean government plans to allocate 70% of its bilateral grants to 26 priority partner countries and use the remaining 30%with flexibility. In response to the development circumstances and demand of partner countries, the Korean government utilizes diverse modalities in grants. For example, infrastructure building projects for economic and social development of developing countries (which include provision of equipment, technology transfers and training programs) are some of the leading grant projects. In addition, there is an overseas volunteer program (World Friends Korea: WFK), which dispatches volunteers and advisory group to implement field-based support in education, health and medical service, rural development and IT sectors. The WFK program, in which the Korean government unified various volunteer programs under the single brand in 2009, is a representative public participation program with over 5,000 volunteers participating every year. This is the second largest number in the world after the Peace Corps of United States, and the Korean government will continue to increase the number of volunteers. In an effort to improve aid effectiveness, the government tries to diversify types of project. For this purpose, KOICA is implementing pilot programs that provide budget support to Cambodia s healthcare sector and Rwanda s vocational training sector for capacity building. The introduction of program aid, in which Korea directly support budget of developing countries, improves aid effectiveness by encouraging project ownership of those countries and by utilizing an internal system.

63 Korea s ODA Policies and Strategies 63 Although most of the grant projects are implemented by KOICA, a few specialized fields are implemented by individual ministries. To minimize inefficiency caused by overlapping projects and fragmentation among implementation agencies, MOFA is strengthening the consultation and adjustment function of the Inter-Agency Grants Committee. Also, MOFA developed a mechanism in which ministries can suggest their project proposals to KOICA. This mechanism allows the line ministries and KOICA to promote a more integrated and coherent project implementation. In addition, KOICA s newly named development consulting program, Development Experience Exchange Partnership (DEEP) is serving as a platform to implement technical cooperation and development study projects, sharing Korea s successful development experience and know-how to foster partner countries economic and social growth. Development Experience Exchange Partnership (DEEP) The Ministry of Foreign Affairs (MOFA) launched the Development Experience Exchange Partnership (DEEP) program in 2012, which provides developing countries with comprehensive consulting services in order to share Korea s development experiences and to improve the quality of existing technical cooperation. The DEEP program is a new brand that encapsulates over 20 years of technical cooperation projects conducted by KOICA including policy consultation, feasibility studies and establishment of master plans. The DEEP program aims to share knowledge and technology with partner countries to promote economic and social development and social welfare through technical cooperation with partner countries. The program has four dimensions: technical policy consultation; institution building; planning for infrastructure building; and human resource development. DEEP is implemented based on the following five principals principles: active participation of partner countries; harmonization with other donor agencies including international organizations and NGOs; comprehensive approach for diverse development demands; mutual accountability; and result-oriented development cooperation.

64 64 Exemplary Cases of Korea s Grants (1) The Project for the Development of Community-Based Health Insurance (CBHI) in Nepal Nepal is one of the world s poorest countries and is deficient in every sector including health and medical service, education, and public administration. Especially in the health and medical service sector, medical facilities and national healthcare system are insufficient due to absolute poverty. Thus, the Nepalese people have to pay for their medical expenses on their own. Given Nepal s economic challenges, the Nepalese people even face greater difficulties in receiving basic medical treatment. Considering the circumstances, the Korean government introduced a health insurance scheme and shared the operational know-how with the Nepalese government as part of the DEEP program. KOICA has granted USD 1 million for three years ( ) and conducted a feasibility study, introduced the local medical insurance system on a trial basis and developed a manual for the newly launched of health insurance scheme. A baseline survey of 5,000 households was also conducted in five regions on basic public health (income, health conditions, and etc.). As a result, public awareness about CBHI and healthcare was raised, and the number of medical insurance subscribers dramatically increased. In particular, the project brought about significant improvement in the health sector including a two-fold increase in the number of medical insurance subscribers (from 800 to 1600) in Bikalpa, which is one of the subject areas of this project. The Nepalese government has recognized the success of the project and requested for the second round of the project in order to establish a health insurance system tailored to meet local needs. The Korean government agreed to provide a grant of USD 4.5 million by 2017 and launched the National Health Insurance Support Project in August The second round aims to provide technical support in order to expand the coverage of the national health insurance program based on the experience of the first project. The Korean government is looking forward to assisting the Nepalese government to build a medical institution to implement a nation-wide health insurance system. (2) Project for the Establishment of the Vietnam-Korea Institute of Science and Technology (V-KIST) in Vietnam ❶ Korea s grant aid cooperation projects contribute to sustainable socioeconomic development beyond poverty eradication in developing countries. In particular, since Vietnam has recognized that science and technology development is crucial for its development, the Korean government has provided USD 35 million for the V-KIST project since ❷ 1 Baseline field survey is conducted. 2 Invitational training program for the health insurance scheme The V-KIST project aims to establish a research institute devoted to science and technology in Vietnam, similar to the Korea Institute of Science and Technology (KIST), with a grant from KOICA. The V-KIST will be located at the Hoa Loc Technopark in Hanoi and is expected to develop into a leading science and technology research institute in Vietnam with the full support of the Vietnamese government. This project

65 Korea s ODA Policies and Strategies 65 is expected to create a sustainable growth engine for Vietnam, which could help it from falling into a middle-income trap after reaching GDP per capita of USD 1,633 (2012). In addition, the Korean research team selected core research fields for Vietnam s development in cooperation with the Vietnamese researchers as a part of the DEEP program, and those fields include advanced materials, renewable energy and environment, IT and BT fusion technology and food processing. The Korean government also plans to provide related education and consultation in order to help Vietnam conduct research on its own. In other words, this project is a comprehensive cooperation package including infrastructure, consulting and capacity building. It shows that Korea s grant aid projects have developed from simple provision of resources and implementation of infrastructure to the level of the provision of core growth engine with developing countries. KIST, which led Korea s economic growth by developing industries and disseminating science technology, is itself a national research institute initially established by the US grant aid. This is a symbolic case that shows Korea s achievement of becoming a donor from a recipient country. The V-KIST project is a joint cooperation project of KOICA with the Ministry of Science, ICT and Future Planning (MSIP) and KIST, which is a good example that successfully combines the local network of KOICA and the sectoral expertise of government ministries. This project was first discussed at the Korea-Vietnam Summit Meeting in March 2012, and the MOU was signed in September 2013 during President Park Geun-hye s state visit to Vietnam. This project is scheduled to be finished by (3) Emergency Relief for the Recovery from Typhoon Haiyan in the Philippines Providing emergency relief and humanitarian assistance in response to large-scale disasters is one of most representative forms of grant aids that realize its demand-driven principle. The Korean government has been conducting various assistance activities for large and small overseas disasters around the world with cash, goods, and relief teams. In 2013, Korea participated in approximately 20 emergency relief cases including the Sichuan earthquake (USD 1 million aid) and Syria s refugee and internally-displaced persons (USD 3 million aid). The most significant humanitarian assistance was after typhoon Haiyan in the Philippines. Typhoon Haiyan hit the central part of the Philippines on November 8-9, 2013 and was recorded as one of the most powerful typhoons (wind speed of 380 KPH). It resulted in 10 million victims including deaths, injuries, missing persons, damaged houses, and refugees. The Korean government dispatched a rescue team and convened a Public-Private Joint Committee on Overseas Emergency Relief led by MOFA, which quickly decided to provide disaster relief support worth USD 5 million and immediately dispatched relevant agencies (Air force, National Emergency Management Agency, National 119 Rescue Team, National Medical Center, KOICA) and the Korea Disaster Relief Team (KDRT) with relief goods. The KDRT took part in various activities including medical activities, lifesaving, body retrieval, preventive measures, refugee evacuation, delivery of relief supplies and others. In particular, Korea s rescue team was one of the very few that retrieved bodies along the sea shore with rubber rafts, demonstrating Korea s excellent capacity in disaster relief. Meanwhile, the medical team performed operations in local hospitals with Korea s high-level medical technology and capacity. V-KIST Project MOU signing ceremony (September 2013, Vietnam) Emergency relief activities in the Philippines

66 66 Humanitarian Assistance and Assistance for Fragile States Humanitarian Assistance Improving quality of lives of people living in the regions in conflict and peacebuilding are some of the major goals of Korea s grant aid. To achieve these goals, the Korean government provides humanitarian assistance in compliance with the UN resolution (A/RES/46/182) and the principles of Good Humanitarian Donorship (GHD) (humanity, impartiality, neutrality, independence). In accordance with the needs-based principle of the GHD (Article 6), the Korean government allocates humanitarian funding on the basis of needs assessments. The government gives priority to countries without autonomous emergency relief capabilities or to those requiring an immediate response in order to minimize losses. The Korean government also assists countries in chronic humanitarian crisis listed in the UN Consolidated Appeal Process (CAP) as well as the least-developed countries with low probability of achieving MDGs. Korea also makes efforts to strengthen the domestic legal and institutional basis for humanitarian assistance. To minimize personnel and material losses in disaster inflicted countries, the Korean government enacted the Overseas Emergency Relief Act in March Based on the Plan for the Advancement of the Overseas Emergency Relief, Korea also tries to improve the system of overseas emergency relief and to enhance its efficiency. In recent years, humanitarian assistance focuses on the need to achieve mediumto long-term social stability and development beyond short-term emergency relief. Considering that the displacement of Syrian refugees affected the neighboring countries society and economy in fundamental ways, recovery from a large-scale disaster should be coupled with a development cooperation project rather than solely relying on temporary relief. The Korean government also recognizes the importance of linking humanitarian assistance and development and is reinforcing cooperation and coordination between relevant departments and organizations to overcome fragmentation in the budgeting system and organizations.

67 Korea s ODA Policies and Strategies 67 Types of Humanitarian Assistance in Korea (1) Preparedness for Disaster As the frequency and scale of disaster increases, the humanitarian assistance paradigm has shifted from disaster response to disaster preparedness. Even the relatively well-prepared developed countries can be vulnerable to disasters, and developing countries need greater international cooperation and assistance in order to build the necessary mechanism and capacity-building. The Korean government has carried out diverse projects to rebuild capacity and confidence for disaster response and management in order to help reduce the scale of damage and the costs of recovery. The Korean government actively participates in regional efforts to reinforce cooperation such as ASEAN (Association of Southeast Asian Nations), ARF (Association of Southeast Asian Nations Regional Forum), and EAS (East Asia Summit). The Korean government hosted and has been successfully operating the East Asian office of the UN GETI (Global Education and Training Institute for Disaster Risk Reduction) and the UN ISDR (International Strategy for Disaster Reduction). In May 2013, Korea co-hosted the third ASEAN Regional Forum Disaster Relief Exercise (ARF DiREx) with Thailand and conducted a simulation exercise of civil-military coordination in the event of large-scale disasters such as earthquakes or hazardous material leaks. Over 1,600 disaster relief experts from 28 countries and 8 international and regional organizations joined this simulation exercise and inspected multinational collaboration capacity on the ground, sea, and air. This became a momentum to reinforce disaster-response capability in ASEAN countries. (2) Overseas Emergency Relief In an event of a large-scale disaster, the Korean government provides swift and effective emergency relief in consideration of a number of factors including the disaster-inflicted nation s request, the inflicted nation s capacity to cope with the disaster, and the international community s support. The emergency relief is provided through multilateral or bilateral channels in the form of provision of relief goods, other in-kind delivery, and deployment of rescue teams depending on the situation. The Korean government responds to disasters in about countries every year, and has provided relief aid worth of USD million to 31 countries in (3) Assistance for Chronic Crisis and Neglected Disasters In addition to emergency relief, the Korean government provides assistance for chronic crisis and neglected disasters in addition to emergency relief. Korea contributes to the UN Consolidated Appeals Process (CAP), which is an integrative humanitarian assistance of the UN and relevant organizations, and the Central Emergency Response Fund (CERF). CAP is a financing channel for chronic crisis requiring longerterm recovery such as Somalia and Sudan, whereas CERF allocates grants to neglected disasters. The United Nations provides humanitarian assistance to North Korea through the Underfunded Emergency Window of CERF every year. 1 Simulation exercise for disasters caused by hazardous material leaks 2 Rescue team for overseas emergency relief for Japan s earthquake in 2011 According to the World Disasters Report published in 2012 by the International Federation of Red Cross and Red Crescent Societies (IFRC), about 500 to 700 disaster cases occur annually around the world. The Korean government, as a responsible member of the international community, actively participates in disaster relief activities

68 68 Assistance for Fragile States The Korean government is striving to refurbish domestic policies and institutions for fragile states. The Korean government identified 12 fragile states among 26 priority partner countries and has allocated 40% of bilateral grants for these countries. Korea also supports reconstruction of post-war countries through institution building, and health service and job creation. The Korean government, in particular, makes efforts to strengthen governance in fragile states through efforts including operating the Provincial Reconstruction Team (PRT) in Afghanistan. In addition, the Korean government strives to assist the fragile countries development with a whole of government approach, considering complicate and multifaceted causes of fragility and conflicts. In particular, Korea considers associating the civilian military operation of the UN Peace Corps and multinational force with development cooperation in order to ensure development effectiveness. In 2012, Korea developed the Guideline on Assisting Fragile States, suggesting strategic principles to assist fragile states. Furthermore, the Korean government is improving the whole-of-government strategies and the Country Partnership Strategy for Fragile Partners in consideration of the special situation and needs of fragile states. The Korean government will establish an integrated policy to support fragile states and focus on core sectors based on development priorities. In addition, it will improve ownership of fragile states and respect their efforts to build sustainable governance.

69 Korea s ODA Policies and Strategies 69 Glossary Fragile State: refers to a state which lacks the capacity and political will to perform key state functions such as poverty alleviation and development efforts. In other words, it is a low-income country incapable of building partnership for development or in crisis due to exogenous factors. In general, it refers to a country that is politically unstable and sufferings from deficits in governance or that has a high probability of having recurring conflicts. According to the World Bank Annual Report in 2011, not a single low-income fragile state has achieved MDGs. There is an increasing concern that it would be hard to achieve MDGs without the development of these countries. Given that the problems of fragile states such as unstable security, crime, illegal arms trade, and refugees are transnational problems, which would threaten world peace and worsen international crime rates, the status of fragile states is related to Korea s security. Thus, the international community has worked on joint efforts to resolve the problems of fragile states with the increasing attention on fragile states. The OECD DAC has established and operated the INCAF (International Network on Conflict and Fragility) and the International Dialogue on Peacebuilding and Statebuilding. It also released a new guideline for conflict and fragile states, the New Deal. This guideline is advocated by the G7+, a group of fragile states, providing action plans, principles, and guidelines for effective linkage between bilateral and multilateral donors to assist fragile states. It was officially adopted and consolidated at the 4th High Level Forum on Aid Effectiveness. The Korean government joined the New Deal on October 2012 to assist the fragile states in consideration of achieving international development goals such as poverty alleviation and MDGs, and peace building. The Korean government actively engages in dialogue of the INCAF (International Net-work on Conflict and Fragility) and the International Dialogue on Peacebuilding and Statebuilding, thereby contributing to the formulation of the international development agenda. What is G7 +? The G7 + is the first association of fragile states that have experience of conflict and fragility. The G7 + was formed to share and analyze their unique experiences and to call for effective assistance from the international community. The G7 + has strived to make the challenges of fragile states a mainstream issue by actively participating in international discussions. It started with 7 fragile states and has now expanded to 20 countries. - Afghanistan, Burundi, Central African Republic, Chad, Côte d Ivoire, Democratic Republic of Congo, Ethiopia, Guinea, Guinea Bissau, Haiti, Liberia, Nepal, Papua New Guinea, Sierra Leone, Solomon Islands, Somalia, South Sudan, Timor-Leste, Togo and Yemen.

70 70 Korea s Assistance to Fragile States (1) Support for Conflict Areas and Post-Conflict Reconstruction: Iraq Reconstruction The Korean government pledged to provide a grant of USD 260 million from 2003 to 2007 for the reconstruction of Iraq at the Madrid Donor Conference in At the meeting of International Compact with Iraq (ICI) in 2007, Korea announced a plan to contribute another USD 200 million (100 million each for grant and loan-type aid) over the next four years from 2008 to 2011, and Korea contributed USD 300 million in total for Iraq from 2005 to Based on Iraq s National Development Plan and the comparative strengths of Korea, the Korean government focuses on four core sectors including education, industrial energy, public administration, and health services. In addition, the Korean government makes efforts to reinforce capacity of Iraq by sharing Korea s development experience and providing technical cooperation such as invitational training. In particular, Korea has provided grant aid for the expansion of educational facilities, improvement of education curriculum, provision of healthcare services and supply of safe water. The Korean government will continue to identify and support reconstruction projects for Iraq. (2) Assistance for Afghanistan s Peace-Building Activities The Korean government has provided grant aid of USD 200 million from 1991 to 2011 to help sustainable economic and social development of Afghanistan, thereby promoting regional stability. The Korean government announced that it will support Afghanistan s reconstruction at the International Donor Conference on Afghanistan in 2008 and the Foreign Ministerial Meeting of the ISAF (International Security Assistance Force) on April In the ISAF meeting, Korea pledged to contribute grant aid of USD 500 million to Afghanistan from 2011 to 2015, allocating USD 300 million for capacity building of military and police and USD 200 million for economic and social development. To enhance aid effectiveness, it is particularly important to manage various security risks including political instability, conflict and aggravation of public security during the reconstruction of fragile states. In consideration of Afghanistan s domestic situation and to manage risks, the Korean government has cooperated with international organizations that have relevant expertise in each field. In particular, for social and economic development of Afghanistan, the Korean government implements projects in cooperation with international organizations in the fields of education, healthcare, governance, rural development, gender equality, and refugee settlement, and all while considering the domestic situation. (3) Assistance for the Solomon Islands The Korean government included the Solomon Islands, which is an aid orphan, into the list of fragile states and has provided ODA since The Solomon Islands was then in an unstable situation due to the civil war and frequent natural disasters. Moreover, the government of the Solomon Islands failed to manage its crisis, resulting in 70% of decrease in aid. The Solomon Islands could not adequately respond to climate changes, which caused serious marine contamination, neither to deforestation, which was aggravated with private investment in wood export. In addition, given that the Solomon Islands are highly dependent on inconsistent foreign aid from a few donor countries like Australia, aid specialization and harmonization was required among donor countries. In particular, the Solomon Islands is in urgent need for institution building, infrastructure expansion, and human resource development; thus, major donors have to cooperate with each other in the process of aid implementation. Considering the problems above, the Korean government established aid strategies for five years ( ) based on the national development plan of Solomon Islands ( ). The strategy focuses on building foundation for economic growth with three priority sectors of fishery, forestry, and health and medical service. These are selected in accordance with development needs of the Solomon Islands and Korea s strength, and the Korean government plans to allocate 70% of aid resources in these sectors.

71 Korea s ODA Policies and Strategies 71 3) Basic Plan for Multilateral Aid Korea uses multilateral aid to complement bilateral aid, especially in areas such as climate change and food security where bilateral approach alone is insufficient. By improving the contribution channels in multilateral cooperation, the Korean government has been promoting strategic multilateral aid. Obligatory contributions and project contributions, partially counted as ODA, will be paid by each responsible ministry, while contributions to MDBs and affiliated organizations of the UN will be paid by MOSF and MOFA. Meantime, the Korean government is strengthening cooperation between relevant agencies to effectively divide functions and contents of multilateral aid with the UN and MDBs. Multilateral aid with the UN will focus on social development, capacity building, and governance, while the Korean government will cooperate with MDBs for large-scale projects such as infrastructure building and the establishment of economic policies. As for joint projects of the UN and MDBs in some areas, including food security, relevant ministries will jointly participate and reinforce cooperation. With trust funds, which have advanced monitoring systems of the aid implementation, the Korean government plans to expand the participation of Korean organizations in projects of international organizations and assess the effectiveness of multilateral aid by actively participating in multilateral project evaluation. The implementation plan of multilateral aid by each international organization is as follows: first of all, the top priority of multilateral aid through the UN and other international organizations is in achieving MDGs, while addressing global issues on development, strengthening humanitarian assistance and peace-building, and improving the efficiency of international organizations as implementation goals. To achieve these goals, the Korean government will increase contributions in areas related to MDGs such as health care, education, and gender equality and strengthen its support for international organizations dealing with global issues such as environment, food security, migration, anti-corruption, human rights and contagious diseases. In addition, the Korean government will reinforce cooperation with the UN for emergency relief and conflict prevention, thereby continuing its assistance to fragile and conflict-affected countries. The Korean government will strengthen coordination between supervising and implementing agencies through the Multilateral Assistance Committee, which is a

72 72 sub-committee of the Inter-Agency Grants Committee. In addition, it will continue to improve aid effectiveness in multilateral cooperation by selecting and supporting international organizations with excellent field implementation infrastructures and know-how as strategic partners. As for the evaluation, the Korean government will strengthen evaluation on the international organizations and keep monitoring the activities of international development cooperation by participating in the steering committee meetings of international organizations and the informal group meetings of donor countries. Then, it will reflect the result of evaluation to the support plan for corresponding organizations. Since joining the Multilateral Organization Performance Assessment Network (MOPAN) in December 2008, the Korean government has been actively engaging in the joint evaluation activities on organizational effectiveness of other donors and major international organizations. As for the multilateral aid with MDBs, the Korean government will gradually expand the amount of contributions to the MDBs, taking into account the financial situation of Korea. The amount of contributions and subscriptions to the MDBs stands at the level of USD 400 million per year (2014), which mainly goes to the World Bank. To strengthen Korea s position in MDBs, the Korean government will comply with pledged contributions and gradually expand the amount of contributions and subscriptions to MDBs. 4. Country Partnership Strategies (CPS) In accordance with the Framework Act (Article 8.2.3) and the Strategic Plan, the Korean government formulated integrative Country Partnership Strategies (CPS) for each priority partner country to maximize synergy effects and to improve ODA effectiveness through strategic concentration. Korea had conducted ODA by loans and grants separately for each partner country without a comprehensive strategy at national level. Thus, Korea was unable to concentrate its capacity in ODA and had difficulties in implementing whole-of-government ODA policies in a comprehensive and systemic manner. In this context, the Korean government has selected 26 priority partner countries out of 130 partner countries based on their income, political situation, diplomatic relationship with Korea, and economic potential. The PMO, MOFA, and MOSF had taken part in formulation of the CPS since 2011 and completed it in Priority partner countries are composed of 11 Asian countries, 8 African countries, 4 in Central and South American countries, 2 Middle

73 Korea s ODA Policies and Strategies 73 East and CIS countries and 1 country in Oceania. The CPS includes ODA volume, focus sectors, and implementation plans for each partner country based on Korea s ODA strategy and the national development plans of the partner country. The implementation of country specific ODA will be successful if the CPS includes comprehensive understanding on the partner country s diplomatic strategies and needs. The CPS is revised every three to five years for a better alignment with the national development plans of partner countries. If required, CPS can be modified within three years through the CIDC s deliberation and decision. The CPS enables ODA agencies to implement policies coherently and to improve project performances reflecting the needs of partner countries. :: Countries with the CPS Year Country 2011 (3 countries) 2012 (11 countries) 2013 (12 countries) Vietnam, Ghana, Solomon island Bolivia, Sri Lanka, Indonesia, Mongolia, Azerbaijan, Ethiopia, DR Congo, Cambodia, Bangladesh, the Philippines, Uzbekistan Lao, Mozambique, Peru, Cameroon, Colombia, Nepal, East Timor, Rwanda, Uganda, Paraguay, Pakistan :: Focus Sectors of 26 Priority Partner Countries Region Country Focus Sectors Asia (11 countries) Nepal East-Timor Laos Mongolia Bangladesh Vietnam Sri Lanka Indonesia Cambodia Pakistan Philippines Vocational Training / Health and Medical Care / Agriculture / Electricity Education Training / Health and Medical Care / Social Infrastructure Water Resources and Electricity / Human Resource Development / Health and Medical Care ICT-based Public Administration / Urban Development / Agriculture Development Water Resources and Electricity / Health / Education / Public Administration Environment and Green Growth / Vocational Training / Transportation Infrastructure Basic Infrastructure / Human Resource Development / Public Administration Public Administration / Economic Infrastructure / Environment and Resource Management Rural and Agriculture Development / Transportation and Green Energy / Human Resource Development / Health and Medical Care Industrial Energy / Education / Health and Medical Care Transportation Infrastructure / Agriculture and Water Resources / Health and Medical Care Oceania (1 country) Solomon Islands Fisheries / Forestation / Health and Medical Care Central and South America (4 countries) Middle East and CIS (2 countries) Bolivia Colombia Paraguay Peru Azerbaijan Uzbekistan Transportation / Agriculture / Health and Medical Care Rural Community Development / Productivity and Competitiveness of Small and Medium-sized Enterprises / Public Administration Basic Social Services / Productivity Improvement and Capacity Building for Vulnerable Social Groups Transportation Health and Medical Care / Rural Development / Information and Communication Industrial Energy / Public Administration Human Resource Development / Health and Medical Care / Administration Informatization and Improvement of Economic Institutions

74 74 Africa (8 countries) Ghana Nigeria Rwanda Mozambique Ethiopia Uganda Cameroon DR Congo Expansion of Strategic Infrastructure / Improvement of Health and Sanitation, and Medical Environment / Improvement of Vocational Training Environment Human Resource Development / Public Administration ICT / Human Resource Development / Rural Community Development Electricity and Transportation / Agriculture Development / Human Resource Development Material and Child Health Care/ Drinking Water Supplementation / Agriculture and Rural Community Development, Vocational Training for Farmers / Technical Education and Vocational Training / Electricity and Road Infrastructure Agriculture / ICT / Economic Infrastructure Human Resource Development / Social and Industrial Infrastructure / Rural Development Health Environment and Medical Care / Rural Development 5. ODA Contents The international community has great interests in Korea s distinctive development experience of rapid economic growth from one of the world s poorest nations after suffering from the aftermath of civil war and Japanese colonialism and pays attention to the implications that the Korean experience has on international development cooperation. Therefore, Korea established the Korean ODA Model in September 2012 to share Korea s development experience and the know-how with partner countries. :: Framework of the Korean ODA Model Poverty Reduction, Self-reliance, and Sustainable Development of Partner Countries Strategies Strategic Concentration Participation and Cooperation Continuous Expansion of ODA Infrastructure Field-based and Performanceoriented ODA 159 ODA Programs Economic Growth Governance Social Development Future & Cross-cutting Issues Analysis on Korea s Development Experience and Comparative Advantage

75 Korea s ODA Policies and Strategies 75 :: Program Pool by Sector of the Korean ODA Model Program Pool by sector (159 Programs) Economic Growth (71 programs) Social Development (52 programs) Governance (10 programs) Future Cross-cutting Issues (26 programs) REconomic Policies Industry / Energy Land Development Agriculture/Fishery Health and Welfare Education Human Resource Science Technology Government Efficiency Legal Foundation / Institution Building Anti-corruption Green Growth / Environment ICT Women + + Development Experience Needs of Partner Countrie International Standard More detailed information about the 159 Programs is available in the ODA Korea website ( in Korean. In the Korean ODA Model, the Korean government formulated 159 programs in four sectors of economy, society, governance, and future and cross-cutting issues on the basis of systematic analysis on Korea s development experience and comparative advantages. These ODA programs will be specified and continuously developed in follow-up studies. In addition, the CIDC will regularly monitor the progress and improve the performance with supervising ministries 6. ODA Strategies The Korean ODA Model elaborates on the content of ODA, and it advances strategies including strategic concentration, field-based and performance-oriented ODA, participation and cooperation, and continuous expansion of ODA infrastructure. First, in consideration of limited ODA resources, the Korean government will concentrate its capacity on specific areas in which Korea has held a comparative advantage. Second, the Korean government plans to make field-based ODA programs through close consultation with partner countries and proactive consideration of opinions

76 76 in the field and will strengthen the result-based approach. Third, Korea improves aid effectiveness and synergistic effects by promoting participation and close cooperation among diverse ODA stakeholders including domestic organizations, private sectors and partner countries. Finally, the Korean government plans to strengthen the foundation of ODA to ensure the sustainability of Korea s ODA by promoting public consensus, training ODA experts, and encouraging participation of private companies. The government utilizes these strategies as a major standard for deliberation and adjustment of ODA projects in order to embed them in the process of ODA implementation. The Korean government recognized that ODA effectiveness can be enhanced when diverse organizations coordinate different opinions in time and combine their specialties together. Therefore, it formulated the Activation Plan for Collaboration in ODA (August 2013) based on strategic concentration and Establishment of the Coordinating Mechanism to Improve Whole-of-Government Approach among ODA Agencies (December 2011). The Activation Plan provides for measures to activate collaboration between relevant agencies over the process of project identification, selection, implementation and evaluation. The government especially introduced the Preview of the ODA Project 2 Years Prior to Implementation and is actively identifying project packages by sharing preliminary project information among ministries and implementing agencies at the stage of project identification. In addition, the PMO-chaired Collaboration Meeting for ODA is held on a regular basis in order to adjust different opinions in a timely manner and to resolve difficulties in the course of collaboration. The Korean government also devised a Guideline for ODA Collaboration promoting personnel exchanges and joint work in a local office to reinforce information sharing between Korean embassies in partner countries and implementing agencies. Through these diverse measures to improve collaboration, the Korean government is enhancing ODA implementation.

77 Korea s ODA Policies and Strategies 77 :: Four Strategies of Korean ODA Model Strategies Strategic Concentration Field-based and Participation Performance-oriented ODA & Cooperation Continuous Expansion of ODA Infrastructure Specific Tasks Strengthening Supports to Priority Partner Countries Encouraging Association among Projects CPS-based Implementation Improving Expertise in ODA Policy-making and Implementation Promoting Embassy Participation in Project Identification Strengthening Field Staff Capability Reinforcing Integrative Evaluation System Improving Ex-post Management Strengthening Cooperation between Domestic Agencies Facilitating Public-Private Participation Expansion of Partner Countries Participation and Policy Consultation Reinforcing Participation in the Agenda-setting Process of the International Community Expanding Information Sharing Fostering ODA Experts Expanding Business Participation Expanding Public Awareness and Consensus

78 The Korean government has expanded its ODA disbursements, in spite of current fiscal pressures from increasing welfare expenses, and Korea contributed to the increase of development resources aimed at poverty alleviation. For more than a decade since 2001, Korea s ODA volume has been increasing by 21.6% annually. ODA volume (net disbursements) totaled USD 1,597 million in 2012, ranking Korea as the 16th largest donor among 27 DAC countries. The annual growth rate reached 20.6%, recording the highest level among DAC members. ODA

79 05 ODA Volume and Allocation Section 1. ODA Volume and Allocation of OECD DAC Countries Section 2. ODA Volume and the Allocations of Korea

80 80 Chapter 5. ODA Volume and Allocation Section 1. ODA Volume and Allocation of OECD DAC Countries The members of the Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD) account for about 80% of the total volume of Official Development Assistance (ODA). These members have sought to achieve the United Nation s Millennium Development Goals (MDGs) and alleviate poverty by increasing ODA volume and enhancing aid effectiveness. By examining ODA volume and the allocation patterns of OECD DAC countries, the Korean government is able to understand the international trends and ODA performances of advanced donor countries, while also setting a future course for Korean ODA. For this purpose, this section briefly introduces ODA volume, trends and allocation by sector, region, and type. 1. ODA Volume and Trends According to OECD DAC statistics, the ODA volume of DAC countries has been continuously increasing, totaling USD 127 billion (net disbursement) in Although the ODA volume of 2012 was slightly lower than that of 2011 (USD billion), it increased by over two times during the last decade, disbursing USD 54 billion in 2000, USD billion in 2005, and USD 129 billion in This ODA volume has shown a rising trend even after the global financial crisis. In terms of the absolute amount of ODA, the largest donors are the United States (USD 30.7 billion), the United Kingdom (USD 13.9 billion), Germany (USD 12.9 billion), France (USD 12 billion), and Japan (USD 10.6 billion). In contrast to this rising trend of overall ODA, the ODA ratio to gross national income (GNI) has been decreasing since The United Nations recommends that the ODA/GNI ratio reach 0.7% by 2015 in order to achieve MDGs with a purpose of eradicating poverty in developing countries. However, only five member countries of the OECD DAC - Luxemburg (1%), Sweden (0.97%), Norway (0.93%),

81 ODA Volume and Allocation 81 Denmark (0.83%), and Netherland (0.71%) - reached this target by 2012, and other member countries including Korea remain well below this target set by the United Nations. The average ODA/GNI ratio of DAC countries was 0.22% in 2000, 0.32% in 2005, and 0.29% in :: Total of Net ODA Disbursements from Advanced Donors to Developing Countries (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat All Donors, Total OECD Countries DAC Countries (ODA/GNI ratio, %) 180, , , , , ,000 60, , , ODA Disbursements by Channel Bilateral aid accounts for 70% of total ODA disbursement of DAC countries, which has been increasing in parallel with increases in total ODA volume. Multilateral aid also has been increasing since 2000, accounting for approximately 30% of total ODA volume. OECD DAC countries have provided -0.2% of bilateral aid to loans and 100.2% to :: Bilateral and Multilateral ODA of OECD DAC Countries DAC countries Bilateral ODA Source: DAC Aid statistics in OECD.Stat Multilateral ODA , , , , , , , , , , Australia 2, , , , , Austria 1, Belgium 1, , , , , , , , Canada 3, , , , , , , , , Czech Republic Denmark 1, , , , , Finland

82 82 DAC countries Bilateral ODA Multilateral ODA , , , , , , , , , , France 6, , , , , , , , , , Germany 9, , , , , , , , , , Greece Iceland Ireland Italy 1, , , , , , , Japan 6, , , , , , , , , , Korea , Luxembourg Netherlands 5, , , , , , , , , , New Zealand Norway 3, , , , , , , , Poland Portugal Slovakia Spain 4, , , , , , , , , Sweden 3, , , , , , , , , , Switzerland 1, , , , , United Kingdom 7, , , , , , , , , , United States 23, , , , , , , , , , grants over the last decade in terms of net disbursements. Although the total disbursements of bilateral loans decreased from the early 2000s (accounting for 10.2% of bilateral ODA in 2006), it increased after 2007 and reached a loans-to-grants ratio of 15:85 in Loan-type aid requires repayment of principal on loan and interests once the term of a loan is completed. In this case, net disbursement is amount in which deducts repayments of loan principal from the total amount disbursed. :: Loans and Grants in Bilateral ODA of DAC Countries (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Loans Grants Year Bilateral ODA Volume Ratio(%) Volume Ratio(%) , , , , , , , , , , , , , ,

83 ODA Volume and Allocation 83 Year Bilateral ODA Loans Grants Volume Ratio(%) Volume Ratio(%) , , , , , , , , , , , , , , , , , , , , , ODA Disbursement by Sector OECD DAC countries disbursed the largest proportion of ODA, accounting for 47.3% of total bilateral ODA, for social infrastructure and service sectors including education, government and civil society, and 20.6% for economic infrastructure and the service sector, followed by 11.2% for multi-sector and cross-cutting issues, 9.9% for humanitarian aid and 9.2% for the production (industrial) sector, respectively. :: ODA Disbursement of DAC Countries by Sector (Commitments, USD million) Source: DAC Aid statistics in OECD.Stat ODA Disbursement by Sector 81, , , , , Social Infrastructure & Services 46, , , , , Education 9, , , , , Health 5, , , , , Water supply & Sanitation 5, , , , , Government & Civil Society 14, , , , , Others 11, , , , , Economic Infrastructure & Services 20, , , , , Transport & Communications 9, , , , , Energy 5, , , , , Banking & Financial Services 2, , , , , Other Services 1, , , , , Production Sectors 8, , , , , Agriculture, Forestry, Fishing 5, , , , , Industry, Mining, Construction 1, , , , , Trade Policies & Tourism Multi-sector/ Cross-cutting 7, , , , , Commodity Aid & General Program Assistance 5, , , , , Action Relating to Debt 9, , , , , Humanitarian Aid 8, , , , , Unallocated & Unspecified 10, , , , , Total 115, , , , ,756.28

84 84 4. ODA Disbursements by Region By region, OECD DAC countries have provided the largest portion of ODA to Africa in a recent five year period, totaling USD 30.4 billion in Among those, approximately 89% of ODA focuses on sub-saharan Africa, accounting for 31% of total ODA disbursement. Followed by Africa, Asia received USD 22.9 billion in 2012, of which 57% concentrates on the Southwest and Central Asia. Besides, America and Europe received USD 6.6 billion and USD 2 billion, respectively. :: ODA Disbursement of DAC Countries by Region (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Africa 27, , , , , North of Sahara 2, , , , , South of Sahara 24, , , , , Africa, regional 1, , , , , Asia 29, , , , , Far East Asia 4, , , , , Southwest & Central Asia 10, , , , , Middle East 13, , , , , Asia, regional America 7, , , , , North & Central America 2, , , , , South America 2, , , , , America, regional 1, Europe 3, , , , , Oceania 1, , , , , Unspecified 19, , , , , Total 87, , , , ,549.88

85 ODA Volume and Allocation ODA Disbursements by Income Group Meantime, OECD DAC countries provided USD 30.4 billion to least-developed countries (LDCs) and to other low-income countries (OLICs), accounting for 34% of total bilateral ODA. Other proportions of ODA went to lower-middle income countries (LMICs) at 20.7%, and to upper-middle income countries (UMICs) at 8.7%. Based on the gross disbursement, LDCs, LMICs, and UMICs received 31%, 24.7%, and 12.5 %, respectively. :: ODA disbursements of OECD DAC Countries by Income (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Country Least Developed Countries (LDCs) Other Low-Income Countries (OLICs) Lower Middle- Income Countries (LMICs) Upper Middle Income Countries (UMICs) Others Australia 1, , , Austria Belgium Canada 1, , Czech Republic Denmark Finland France 1, , , , Germany 2, , , , Greece Iceland Ireland Italy Japan 3, , , , Korea Luxembourg Netherlands , New Zealand Norway , Poland Portugal Slovakia Spain Sweden , Switzerland , United Kingdom 3, , , United States 9, , , , , DAC Total 27, , , , ,038.44

86 86 Section 2. ODA Volume and the Allocations of Korea The Korean government has expanded its ODA disbursements, in spite of current fiscal pressures from increasing welfare expenses, and Korea contributed to the increase of development resources aimed at poverty alleviation. At the same time, the Korean government has been actively participating in the global community s effort to enhance aid effectiveness. This section examines the current status and diverse features of Korea s ODA by volume, type, sector, and region. 1. ODA Volume and Trends For more than a decade since 2001, Korea s ODA volume has been increasing by 21.6% annually. ODA volume (net disbursements) totaled USD 1,597 million in 2012, ranking Korea as the 16th largest donor among 27 DAC countries. The annual growth rate reached 20.6%, recording the highest level among DAC members. The ODA/GNI ratio also experienced a steady increase, recording 0.14% in 2012, which is a 0.02% increase compared to that of the previous year (2011) :: ODA Disbursements by Year (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Total ODA(A+B) , , , Bilateral(A) , Multilateral(B) ODA/GNI(%) ODA Disbursements by Type The Korean government disbursed USD 1,183 million (net disbursements) to bilateral ODA in 2012, recording approximately 20% increase over the previous volume of USD 989 million in The bilateral to multilateral ODA ratio had changed from 83:17 to 74:26 between 2006 and This ratio is close to the average multilateral ODA (30%) among DAC countries. Over the last decade, the Korean government has disbursed 63.8% of bilateral ODA as grant-type aid and 36.2% as loan-type aid. Loans exceeded grants in Korea until 2002, but the grants to loans ratio has transformed into approximately 60:40 in line with the expansion of humanitarian assistance to Afghanistan and Iraq and with joining the OECD DAC.

87 ODA Volume and Allocation 87 :: ODA Disbursements by Type (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Loans Grants Year Bilateral ODA Volume Ratio(%) Volume Ratio(%) , Along with the expansion of ODA volume, Korea s multilateral ODA shows a growing trend. The expansion of multilateral ODA corresponds to the policy targeting 30% of ODA allocation to multilateral ODA. The volume of multilateral ODA to international organizations including the UN and to MDBs has been on the rise since 2000, reaching USD 414 billion in Above all, Korea s multilateral ODA focuses on contributions to the World Bank group including IBRD and IDA, in which the annual sum reached USD 153 million, accounting for 37.2% of total multilateral ODA. Meanwhile, Korea disbursed USD 126 million (30%) to ADB and to regional development banks, USD 114 million (28.6%) to UN organizations, and USD million (3.7%) to other UN funds and programs. The contribution to the UN and other international organizations mainly consists of obligatory contributions, but the Korean government is currently increasing its voluntary contributions, especially for the three major implementation organizations of the United Nations: UNDP, UNICEF, and WFP. In response to the change of policy environment such as the capital increase in MDBs, the quota extensions in the World Bank, and the implementation of G20 Seoul Development Agenda, the Korean government plans to expand the size of contributions. Along with the capital increase in MDBs, the Korean government plans to make a combined use of budget and foreign exchange reserves, while expanding contributions and subscriptions to MDBs in order to increase its influence within MDBs.

88 88 :: Multilateral ODA by Organizationsr (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat UN Organizations UNDP UNICEF UNRWA WFP UNHCR UNFPA IFAD Other UN EC World Bank Group IBRD IDA IDA-MDRI IFC MIGA Regional Development Banks ADB ADF IDB IDB Special Oper. Fund AfDB AfDF Others Other International Organizations IMF Others Total Multilateral ODA ODA Disbursement by Sector In each sector, Korea s ODA to social infrastructure and services has been on the rise. In 2012, USD 768 million of ODA, which accounts for 43.6% of bilateral ODA, went towards social infrastructure and the service sector, recording the highest proportion. Subsequently, the Korean government disbursed USD 488 million to economic infrastructure and services (27.9 %), and USD 291 million to production sectors (16.6%).

89 ODA Volume and Allocation 89 Within the social infrastructure and the service sector, 13% of bilateral ODA was directed to support government and civil society, 10.7 % to health, water and sanitation, and 7.3% to the education sector. In the economic infrastructure and service sector, transport and storage accounted for 18.5%, communication for 5.9%, and energy for 3.2%. :: ODA Disbursement by Sector (Commitments, USD million) Source: DAC Aid statistics in OECD.Stat Total ODA by Sector Social Infrastructure & Services Education Health Water supply & Sanitation Government & Civil Society Others Economic Infrastructure & Services Transport Communications Energy Banking & Financial Services Other Services Production Sectors Agriculture, Forestry, Fishing Industry, Mining, Construction Trade Policies & Tourism sightseeing Multi-sector/ Cross-cutting Equipment Provision & General Program Assistance Action Relating to Debt Humanitarian Assistance Unallocated & Unspecified Others Total , , , , , , ODA Disbursement by Region According to the statistics for 2012, Asia received the largest portion of bilateral ODA from Korea, approximately 57.5% of bilateral ODA, followed by Africa at 22.1% and Central and South America at 6.4%. The Korean government has expanded ODA allocation to Africa, Central and South America and other regions

90 90 while maintaining close ties with Asia. In particular, the Korean government held the Korea-Africa Forum in 2009, and ODA disbursement increased by 2.5 times in Africa between 2008 and :: ODA Allocation by Region (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Africa North of Sahara South of Sahara Africa, regional Asia Far East Asia Southwest & Central Asia Middle East Asia, regional America North & Central America South America America, regional Europe Oceania Developing Countries Unspecified Total , ODA Disbursement by Income Group By income, the Korean government provided 40.6% of bilateral ODA to LMICs, 35.2% to LDCs, and 8.3% to UMICs in During the last five years, the Korean government has expanded ODA volume to LDCs and other OLICs, particularly to the highly indebted poor countries (HIPCs). In 2012, the OLICs (including LDCs) received 36% of total bilateral ODA, which has slightly decreased compared to that of 2010 and 2011, but increased compared to 27% in Bilateral ODA to LMICs accounted for 40.6%, which has increased compared to 37.7% in On the contrary, bilateral ODA to UMICs has decreased from 11.5% to 8.3% between 2011 and 2012, which shows that bilateral ODA was allocated to developing countries with high demand on development.

91 ODA Volume and Allocation 91 :: ODA Allocation by Income Group (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Total Bilateral ODA , Least Developed Countries (LDCs) Other Low-Income Countries (OLICs) Lower Middle-Income Countries(LMICs) Upper Middle Income Countries(UMICs) Others ODA Disbursement by Priority Partner Countries Owing to small ODA volume compared to that of DAC countries, the Korean government is promoting aid effectiveness based on the strategy of Strategic Concentration. In 2012, Korea s ODA disbursement to the 26 priority partner countries accounted for 56.4% (USD 1, million, net disbursement). Among those, 79% of ODA went to the top 10 countries (by aid volume) including Vietnam and Cambodia. Korea s ODA allocation to the priority partner countries has been maintained above 50% after integrating the list of 26 priority partner countries for both grants and loans. Given that the Korean government plans to allocate 70% of bilateral ODA to these priority partner countries, this ratio is expected to increase further. By country, Vietnam, which is the first largest partner country of Korea, received 16.9% of Korea s bilateral ODA in Cambodia, Sri Lanka, and Bangladesh received 4.7%, 4.4%, and 4.0% of bilateral ODA, respectively. :: 26 Priority Partner Countries of Korea Uzbekistan Azerbaijan Laos Mongolia Bangladesh Colombia Peru Ghana Nigeria DR Congo Cameroon Rwanda Pakistan Nepal Vietnam. Ethiopia Cambodia Uganda Sri Lanka East Timor Indonesia the Philippines Solomon island Bolivia Paraguay Mozambique

92 92 :: ODA Disbursement by Priority Partner Countries (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Priority Partner Countries Ghana Nigeria Nepal East Timor Laos Rwanda Mozambique Mongolia Bangladesh Vietnam Bolivia Solomon Islands Sri Lanka Azerbaijan Ethiopia Uganda Uzbekistan Indonesia Cameroon Cambodia Colombia DR Congo Paraguay Pakistan Peru Philippines Total (Percentage of the total Bilateral ODA, %) (43.6) (46.4) (55.0) (59.5) (57.0) 7. Cross-Cutting Issues Korea s untied aid ratio has decreased from 48.4% in 2009 to 35.7% in 2010, but rebounded to 55.1% in 2012 gradually. :: ODA Disbursement by Tied and Untied Aid (Commitments, USD million) Source: DAC Aid statistics in OECD.Stat Year Total Bilateral Aid Untied Aid Partially Tied Aid Tied Aid Untied Aid ratio(%)

93 ODA Volume and Allocation 93 Year Total Bilateral Aid Untied Aid Partially Tied Aid Tied Aid Untied Aid ratio(%) , , , , , , As for humanitarian assistance, the Korean government committed USD million in 2012, which accounted for 0.94% of total ODA volume. The ODA for emergency relief has also maintained a similar level across the recent three years. :: ODA Disbursement to Humanitarian Assistance and Emergency Relief (Commitments, USD million) Source: DAC Aid statistics in OECD.Stat Humanitarian Assistance Ratio(%) Emergency Relief Ratio(%) The Korean government allocated approximately USD million to cross-cutting issues such as the environment, gender equality, and human rights, an allocation expected to be on the rise along with the overall expansion of ODA volume and the pursuit of corresponding strategies. :: ODA Allocation to Multi-Sector and Cross-Cutting Issues (Net Disbursements, USD million) Source: DAC Aid statistics in OECD.Stat Multi-Sector/ Cross-Cutting ODA Ratio (%)

94 Public-Private Partnerships (PPPs) refer to the participation of the private sector, such as businesses and civil society, as stakeholders in Official Development Assistance (ODA) projects. During the persistent global economic depression, traditional donors reduced their ODA budgets, and thus the international community increasingly recognizes that the private sector s participation in ODA is indispensable for sustainable economic growth and development. In this context, the partnership of public and private sectors has become a major feature of international development cooperation ODA

95 06 Korea s ODA and Public-Private Partnerships (PPPs) Section 1. Definitions and Types of PPPs Section 2. Public-Private Partnership (PPP) in Korea s ODA

96 96 Chapter 6. Korea s ODA and Public-Private Partnerships (PPPs) Section 1. Definitions and Types of PPPs 1. Definitions and Importance of PPPs in ODA Public-Private Partnerships (PPPs) refer to the participation of the private sector, such as businesses and civil society, as stakeholders in Official Development Assistance (ODA) projects. PPPs can complement the insufficient public resources of ODA and involve diverse stakeholders for cooperation in development projects. Stakeholders of international development cooperation, which consist of traditional donors in Europe and North America and international organizations, such as the Organization for Economic Cooperation and Development (OECD) and the United Nations (UN), have expanded to include emerging donors such as China and India, as well as the private sector such as NGOs, research institutes, and media. This diversification of stakeholders in development has promoted global partnerships to address global issues such as poverty, hunger, gender equality, and climate change. During the persistent global economic depression, traditional donors reduced their ODA budgets, and thus the international community increasingly recognizes that the private sector s participation in ODA is indispensable for sustainable economic growth and development. In this context, the partnership of public and private sectors has become a major feature of international development cooperation. In fact, the size of private finance for developing countries had increased by approximately 3.5 times from 1990 to However, the proportion of ODA among development resources decreased from 60% to 30%, contrary to the increase of private resources of foreign direct investment. This expansion of private finance has made the international community recognize the importance of the private sector as a new stakeholder, particularly against the backdrop of the deepening global financial crisis and the shifting paradigm of development cooperation. In 2002, the leaders of 50 states who attended the UN International Conference on

97 Korea s ODA and Public-Private Partnerships (PPPs) 97 Financing for Development held in Monterrey, Mexico, agreed on the need for diverse financing and insisted that it should include the domestic financial resources of developing countries, ODA, foreign direct investment and other private flows for not only achieving the UN Millennium Development Goals but also global development. The Monterrey Consensus triggered a discourse regarding more diverse ways of PPPs, which aims to supplement limited ODA resources by expanding the participation of the private sector and to achieve better results by utilizing the private sector s expertise. Glossary The Monterrey Consensus is the outcome of the 2002 Monterrey Conference, the UN International Conference on Financing for Development. It recommends diverse ways to expand development resources by mobilizing domestic financial resources of partner countries, attracting international flows, encouraging international trade as an engine for development, increasing international financial and technical cooperation for development, promoting sustainable debt management and external debt relief and enhancing the coherence and consistency of the international monetary, financial and trading systems (United Nations, 2003). In particular, the Monterrey Consensus underlines the role of the private sector as a complementary provider of development efforts for sustainable economic growth In this context, it urges improvements in the business environment to activate private capital such as stimulating foreign direct investment (FDI) and promoting financial deregulations. :: Definitions of PPPs by Organizations Organization OECD ADB IMF EC Definition of PPPs An agreement between the government and one or more private partner according to which the private partners deliver the service in such a manner that the service delivery objectives of the government are aligned with the profit objectives of the private partners and the effectiveness of the alignment depend on a sufficient transfer of risk to the private partners. A range of possible relationships among public and private entities in the context of infrastructure and other services Arrangements where the private sector supplies infrastructure assets and services that traditionally have been provided by the government. A form of cooperation between public authorities and economic operators, which primarily aims to fund, construct, renovate or operate an infrastructure or the provision of a service 2. Types of PPPs Although a PPP includes diverse and innovative approaches to international cooperation, it basically refers to a project in which the private sector participates in the provision of social overhead capital (SOC) such as public infrastructure, assets, and services and shares with the public sector some of the possible risks associated with such a project. The arrangement allows the public sector to mobilize greater resources toward SOC projects while providing profitable business opportunities to the private sector.

98 98 A BOT (Build-Operate-Transfer) is the most common type of PPP projects, in which project companies or operators finance and construct a facility and operates it during the concession period. In a BOT, project companies cover their operating costs and debts with revenues, later returning the facility to the government upon termination of the operation phase. In Korea, most of the private-funded stations and expressways are BOT-type projects. Public-Private Partnership loans and Export Credit-EDCF Hybrid Financing to be introduced in Section 2, could also be utilized for BOT-type PPP projects in developing countries. This type of project is mainly applicable to infrastructure development in countries that are struggling to raise capital in the international capital markets due to their low credit ratings, or that are seeking to privatize national projects. Most PPP projects aim to supplement limited government funds, eliminate possible inefficiencies in public services, and efficiently execute large-scale projects through the sharing of project responsibilities and costs between public and private stakeholders on a long-term basis. Besides infrastructure projects, the Korean government is also considering various ways to forge partnerships with the private sector in promoting development, such as through ODA projects linked with Corporate Social Responsibility (CSR), collaborative projects with Civil Society Organizations (CSOs) and partnership projects with universities - which may be seen as PPPs in a broader, more inclusive sense of the term.

99 Korea s ODA and Public-Private Partnerships (PPPs) 99 Section 2. Public-Private Partnership (PPP) in Korea s ODA 1. PPP Projects by ODA Types 1) PPP projects in the ODA Grant sector The Korean government established the Mid-term ODA Policy ( ) and the Strategic Plan in 2010, seeking diverse ways to cooperate with private partners in order to improve ODA effectiveness. Private partners have gradually diversified across the past two decades from development NGOs and private or social enterprises to universities and research institutes. Partnerships with Civil Society Organizations (CSOs) In an effort to promote partnerships with internal and external CSOs, the Korean government supports field-oriented development projects to supplement governmental cooperation. The Korean government supports development projects identified by NGOs for poverty alleviation and welfare promotion in developing countries. This partnership program supports projects at the grass-roots level, which aim to build capacity and improve the life quality of people marginalized from traditional ODA projects; to this end, the partnership program utilizes the expertise and networks of private organizations. The budget allocated to CSOs increased from KRW 600 million in 2000 to KRW 2 billion in 2006 and reached KRW 18 billion in 2014, demonstrating a strong upward trend. Empowerment Program for Physically Disabled People in Kandal Province, Cambodia Project Period: (Tentative) Executing Agencies: KOICA & One-body One-spirit Movement (OBOS) Vocational training and business start-up education for disabled people Supporting capacity building and self-reliance of disabled people by realizing their personal rights and potential

100 100 The Korean government has expanded the range of assistance from Korean NGOs to local NGOs and CSOs in developing countries. It also supports capacity building of local organizations and utilizes local expertise to promote economic and social development in developing countries. In addition, to expand the participation of diverse CSOs in PPP programs by lowering barriers to entry, the Support Program for Project Identification was adopted in 2012 for small-sized or newly-founded private organizations. This program delivers capacity building education for project managers of those organizations and provides field surveys and consulting to improve quality of projects implemented by those private organizations. Finally, the Korean government provides various capacity building programs through grant-type ODA in order to strengthen the expertise of CSOs and other private actors in conducting projects; for instance, education on project operation, monitoring and result management, education for field practitioners, and support for the civil society s forums are all provided. Global CSR (Corporate Social Responsibility) Partnerships The Global CSR Partnership program supports aid projects conducted by Korean companies or non-profit foundations established by Korean firms. According to this program, the Korean government contributes an amount within 50% of total expense of a project which is developed by private companies. It is expected to create synergistic effects, thus contributing to poverty alleviation and to the socioeconomic development of developing countries. Since 2010, the Korea International Cooperation Agency (KOICA) has carried out the Global CSR program in order to promote cooperation with private companies. This program promotes partnership between the ODA agency and the private sector and supplements ODA resources with private companies sufficient financial resources, technical expertise, efficient business practices and networks, improving the effectiveness of ODA. It aims to create job opportunities and to promote sustainable economic development in developing countries via private investment and technological transformation, increasing private companies interest in ODA and their participation. For this program, a total of KRW 10.8 billion had been disbursed until 2013, since it received KRW 1.2 billion in The Korean govern-

101 Korea s ODA and Public-Private Partnerships (PPPs) 101 ment also plans to expand the number of projects it supports. Baking and Pastry Skill Course at the Korea-Vietnam Vocational Training College in Nghe An Province, Vietnam Project Period: Executing Organization and Company: KOICA & CJ Transferring baking and pastry skills by utilizing private companies expertise Aiming for job creation and income expansion through vocational training Partnerships with Universities The Korean government supports universities in order to implement development projects by utilizing their expertise on sectors and regions. Universities are involved in the post-management of KOICA s projects or in self-identified projects. The Korean government has introduced a partnership program with universities since 2012 to enhance university participation in international development cooperation. Partnerships with universities aim to enhance project sustainability and the medium- to long-term effectiveness of ODA projects. In particular, support for Project of transferring cultivation technique of highland vegetable and generating income in the Djummah region, Ethiopia Project Period: Executing Organizations: KOICA & Kangwon National University Increasing productivity by transferring vegetable cultivation techniques Supporting profit-maximizing strategy implementation through vegetable sales

102 102 projects that universities identified aims to contribute to capacity development of local human resources by utilizing the expertise in majors. It can create synergistic effects by promoting cooperation between universities and other organizations such as social enterprises, private companies, and developmental NGOs. Partnerships with universities are expected to promote the overseas entry of Korean experts and consultants specializing in development. 2) PPP projects in the ODA Loan sector Although PPP projects in the ODA Loan sector have not been widely pursued yet, the Korean government is exploring new PPP projects which can complement the typical and traditional ODA Loans by applying various project models. Public-Private Partnership (PPP) Loans The Korean government introduced PPP loans to facilitate private investment in developing countries. This program provides needed funds to the governments of developing countries or to companies conducting PPP projects, which can promote mutually beneficial cooperation by facilitating infrastructural expansion in developing countries and also by creating opportunities for Korean companies to play a leading role in project design, finance, construction and operation. The Korean government is also actively seeking ways to support projects by combining ODA loans with private investment, particularly for public projects that are less attractive due to political instability or low profitability. In such cases, the Korean government provides concessional loans that serve to ameliorate profitability, thereby attracting private investment in the SOC or infrastructure development project concerned. To facilitate PPPs, the Korean government can provide concessional loans to build the necessary infrastructure for the implementation of a PPP project, including access roads, which otherwise would have to be provided for by the government of the developing country concerned. It is also able to finance a portion of a PPP project such as a highway or toll road through an ODA loan. This model has been applied to a private highway project and a thermal power project in Vietnam. Currently, the Korean government is reviewing the Xepian-Xenamnoy Hydroelectric Power Generation Project in Laos, as potentially the first PPP project to be

103 Korea s ODA and Public-Private Partnerships (PPPs) 103 financed by an ODA loan. This project is aimed at building a 410 MW hydro power plant at the Mekong River in southern Laos to supply electricity to Thailand and Laos for 27 years. This project is expected to help boost Laos government revenue through increased taxation and dividend incomes, while also contributing to the broader Laotian economy by stimulating private investment, technological transfers, job creation, and infrastructure development. Export Credit-EDCF Hybrid Financing The Korean government provides financing packages that combine EDCF loans with Korea Eximbank s export credits to support large-scale infrastructure projects and the entry of Korean companies into foreign markets. The Hybrid Financing has similar characteristics to a PPP loan in that it aims to improve profitability and mitigate risks, by extending support to large-scale infrastructure projects, equity investments, or subsidies by developing country governments. The EDCF portion of the Hybrid Financing is recognized as ODA loans in ODA statistics. The Korean government provided a total of USD 100 million for the Laguindingan Airport Development Project in the Philippines, in a financing package combining an EDCF loan with an export loan from Korea Eximbank that allowed Korean enterprises to participate in this project. By providing such Hybrid Financing for projects in the transportation, energy, and water sectors where demand is rising in developing countries, Korea Eximbank seeks to promote the entry overseas of Korean companies as well as development. In order to widen the use of Hybrid Financing programs, Korea Eximbank set up a Consultative Group on SOC Projects consisting of EDCF, export credit agencies, and developing country governments in Vietnam and the Philippines. It also plans to apply this model to Indonesia and other countries interested in large-scale infrastructure and PPP projects. Guarantee Program Many governments of developing countries have difficulties in financing due to their low national credit rating. A bank guarantee program mitigates the risk of developing countries, acting as a useful method of attracting private investment for infrastructure projects in developing countries. This program is not a traditional tool of ODA, but given its positive impacts, the OECD DAC is discussing a way to treat the guarantee program as ODA.

104 104 The EDCF modified its related institutions by 2013 in order to identify diverse projects by utilizing the guarantee program, and it now conducts project identification and implementation for a pilot project in cooperation with multilateral development banks (MDBs) including the Asian Development Bank (ADB). International organizations and other bilateral donors are also supporting PPP-types of large-scale infrastructure development projects through the guarantee program. 2. Communication for Activating PPPs On January 13, 2014, 6 civilian experts participated in the 17th meeting of the Committee for International Development Cooperation (CIDC), including the president of KCOC (Korea NGO Council for Overseas Development Cooperation) and the Secretary General of Global Civic Sharing. 1) Public Participation in Policy-Making Process In line with the effort of the international community to strengthen partnerships with private sectors for diversifying and expanding development resources, the Korean government also actively cooperates with private sectors, including civil society and private enterprises. The Committee for International Development Cooperation (CIDC), a top decision-making body, appointed civilian experts as its members. The experts use their expertise in making ODA policies to enhance ODA effectiveness. By this effort, the Korean government establishes enduring and mutually beneficial partnerships, thus creating new opportunities for PPP proliferation. The CIDC is composed of 17 ministers and heads of organizations, and seven civilian experts from civil society, academia, and business. There are also seven civilian expert members in the Working Committee of the CIDC. Through this participation of civilian members, the Korean government has built a foundation for promoting participation of the public in the policy-making process and enhancing PPP. In the CIDC, the government and the private sector share information on Korea s ODA policies and discuss mutual cooperation. Finally, by converging expert opinion from various fields, the Korean government establishes balanced ODA policies. 2) Launching Private Consultative Body Development Alliance Korea (DAK) With increasing international attention to the role of the private sector for sustainable development, emphasized at the G-20 Seoul Summit and at The Fourth High Level Forum for Aid Effectiveness (HLF-4), the Korean government has expanded the ODA budget, and the private sector, including NGOs, academia, and private

105 Korea s ODA and Public-Private Partnerships (PPPs) 105 Ban Ki-Moon, UN Secretary General, delivers the keynote speech at the inauguration ceremony of the Development Alliance Korea (DAK). DAK is the first partnership body between the Korean government and private entities in grant aid. companies, has also increased its interest in ODA. Hence, the need for mutual communication and the creation of synergies through inter-organizational network in Korea have increasingly been highlighted. In this context, the first public and private alliance organization, DAK, was launched on August 2012, for more expansive PPPs under an overarching framework among the government, NGOs, enterprises, academia and other private actors. Eight institutions, including the Ministry of Foreign Affairs (MOFA), KOICA, Federation of Korean Industries (FKI), Korea NGO Council for Overseas Development Cooperation (KCOC), Korea Council for University Education (KCUE), Korean Association of International Development and Cooperation (KAIDEC), UN Global Compact Network Korea, and UN Academic Impact Korea, participated in the formulation of the alliance. Since its origin with 103 member organizations, DAK extended its participating members to 194 organizations by February of To date, PPPs have been implemented through the government s open bidding, whereas DAK implements innovative PPPs based on voluntary participation and leadership and jointly identifies projects by sharing information and by consulting on policies and strategies together. DAK aims to interconnect diverse partners strengths and expertise, minimizing trial and error in development projects as well as promoting the mutual benefit of donors and partners. To expand the network between partners, DAK holds a semi-annual meeting on a regular basis since September 2012 and subdivision meetings to exchange opinions among members and to devise ideas for PPPs. DAK also plans to expand its partnership to major donor countries, international organizations and global developmental NGOs. Global Infrastructure Development Forum (GIDF) The recent focus of the international community has been extended from poverty alleviation to enabling self-sustaining growth in developing countries. In the midst of growing recognition on the importance of investing in infrastructure to promote economic growth and poverty alleviation in developing countries, a Global Infrastructure Development Forum (GIDF) comprising governments, private sector entities, international organizations, and research institutes was launched to explore ways to support infrastructure building in developing countries through public-private partnerships (PPPs). About 150 participants took part in this forum,

106 106 The Global Infrastructure Development Forum (October 9, 2012) including not just parties to PPPs such as the World Bank, Japan International Cooperation Agency (JICA), International Contractors Association of Korea, and SK E&C, but also many government officials from developing countries involved in infrastructure development. This forum generated productive discussions on how to promote PPPs in facilitating economic growth and infrastructure development in developing countries. Whereas past ODA infrastructure projects in developing countries tended to center around agreements between donor and recipient governments, the GIDF discussed how to broaden the cooperation mechanism in such a way as to involve the private sector, so that ODA funds including EDCF may play a catalytic role for development by attracting private investments into developing countries. The GIDF aims to promote win-win solutions benefiting both developing countries and the South Korean private sector, by providing a venue for sharing knowledge that can enhance the effectiveness of infrastructure development as well as a platform of cooperation for among businesses aiming to enter developing markets. It will continuously strive to facilitate networking and cooperation among public and private stakeholders in infrastructure development in developing countries. 3) Efforts to Communicate with Private Stakeholders Since 2013, the Korean government has been holding regular discussions with civil society organizations, including KCOC, to enhance communication with the private sector and to expand its participation in development cooperation.. The regular discussion meeting is held on a quarterly basis and is led by the Prime Minister s Office (PMO) (twice a year) and by supervising ministries, the Ministry of Strategy and Finance (MOSF) and the Ministry of Foreign Affairs (MOFA) (an-

107 Korea s ODA and Public-Private Partnerships (PPPs) 107 nually). In this meeting, the Korean government shares major policy directions and major ODA plans with private stakeholders and listens to their opinions regarding the promotion of PPPs. In the meantime, the PMO held the Public-Private Joint Forum for Win-Win Types of ODA in cooperation with MOSF and MOFA, formulating a large-scale communication network encompassing ODA related CSOs, academia, and enterprises. In this forum, the Korean government introduced recent policy directions for the Win-Win Types of ODA and shared the best PPP practices by each private actor. KOICA and EDCF also introduced implementation progress and procedures of PPPs, while DAK and the GIDF held joint meetings in the afternoon session. This Forum is notable in a sense that it was the first joint Forum between DAK and the GIDF, encompassing all the private stakeholders in relation to ODA. The Korean government will provide such an integrative communication opportunity to promote PPPs. Public-Private Joint Forum for Win-Win Types of ODA

108 As a member of the Organization for Economic Co-operation and Development s (OECD) Development Assistance Committee (DAC), the Korean government endeavors to meet international standards and to actively participate in the process of forming new standards for the international community. Serving as the host of the G20 Seoul Summit in 2010 and the 4th High Level Forum on Aid Effectiveness (HLF-4) in Busan in 2011 was the important momentum for enhancing the leadership and prestige of Korea in terms of international development cooperation. Strengthening partnerships with recipient countries is conceived as one of the most significant values and principles in international development cooperation.. It is based on the recognition that a partner country is a partner with which to build peace and prosperity. ODA

109 07 Korea s ODA and International Cooperation Section 1. Korea s Participation in International Discussions Section 2. Cooperation with Donor Countries and International Organizations Section 3. Cooperation with Partner Countries

110 110 Chapter 7. Korea s ODA and International Cooperation Section 1. Korea s Participation in International Discussions Korea has rapidly grown to become an advanced donor country, drawing the attention of the international community. As a member of the Organization for Economic Co-operation and Development s (OECD) Development Assistance Committee (DAC), the Korean government endeavors to meet international standards and to actively participate in the process of forming new standards for the international community. In addition, on the basis of successful development experience, from a least-developed country to a donor, the Korean government plays a role as a bridge between developing and developed countries. Serving as the host of the G20 Seoul Summit in 2010 and the 4th High Level Forum on Aid Effectiveness (HLF-4) in Busan in 2011 was the important momentum for enhancing the leadership and prestige of Korea in terms of international development cooperation. 1. Leadership in the G20 Development Agenda Having played a leading role for adopting the development agenda of the G20 Seoul Summit, Korea has been reinforcing its leadership in ODA. The G20 development agenda is meaningful in a sense that it focuses on capacity building to establish the foundation of economic growth in developing countries, which is differentiated from donor-oriented development on aid effectiveness within OECD as well as from poverty eradication driven by social development within United Nations. G20 Seoul Summit During the G20 Seoul Summit, the leaders agreed to resolve bottlenecks for the growth of developing countries under the premise that the economic growth of developing countries contributes to a global financial balance. As a follow-up, the Korean government took the leading role in adopting the Seoul Development Consensus for Shared Growth and Multi-Year Action Plan on Development and launching the Development Working Group to monitor the implementation of the Multi- Year Action Plan. G20 member agreed on six development principles the Seoul

111 Korea s ODA and International Cooperation 111 Development Consensus for strong, self-sustained and resilient economic growth among the low-income countries (LICs). G20 Development Principles 1 Focus economic growth 3 Global or regional systemic issues 5 Complementarity 2 Global development partnership 4 Private sector participation 6 Outcome orientation Also, the Multi-Year Action Plan on Development identifies nine key pillars: ⅰ)infrastructure; ⅱ)human resource development; ⅲ)trade; ⅳ)private investment and job creation; ⅴ)food security; ⅵ)growth with resilience; ⅶ)financial inclusion; ⅷ)domestic resource mobilization; and ⅸ)knowledge sharing, in addition to specifying the main agents and time frames. At the G20 Los Cabos Summit in 2012, inclusive green growth was added as the 10th key pillar. The Korean government had actively led discussions as a co-chairperson of the Development Working Group from 2010 to The Korean government also contributed to drawing out results of the G20 Development Agenda as a co- facilitator of infrastructure, human resource development, knowledge sharing and inclusive green-growth pillars. In the G20 Saint Petersburg Summit in 2013, as the Multi-Year Action Plan of Seoul Summit was completed, the Accountability Report (reporting achievements of previous activities) and the Development Outlook (suggesting a new action plan based on the previous activities) were both adopted. Korea contributed to this process of drafting an evaluating documents and a new action plan as a member of the Core Group of Accountability Process. The Development Outlook of 2013 simplified the key pillars to five areas (food security, infrastructure, human resource development, financial inclusion, and domestic resource mobilization) in order to enhance the effectiveness of the G20 Development Agenda. The Korean government plans to closely cooperate with G20 members, including Australia, Chair country, and related international organizations to reinforce the implementation of the G20 Development Agenda as well as to harmonize with other global development discourses such as the Post-2015 Development Agenda and the Busan Global Partnership.

112 Hosting the Busan HLF-4 In 2011, Korea successfully hosted the HLF-4 for three days from November 29 to December 1. The HLF-4 involved approximately 3,000 participants including 10 highest ranking figures, 100 minister-level figures and representatives from 160 countries, 40 chiefs of international organizations and delegates from 70 international organizations, NGOs, congresses, and business corporations. The HLF-4, which was held just four years before the deadline for the Millennium Development Goals (MDGs), was one of the largest in scale and a showcase for development cooperation, which became a critical juncture for seeking an inclusive and futureoriented paradigm of development cooperation. In this forum, the international community comprehensively evaluated the progress made since the adoption of the Paris Declaration on Aid Effectiveness in 2005 as well as discussed measures to respond to environmental changes and emerging issues in international development cooperation. It also focused on deriving future directions toward inclusive and effective development beyond development assistance. Through the HLF-4, the international community tried to expand existing discussions on aid effectiveness to inclusive development cooperation. The HLF-4 discussed four major issue areas: first, the enhancement of the role of ODA to ultimately bring about development as an outcome going beyond effective delivery of aid; second, the need for political momentum to draw attention and participation of policy makers and the private sector beyond technical discussions on aid effectiveness; third, the establishment of inclusive partnerships considering the complex architecture for development cooperation and diverse stakeholders; and fourth, the joint efforts of the international community for effective development cooperation in the midst of global crisis such as climate change, food security, and financial crisis. Press Interview for adoption of the Result Document on December 2011 In the course of agenda development, Korea played a leading role for setting the agenda of effective development based on its successful development experiences. In particular, Korea merged the major driving forces of Korea s economic development into the agreement of Busan HLF-4 in terms of the establishment of effective institutions, the role of private companies, and women s empowerment, thereby sharing its own development experiences with the international community and eliciting a new development paradigm beyond aid.

113 Korea s ODA and International Cooperation 113 :: Shared Principles to Achieve Common Goals Shared Principles Ownership of development priorities by developing countries Focus on results Inclusive development partnerships Transparency and accountability to each other Action Plan Deepen, extend and operationalize the democratic ownership of development policies and processes Strengthen our efforts to achieve concrete and sustainable results. This involves better managing for results, monitoring, evaluating and communicating progress; as well as scaling up our support, strengthening national capacities and leveraging diverse resources and initiatives in support of development results Broaden support for South South and Triangular Cooperation, helping to tailor these horizontal partnerships to a greater diversity of country contexts and needs Support developing countries in their efforts to facilitate, leverage and strengthen the impact of diverse forms of development finance and activities, ensuring that these diverse forms of cooperation have a catalytic effect on development :: Common Goals and Commitments of HLF-4 Contents Common Goals Differential Commitments Political preamble Improving the quality and effectiveness of development cooperation From effective aid to cooperation for effective development Implementation system of Post-Busan Prospecting new global environment and Setting shared principals and actions in development cooperation Ownership, results and accountability Transparent and responsible cooperation Promoting sustainable development in situations of conflict and fragility Partnering to strengthen resilience and reduce vulnerability in the face of adversity Effective institutions and policies South-South and triangular cooperation for sustainable development Private sector and development Combating corruption and illicit flows Climate change finance Partner country- oriented implementation and Establishment of light type of global governance Shared Principals: Ownership Focus on results Inclusive development partnership Transparency and mutual accountability Common Actions: Deepen, extend and operationalize the democratic ownership of development policies and processes Strengthen efforts to achieve concrete and sustainable results Broaden support for South South and Triangular Cooperation Ensure that diverse forms of development finance have a catalytic effect on development Recognizing the difference and the complementary role between North-South Cooperation and South-South Cooperation, Recognizing shared principals and differential commitments, Expressing wills to formulate a new partnership for development cooperation and thereby achieve the Millennium Development Goals Accelerate efforts to untie aid Use and strengthening of developing countries system Make full use of data disaggregated by sex and integrate targets for gender equality and women s empowerment in accountability mechanisms Support parliaments, local governments and CSOs Make the full range of information on publicly funded development activities Implement a common and open standard for electronic publication (Aim of implementing it fully by December 2015) Provide timely rolling three- to five-year indicative forward expenditure and/or implementation plans to all developing countries by 2013 The Peacebuilding and State building Goals as an important foundation to enable progress towards the MDGs to guide our work in fragile and conflict-affected states Invest in shock-resistant infrastructure and social protection systems Support the implementation of institutional and policy changes led by developing countries Deepen learning on the determinants of success for institutional reform, exchanging knowledge and experience at the regional and global levels Scaling up the use of South South and triangular cooperation Encouraging the development of networks for knowledge exchange, peer learning and coordination among South South cooperation actors Enable the participation of the private sector in the design and implementation of development policies and strategies Promote Aid for Trade Implement respective commitments to eradicate corruption Accelerate individual efforts to combat illicit financial flow by strengthening anti money laundering measures, addressing tax evasion Continue to support national climate change policy and planning Continue to share lessons learned in development effectiveness with those entities engaged in climate activities Agree on a selective and relevant set of indicators and targets by June 2012 Launch of the Global Partnership for Effective Development Cooperation Agree on light working arrangements including its membership and opportunities for regular ministerial-level engagement by June 2012 Invite the OECD and UNDP to support the effective functioning of the Global Partnership

114 114 In the meantime, the HLF-4 meeting recognized the importance of South-South Cooperation in terms of its characteristics and contributions, which complement the traditional development cooperation between donors and partner countries. In this context, the Korean government played a critical role in building a new paradigm of international development cooperation by encouraging the emerging economies of China, India, and Brazil to participate in the HLF-4 and also to approve the final documents. The HLF-4 conference provided a momentum for Korea to reaffirm its global status as a leader of global issues by actively participating in formulating agendas following the G20 Seoul Summit that adopted the Seoul Development Consensus as a result. 3. Busan Global Partnership After the international community agreed on the initiation of the Global Partnership at the HLF-4, the Global Partnership for Effective Development Cooperation was officially launched at the Working Party on Aid Effectiveness (WP-EFF) held in Paris on June 28, The Busan Global Partnership is an inclusive development partnership firmly based on common principles and goals, while simultaneously respecting the complementary nature and the differences of diverse actors involved in development cooperation. In addition, as a governance model designed for an effective development cooperation through the actual implementation of the agreement made in the HLF-4, all stakeholders, including governments (OECD DAC member countries, partner countries, and emerging donors), NGOs, private actors and parliaments, have participated in this partnership. At the first ministerial meeting held in Mexico in April 2014, more than 160 signatory countries and 50 institutions which agreed on the Busan Global Partnership attended, which was the first step towards enhancing the political status of the Busan Global Partnership. The Busan Partnership for Effective Development Cooperation at the Fourth High-Level Forum on Aid Effectiveness, Busan, Republic of Korea in December 2011 Busan Global Partnership Workshop (18th 19th, November, 2013)

115 Korea s ODA and International Cooperation 115 The Korean government successfully settled the Busan Global Partnership through the demonstration of leadership as a host of the HLF-4 conference. As a followup, it launched the Busan Global Partnership Workshop as a regular international conference to monitor implementation of the Busan Global Partnership. The First Busan Global Partnership Workshop, jointly held with the UNDP Seoul Policy Center on November 2013 in Seoul, was attended by over 100 individuals from major international organizations, NGOs and academia. As preparation for the first ministerial meeting, this workshop discussed the major outcomes and issues of HLF-4 in Busan, the linkages between the Post-2015 agendas and the Busan Global Partnership, and South-South cooperation. Korea is currently a member of the Steering Committee of the Global Partnership. This committee is in charge of the practical operation of the Busan Global Partnership such as preparations for ministerial meetings and is composed of 21 executive members (for a duration of two years) and the joint chair group includes the ministerial figures of an advanced donor country (Netherlands), an emerging donor country (Mexico) and a partner country (Malawi). Having been recognized for its contribution as a host of the HLF-4 and vice-chairman of the Working Party on Aid Effectiveness (WP-EFF), Korea is serving as an executive member with the United States and the European Union (EU). 4. Participation in Building the Post-2015 Development Framework As the deadline of the MDGs is drawing near, the discussion on the post-2015 development agenda, which seeks to overcome the MDGs unbalanced outcomes by field and region and to address wide-ranging global issues in development such as growth, employment, and food security, has been led by the UN community and becoming imperative within the international community. In this regard, Korea is Seoul Post-2015 Conference Keynote Address by the Second Vice Minister of the MOFA Post-2015 Korea Forum (August 26, 2013)

116 116 also actively participating in the international discourses on the new development agenda for the post-2015 era. On August 26, 2013, the Post-2015 Korea Forum was held to strengthen the partnership among the domestic development actors and to formulate Korea s position on the post-2015 agenda. In this Forum, More than 200 participants attended the forum, including Foreign Minister Yun Byung-se, UN Secretary-General Ban Kimoon, and other Korean luminaries in relevant fields. This forum strengthened partnerships major development actors such as the private sector, civil society and academia all of whom will participate in designing and implementing the post development agenda. In addition, there has emerged a need discussion on the Post-2015 agenda to identify major development goals that well reflect specific needs and priorities of developing countries. To this end, MOFA and the UNDP jointly held the Seoul Post-2015 Conference on October 7, 2013, to share the findings from international discussions on the post-2015 development agenda and the best practices in ODA for the achievement of the MDGs. The Seoul Conference initiated global conversations on ways to implement the post-2015 development agenda. Participants reached a consensus that the post-2015 development agenda should pursue sustainable development encompassing economic, social and environmental dimensions, that global partnerships should be forged in various areas to accelerate the achievement of MDGs and implement the post-2015 agenda, and that efforts are needed to increase financing for development resources and strengthen monitoring.

117 Korea s ODA and International Cooperation 117 Section 2. Cooperation with Donor Countries and International Organizations The international community has emphasized harmonization among donor countries through the Paris Declaration on Aid Effectiveness. As the donors and types of aid have diversified, some ODA projects and procedures overlapped to increase transaction costs and burden for partner countries. The international community also raised concerns that donors different interests and goals might diminish the aid effectiveness. Against this backdrop, harmonization in sectors, methods and procedures among donors has become a significant issue in development cooperation. Since the 1980s, the OECD DAC has reinforced policy coordination among donors by forming consulting groups in various sectors and emphasized the quality of aid. Through the G20 Seoul Summit, the HLF-4, and discourses for the Post-2015, the international community has been formulating a new development framework and holding active discussions on harmonization and inclusive partnership based on mutual accountability. In particular, the OECD DAC members have a consensus on the need for a strategic division of labor and cooperation to reduce the operational costs and administrative burdens of partner countries. In this context, Korea has been endeavoring to promote cooperation with advanced donor countries and international organizations since it joined the OECD DAC. Furthermore, the Korean government is making efforts to make a good practice in cooperation and to establish a practical partnership. In particular, the Korean government is focusing on setting a comprehensive strategy and is searching for specific ways to cooperate with other donors. 1. Strengthening Partnership with Donors By strengthening partnership with advanced donors, Korea shares its experience and know-how and seeks to improve its ODA policies and institutions. Through policy consultations with advanced donor countries, the Korean government promotes aid harmonization among donors and shares ODA policies and case studies. The government currently has established partnership with 11 countries including Japan, the United Kingdom, Germany, France, Denmark, Australia, the United States, Canada, Netherland, Belgium and the EU as a whole, and it has held policy

118 118 consultations with those partners. Also by holding the Development Policy Dialogue with China, which is an emerging donor country, the Korean government is simultaneously promoting partnerships with emerging donor countries. Recently, there is the necessity of a mechanism for cooperation among middlepower countries, and Korea, Australia, Turkey, Indonesia and Mexico led the diplomacy of middle-power countries. Development cooperation has emerged as a critical issue in the diplomatic relations of middle-power countries. Thus, the middle-power countries plan to combine their efforts to establish and implement the Post-2015 development agenda, to utilize the Busan Global Partnership and to activate the G20 Development Group. Moreover, the Korean government has been promoting aid harmonization and effectiveness in the project implementation through joint projects with advanced donor countries. As part of this effort, KOICA and USAID plan to provide consultation and information services in the reproductive health sector for Ethiopian youth from This joint project will be conducted in 150 centers (out of 1,200 health centers located in Ethiopia) and will help improve adolescent health by conducting pregnancy tests, after birth care, family planning programs, and AIDS diagnoses. Besides participation in the donors consultation body or joint projects, the Korean government tries to reinforce coordination with donor countries by joint research and evaluation 2. Strategic Partnerships with International Organizations As a newly-emerging donor country, Korea is making efforts to strengthen partnerships with multilateral development organizations and MDBs, thereby obtaining their accumulated expertise, advanced technologies and strategies. Through these efforts, the Korean government tries to enhance its ODA capacities in compliance with international standards. Moreover, the Korean government considers this opportunity as a momentum to share Korea s strength and achievement in ODA. 1) Building Partnerships to Set the Post-2015 Goals With the target date (2015) for the MDGs approaching, the international community is actively engaging in discussions on designing the post-2015 development agenda is actively held in the international community. UN Secretary-General Ban Ki-moon, set the establishment of sustainable development framework for

119 Korea s ODA and International Cooperation 119 the post-2015 era as the key agenda of the United Nations. On August 1, 2012, he presented the general stance and the overview of opinions of the international community about the Post-2015 agenda by establishing the High-Level Panel on the Post-2015 Development Agenda, composed of 27 eminent persons to solicit views from the international community on the post-2015 agenda and framework. The UN Secretary-General appointed high-level government official, both former and incumbent, and other to the high-level panels, including former Foreign Minister Kim Sunghwan, Prime Minister of the United Kingdom David Cameron, Indonesian President Susilo Bambang Yudhoyono among over 120 candidates recommended by national governments and international organizations. The panel submitted its recommendation report to the Secretary-General in May 2013 for the post-2015 development agenda, thereby laying the foundation for intergovernmental consultations on building global partnerships to shape the post-2015 development agenda. At the panel meeting, Korea emphasized the importance of inclusive economic growth and green growth and actively promoted the usefulness of the Busan HLF-4 and the G-20 forum for reaching the post-2015 development goals which is reflected in the panel report. The participation of the Korean government in the panel once again confirmed its stature as an agenda-setting country in the development cooperation field. Also, Korea became a core founding member of the new international framework and conducted its middle-power diplomacy by contributing to discussions about international development based on its development experiences from a former recipient into a newly emerging donor country but became an indispensable member of the international community. Korea actively participated in efforts to eradicate poverty and promote development, thus contributing to the international community. 2) Partnerships with International Organizations for the Globalization of Saemaul Undong (New Community Movement) As the MDGs and Post-MDGs have emphasized the importance of sustainable rural development, the Saemaul Undong (New Community Movement) has drawn the attention of the international community as a useful model for rural development. As a result, many international organizations request for Korea s cooperation regarding this issue. In this context, the Korean government conducts joint-projects with OECD, UNDP, and WFP to develop a rural development policy and delivery models based on Saemaul Undong and promote Saemaul Undong ODA projects in

120 120 the global community. First, the Korean government has launched a joint project research with OECD in January 2014 to conduct a comprehensive comparative investigation on Saemaul Undong and the regional development policies of each developing country. Through this two-year research project, which will be conducted in the coming two years with USD 1 million, Korea s representative rural development project, Saemaul Undong, analyzed in comparison with the rural development of other countries. Then, the success factors of Saemaul Undong will be identified, particularly those applicable to other countries. In this way, the Korean government expects to establish a comprehensive and sustainable regional development model and share it with the international community. The Korean government also makes a joint effort with the UNDP to update, integrate and scale up elements of Saemaul Undong and to promote its application in the international community. For this purpose, the MOFA signed an MOU with the UNDP for the Korea-UNDP Global Initiative for the Saemaul Undong during the 68th UN General Assembly on September Based on this initiative, the Korean government is jointly carrying forward the project of Saemaul Initiative towards Sustainable and Inclusive New Communities to establish a globally applicable rural development model of Saemaul Undong, which is also expected to contribute to the implementation of the Post-2015 development agenda. In cooperation with the WFP also, the Korean government seeks to associate Saemaul Undong with the WFP s project for poverty eradiation in rural areas to prove validity of this movement as a solution for rural poverty. A strategic briefing session for the Global Saemaul Undong hosted by the Ministry of Government Administration and Home Affairs and the Ministry of Foreign Affairs

121 Korea s ODA and International Cooperation 121 3) Partnerships for Increasing the Food Production and Self-Reliance of Rural Areas The Korean government is attempting to strengthen partnership with the WFP, which is the largest humanitarian agency in the United Nations and which reflects the highest level of expertise on emergency relief activities for food-related development projects. Since 2011, the Korean government has built a partnership with the WFP to develop the Korea-WFP Food for New Village (FFNV) which is a three-year project in Nepal and Rwanda. This project focuses on food productivity and the capacity of self-reliance in rural areas, which has earned positive feedback from the local people. Since the WFP suggested expanding the project area under the title of Korea- WFP Saemaul Zero Hunger Communities, the Korean government and the WFP have expanded this project to Bangladesh and Tanzania. The WFP designated the Good Neighbors as an executing agency in this project, which provided significant momentum for Korea s NGOs to be an executing agency of international organizations. 4) Partnerships with the International Community on Core Development Issues Korea is making efforts to contribute to core development issues, such as gender equality and disaster response, in cooperation with international organizations. The Office for Coordination of Humanitarian Affairs (OCHA) is an organization in charge of the coordination of humanitarian assistance and emergency relief activities, support for the humanitarian assistance activities of governments, international organizations and NGOs. Korea has actively cooperated with OCHA, participating in the Consolidated Appeal Process (CAP) of the UN and contributing to the Central Emergency Response Fund (CEFR) as a member of an informal OCHA Donor Support Group (ODSG). The Korean government signed a MOU with OCHA on September 26 in 2013 to strategically implement humanitarian assistance activities. This MOU is expected to provide a foundation for strengthening a partnership with OCHA in humanitarian activities, by holding a regular meeting with OCHA, by reviewing the expansion of contributions to the fund and by expanding partnerships in the capacity building activities of OCHA. Korea also cooperates with neighboring countries to enhance disaster response systems; for instance, Korea successfully hosted the Third ARF DiREx with Thailand in Korea-OCHA MOU Signing Ceremony Meanwhile, the Korean government signed an MOU for the Korea-UNDP gender equality initiative, to ensure women s economic and political participation in frag-

122 122 ile states and developing countries on September 26, 2013, as a follow-up action for the HLF-4 held in This MOU is an agreement between Korea and UNDP for a general and comprehensive partnership for promoting gender equality, which defines partnership measures to develop and implement joint projects for gender equality. The Korean government plans to continue cooperation with UNDP to promote policy dialogue and strengthen capacity to achieve gender equality. Partnership MOUs with International Organizations (1) Korea-UNDP Saemaul Initiative Towards Inclusive and Sustainable New Communities (September 26, 2013). Aims to establish rural development model and to implement joint pilot project by comparative analysis on rural development cases of UNDP and Saemaul Undong. (2) MOU for Korea-UNDP gender equality initiative (September 26, 2013) Aims to share experiences of gender equality as a follow-up implementation of the Busan HLF-4 and promotes women s right through peaceful nation building, global policy dialogue on gender equality, capacity building and cooperation. (3) MOU for Korea-WFP Basic Partnership Basic partnership for more strategic cooperation based on the activities as an executing board member between 2011 and 2012 and experiences on project implementation. (4) MOU between Korea and OCHA(Office for Coordination of Humanitarian Affairs) For a more strategic execution of humanitarian aid, the Korean government reinforces discussion about the humanitarian aid with OCHA and promotes strengthening cooperation during the actual humanitarian aid on field. 5) OECD Knowledge Sharing Alliance (KSA) The OECD Knowledge Sharing Alliance (KSA) initiated in January 2013 is a key effort to realize the OECD s Strategy on Development, which aimed to expand knowledge sharing. The objective of KSA is to create new knowledge by gathering OECD expertise and development experiences of other advanced countries capable of knowledge sharing such as Korea and Germany and to apply that knowledge on field, so that developing countries can find a specific policy options suitable to their contexts. Since 2004, the OECD has helped in sharing economic development experience with developing countries and has requested Korea, which has become a leading country in terms of knowledge-sharing programs (KSPs), to become a partner of the KSA from the first stage of its formulation. The KSA will select core sectors in line with the comparative advantages of participating organizations (Korea s KDI, Germany s GIZ and others), while maintaining

123 Korea s ODA and International Cooperation 123 a policy coherence around the main pillars of the OECD Strategy on Development. Korea plans to participate in green growth and Making Reform Happen (MRH), based on its comparative advantages in infrastructure development. Korea s participation as the OECD KSA s main partner is a result of recognition from the international community for its development experience. With knowledge sharing becoming important through events such as the Busan HLF-4, the successful approach for related projects is likely to designate Korea as a leading country in the area of knowledge sharing in the near future. 6) Co-financing with MDBs As Korea s role in the international community has increased upon joining the OECD DAC in 2010 and hosting the G20 Seoul Summit, there is a greater need to expand ODA volume and to untie aid. In addition, advanced donor countries have reduced their aid volume due to global financial crisis, while the demand on aid from international aid organizations has been increasing. As a result, the need for partnerships among aid organizations is also increasing. In this context, the Korean government plans to expand cooperation with MDBs to increase insufficient aid volume and complement regional information. In particular, Korea has focused on co-financing with MDBs, which help in obtaining advanced aid skills and collecting information about the aid market. The Korean government had started a co-financing project with the Asian Development Bank (ABD) in 1993 for the Mindanao Power Transmission Project in Philippines, and later the Korean government made commitments worth a total of KRW billion to 27 different cofinancing projects with 8 institutions such as ADB, IDB, AfDB, IBRD, JICA, and AusAID as of the end of The 2012 Peer Review by the OECD DAC viewed co-financing with MDBs as a positive cases enhancing aid effectiveness through partnerships and program-based approaches. The Korean government plans to expand the volume of co-financing from 10.3% of the total EDCF budget in 2009 to 20% within the coming three years. For this purpose, the Korean government plans to establish an MOU containing inclusive partnership measures such as mid-term co-financing, information sharing,

124 124 exchange of human resources and regular consultation with MDBs. Also, while focusing the target for co-financing on large-scale infrastructure projects, climate change and water resource development (because it is difficult to support them by EDCF alone), the Korean government plans to establish a multilateral cooperation department in charge of co-financing projects with MDBs. This will strengthen the network with MDBs within the Korea Eximbank and build expertise in the field. 7) Joint Consulting with International Organizations In 2011, the Korean government initiated the Joint Consulting with International Organizations by developing the bilateral KSP into multilateral cooperation among donors, international organizations and partner countries. The introduction of Joint Consulting program allows Korea to offer consulting services that effectively catered to the needs of the recipient by utilizing regional specializations and networking capacities of international organizations. The Korean government proceeded with the Joint Consulting with ADB, IDB, AfDB and WB since 2011, and it has been expanding its scope to work with Development Bank of Latin America (CAF) since The current Joint Consulting Project is improved from existing bilateral cooperation between Korea and the partner country to triangular cooperation (Korea-International organization- Partner country). Through this cooperation, Korea expects to connect its own development experience to special expertise of international organizations, thereby creating synergistic effects in policy consultation. The Basic goal of Joint Consulting projects with international organizations is to share Korea s experience in economic development and support the socioeconomic development of partner countries. It also can be an opportunity for Korean experts to participate in overseas development consulting. Through this Joint Consulting project, the Korean government expects to commercialize Korea s development experience and to contribute to the industry of development cooperation consulting. 3. Diverse Partnerships with Innovative Financing Resources Innovative financing for development refers to a new development finance system to complement government budget-based ODA. It includes air-ticket solidarity

125 Korea s ODA and International Cooperation 125 levies, International Finance for Immunization (IFFIm) and financial transaction taxes. In 2007, the Korean government introduced an air-ticket solidarity levy, which charges a small amount of money (KRW 1,000) to all international flight passengers departing from Korea. Korea, France, Chile, Mauritius, Niger and Mali have introduced and operate this air-ticket solidarity levy. In Korea, the Contribution Management Committee holds meetings once or twice a year to review major policy issues concerning the management of these contributions, which consists of the Minister of MOFA (as a chairman) and eight members from government ministries and civilian experts in related fields. The introduction of this innovative financing for development has allowed Korea to utilize its distinctive financial resources, as differentiated from conventional ODA, and has provided opportunities for Korean NGOs to enhance their international capabilities in disease eradication projects. In addition, this innovative financing actively contributed to reaching the UN s MDGs and tackling other global issues, thus enhancing the nation s status. In particular, participation in the air-ticket solidarity levy has alleviated the burden for the Korean government to increase ODA volume up to 0.25%of GNI as well as dispersed ODA allocation previously focused on Asian countries to the least-developed countries in Africa. In an effort to build partnerships with international organizations holding expertise in the health sector, the Korean government has provided USD 35 million in total (USD 7million a year) to UNITAID, which mainly focuses on the treatment of three major diseases (HIV/AID, malaria, tuberculosis) and it provided USD 1 million to GAVI, which aims to improve child health by expanding supply of vaccines (increasing immunization in poor countries) between 2010 and In particular, the Korean government participates in the executive board of UNI- TAID, and on the board of directors in GAVI, sharing its ideas on innovative financing for development. Also, based on its experience in the air-ticket solidarity levy, the Korean government also has raised a matching fund since 2013 with the Gates Foundation by utilizing contributions to GAVI. The government will continue to strengthen its partnership with international organizations to expand financial resources for development.

126 Harmonization with Diverse Development Actors The Korean government makes efforts to harmonize diverse development agencies by organizing a consultative body encompassing donors, international organizations and partner countries. The Six Banks group (6Banks), in which Korea participates, is a major consultative body functioning as a delegation of donors in Vietnam, which constitutes 80% of total ODA in Vietnam. This consultative body was originally composed of three banks including ADB, JBIC, and the regional office of the World Bank in 1999, and it later represented five banks with AFD and KfW s participation in It finally expanded to become the 6Banks as Korea Eximbank joined in The 6Banks addresses policy issues in relation to the procedure and system of ODA projects and establishes goals for medium and long-term activities of the Partnership Group of Aid Effectiveness (PGAE), supporting implementation of the Hanoi Core Statement. Participating in the 6Banks, the Korean government improves the efficiency and effectiveness of the EDCF by sharing its experience and promoting joint responses. The Six Banks holds regular meetings to exchanges information on projects and programs and develops co-financing funds such as the Support Program to Re- MOU between the EDCF and the Vietnamese Minister of Transport on September 2013 With President Park Geun-hye and President Truong Tan Sangin in attendance, the Korea EximBank and the Vietnamese Minister of Transport entered into an MOU on the EDCF support worth $200 million.

127 Korea s ODA and International Cooperation 127 spond to Climate Change in Vietnam (SP-RCC), in which Korea s EDCF is jointly participating with the JICA, AFD, WB, CIDA, and AusAID. In this program, the Vietnamese government formulates policies related to its response to climate change, while donor organizations support the policies based on their expertise. Through these activities of the 6Banks, the Korean government takes part in international joint efforts as the second largest bilateral donor country for Vietnam based on the Paris Declaration and Hanoi Declaration. Simultaneously, it helps Korea enhance the visibility of ODA.

128 128 Section 3. Cooperation with Partner Countries Strengthening partnerships with recipient countries is conceived as one of the most significant values and principles in international development cooperation. It is based on the recognition that a partner country is not solely a recipient of foreign aid but also a partner with which to build peace and prosperity. Out of five principles of the Paris Declaration on Aid Effectiveness, three principles - ownership, alignment, and mutual accountabilities - stand out as emphasizing the importance of effective partnerships with countries. Based on its experience of taking a large step forward from a poor recipient to a donor country, Korea is well aware of the development cooperation in which the partner country is able to exercise ownership and make efforts to stand alone. In this context, the Korean government tries to strengthen equitable and effective partnerships with partner countries. 1. Field-orientation of ODA projects Through the process of field-oriented project implementation in the areas where partner countries might need aid, the Korean government is making an effort to become flexible and agile in meeting the needs of partner countries in line with their development strategies, priorities, institutions and implementation systems. For these field-oriented ODA projects, Korean embassies participate in overall process of a project from identification, implementation to evaluation. In particular, Korean embassies in partner countries hold the quarterly ODA Council, sharing information between implementing agencies and NGOs as well as coordinating projects. KOICA promotes field-oriented ODA strategies to implement recipient-oriented ODA projects in consideration of different development circumstances and environments of partner countries. In 2011, KOICA expanded its overseas offices from 27 in 2007 to 44 in 26 priority partner countries, while closely cooperating with partner countries and major donor countries. 2. The Expansion of Triangular Cooperation As a means to overcome conventional methods of ODA project implementation, the international community highlights the importance of South-South coopera-

129 Korea s ODA and International Cooperation 129 tion in which middle-income donor countries share their development experiences with surrounding developing countries to enhance aid effectiveness. Triangular cooperation represents the collaboration of two donors and one partner country in which a traditional donor country or international organization participates in the South-South cooperation led by an emerging donor country. In line with the current international trend, the Korean government is expanding triangular cooperation to establish an effective implementation system by strengthening activities in development cooperation. In terms of grant aid, the Korean government has cooperated with Singapore, Israel, Egypt, Mexico, and Chile in the form of joint-training programs. Korea invited Peruvian potato experts during the Project for Improving Crop Production Technique in Algeria and transmitted related techniques. Also, the Korean government has collaborated with Singapore for a joint training project on urban development, establishment of trade policies and green growth for the sustainable development in Asian countries. In 2012, Korea supported Colombia to open an engineering class in the National Learning Service (vocational training agency) in Colombia and to offer training to the engineers from Caribbean countries. Since this project received a positive evaluation, the government is preparing for the second round of the project. MOFA seeks to build a partnership through KOICA in order to implement systematic and efficient triangular cooperation and plans to expand partnerships in Central and South America and also to other regions. As a means to strengthen partnerships, the Korean government makes efforts to promote joint projects. In 2014, new projects are currently being developed in Brazil, Bolivia, Chile, and Paraguay. In Asia, Korea plans to implement a joint project with Thailand for capacity building to improve the medical service in Laos. :: Korea s Donor Country Partners for Triangular Cooperation Country Turkey Brazil Chile Mexico Thailand Date of signing a cooperation MOU (Year and month) In progress

130 Because the source of ODA comes from tax, it is critical for gaining public support for ODA. The Korean government plans to enforce diverse measures to enhance transparency in ODA. The implementation plan for international development cooperation, released on January 2014, contains the list of ODA projects and budget by the organizations and the Korean government plans to persist in its effort to share relevant information with the public. ODA

131 08 Directions of Korea s ODA Development Section 1. Accomplishments of Korea s ODA Section 2. Major Issues and Future Plans of Korea s ODA