At a glance
- South Korea is the fifteenth-largest donor country, spending US$2.4 billion on official development assistance (ODA) in 2018. This corresponds to 0.14% of gross national income (GNI) making South Korea the twenty-fifth-largest donor in proportion to the size of its economy.
- Since becoming a member of the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) in 2010, South Korea has committed to increasing its ODA and strengthening its international development cooperation.
- Since 2012, Korea’s ODA volumes have increased but ODA as a proportion of GNI has been relatively stable. The government pledged to increase ODA to 0.2% of GNI by 2020, however, it is not clear this will be achieved based on current trends. The government has further committed to doubling its ODA to member states of the Association of Southeast Asian Nations (ASEAN) by 2022 (compared to 2017 levels) and to spending 0.3% of GNI on ODA by 2030.
- Korea’s second Strategic Plan for International Development Cooperation for 2016-2020 prioritizes economic infrastructure, environmental policy, Sustainable Development Goals (SDG) alignment, girls’ health and education, and agricultural development. It also places a strong focus on transparency, accountability, and sustainability.
- According to the 2020 International Development Cooperation Implementation Plan, funding will focus on sectors where Korea has a comparative advantage, notably: transport, information technology (IT), health, water hygiene and sanitation (WASH), and education.
- The 2020 implementation plan calls for greater synergies between loans and grants, stronger partnership with civil society and international organizations, and increasing investment in priority sectors, including humanitarian assistance.
- South Korea disburses a high proportion of its ODA bilaterally through concessional loans and focuses on its regional neighbors. 11 of South Korea’s 24 priority countries are in Asia.
- The government is developing its third Strategic Plan for International Development Cooperation (2021-2025). Publication is expected in late 2020. The new strategy is expected to focus on achieving the SDGs and increasing the volume and effectiveness of South Korea’s ODA, including provisions to improve synergies between ODA projects implemented by different agencies.
- The government intends to further align development cooperation with their foreign and national policies and strategies, including through implementing the government’s New Southern Policy and the New Northern Policy.
- Korea International Cooperation Agency (KOICA) has established a committee to develop a New KOICA 2030 Transformation Plan. The committee is expected to make recommendations on KOICA’s future strategic direction including defining KOICA’s objectives and strategy to achieve the SDGs through ODA.
- ODA trends
South Korea is a small yet growing donor; the government aspires to spend 0.2% of GNI on ODA by 2020 and 0.3% by 2030
The Republic of Korea (referred to as South Korea in this profile) is the fifteenth-largest donor country in the world: in 2018, it spent US$2.4 billion on ODA (current prices). This corresponds to 0.14% of South Korea’s gross national income (GNI), making South Korea the twenty-fifth-largest donor in proportion to its economic size. South Korea was itself an ODA recipient until 1995.
South Korea is the 15th-largest donor country: It spent US$2.4 billion on ODA in 2018.
South Korea disburses a large proportion of its ODA through concessional loans. In 2018, 41% of bilateral ODA was disbursed through loans or equity investments, more than four times the OECD Development Assistance Committee (DAC) average of 9%. Because such a large proportion of South Korea’s ODA is disbursed as loans, the OECD’s new system for quantifying ODA — which only counts the ‘grant’ portion of a loan as ODA rather than the total cash-flow — affects the official headline figures for South Korea’s ODA. According to this new methodology, which became official in 2018, South Korea’s total ODA for 2018 was 2.7% lower than it would have been if reported using the cash-flow basis measurement system. (For more information on the changing methodology, see the Donor Tracker Codebook.)
To allow for comparison over time the OECD still publishes ODA calculated using the old cash-flow methodology. Based on these figures, ODA volumes have increased from US$1.4 billion in 2010 — when South Korea became a DAC member — to US$2.4 billion in 2018.
The total ODA budget is set to increase to US$2.9 billion (KRW3.2 trillion) in 2019 and to US$3.1 billion (KRW3.4 trillion) in 2020. The government intends to increase ODA gradually to 0.2% by 2020 however, this would require a considerable increase in the ODA/GNI ratio which has been relatively stable since 2012 (peaking at 0.16% in 2016). The government plans to further increase ODA to 0.3% of GNI by 2030, despite limited support for increased ODA spending among the South Korean public. The government also intends to double ODA to the Association of Southeast Asian Nations (ASEAN) member states by 2022 (compared to 2017 levels).
Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.
- Policy priorities
South Korea prioritizes sharing their own successful development experience and promoting inclusive partnerships for development
The Framework Act on International Development Cooperation, first published in 2010 and amended in 2018, outlines the overarching principles of South Korean development cooperation and clarifies the responsibilities of different actors. The Framework Act sets out six ‘basic ideas’ for development: 1) poverty reduction; the human rights of women, children, and people with disabilities, 2) gender equality, 3) sustainable development and humanitarianism, 4) economic cooperation, and 5) peace and prosperity in the international community. Supporting developing countries to achieve the Sustainable Development Goals (SDGs) and protecting human rights of adolescents, were added with the amendments made in 2018.
South Korea’s second five-year Strategic Plan for International Development Cooperation published in 2015 and in effect between 2016 and 2020, translates the Framework Act into concrete strategic priorities for medium-term development policy and indicative volumes of ODA. It prioritizes increasing development assistance for economic infrastructure and environmental policy issues, enhancing alignment with the SDGs, funding girls’ health and education, and promoting agricultural development. The plan places a strong focus on transparency, accountability, and sustainability in development projects. The foreign ministry and wider government are in discussions to develop South Korea’s third Strategic plan covering 2021 to 2025. These deliberations are expected to continue until late 2020 when the plan will go through an approval process with the Committee for International Development Cooperation (CIDC).
South Korea’s key development priorities for 2016 to 2020:
- Increase ODA: Gradually increase total ODA to 0.2% of GNI by 2020 (2018: 0.14%)
- Focus on bilateral ODA: Maintain ratio of bilateral/multilateral ODA at 70:30 (2018: 75:25)
- Keep grant/loan ratio: Maintain ratio of grants/ loans ODA at 60:40 (2018: 59:41)
Within the five-year Strategic Plan, South Korea’s development cooperation is guided by an annual ‘International Development Cooperation Implementation Plan’ that outlines specific priorities. The 2020 International Development Cooperation Implementation Plan says the government will prioritize helping neighboring countries achieve the SDGs and will focus on sectors where South Korea has a comparative advantage, such as transport, information technology (IT), health, water hygiene and sanitation (WASH), and education. Grant assistance will be prioritized in five sectors: education, health, humanitarian assistance, public administration, and agriculture and fisheries.
The government will prioritize helping neighboring countries achieve the SDGs, according to the 2020 Implementation Plan.
In October 2018, the South Korea government adopted two policies to guide its future foreign relations: the New Northern Policy and the New Southern Policy. These policies demonstrate South Korea’s intention to strengthen engagement with India and the Association of Southeast Asian Nations (ASEAN) and to engage in more regional infrastructure connectivity projects (such as railways and power generation) in cooperation with North Korea, Russia, China, and the former Soviet states in Central Asia. These policies are expected to increase South Korea’s ongoing development focus on infrastructure activities around Asia.
In addition to its thematic initiatives, the government has become more active in global debates around development in recent years. Following the Fourth High Level Forum on Aid Effectiveness (HLF-4) in Busan in 2011, South Korea has hosted regular ‘Busan Global Partnership Forums’ to bring together stakeholders to reinforce the commitment to and track progress against the principles agreed. As part of the government’s endeavors to establish itself as a middle power country, Korea is scheduled to host the Partnering for Green Growth and the Global Goals (P4G) Summit and a Trilateral Summit between the Republic of Korea, China, and Japan.
- ODA breakdown
South Korea focuses on bilateral ODA and uses a high proportion of loans
South Korea channels most of its ODA bilaterally. According to OECD data, 63% or US$1.6 billion was disbursed bilaterally in 2018, compared to the OECD Development Assistance Committee (DAC) average of 45%. A further 12% or US$314 million was disbursed as earmarked funding to multilaterals. In line with OECD reporting practices, South Korean regards earmarked funding to multilaterals as bilateral assistance, therefore current flows are consistent with their target bilateral to multilateral ratio of 75:25.
Loans and equity investments accounted for 41% of South Korea’s bilateral ODA in 2018, more than four times the DAC average of 9%. South Korea’s emphasis on loans can be explained by the Ministry of Economy and Finance’s strong preference for promoting fiscal discipline in recipient countries and by the positive experience, South Korea itself had with loans when it was an ODA recipient. Despite some debate within government about the risks of creating high levels of debt in partner countries through loans, the government intends to maintain a stable, high share of loans.
South Korea channels most of its bilateral grants and loans through its own implementing agencies (80% went through the public sector in 2018), mainly Korea International Cooperation Agency (KOICA) and the Korean Export-Import Bank (Korea Eximbank). It seeks to diversify its activities by promoting public-private partnerships such as the Global Corporate Social Responsibility Program, which encourages the involvement of the South Korean private sector in development cooperation. Despite this goal, only 1% of ODA was channeled through public-private partnerships in 2018 and only 0.2% was channeled through private sector institutions.
Infrastructure is South Korea’s biggest area of bilateral cooperation
Supporting infrastructure through loans is a key focus of South Korea’s bilateral ODA investments. In 2018, the government disbursed 21% of its bilateral ODA to infrastructure projects, up from 17% in 2017. Most of this funding was in the form of loans to Asian countries. Other key areas of bilateral cooperation include education (12% of bilateral ODA); health and population (11%); agriculture, including forestry, fishing and rural development (9%); and water and sanitation (8%).
Supporting infrastructure through loans is a key area of South Korea’s bilateral ODA investments.
Bilateral ODA is concentrated in Asia
South Korea’s bilateral assistance centers on Asia, particularly its Southeast Asian neighbors. This focus was reaffirmed by the 2020 International Development Cooperation Implementation Plan. In 2018, 40% of bilateral ODA went to Asia, significantly above the DAC average of 15%. South Korea has 24 priority countries, eleven of which are in the Asia-Pacific region, seven in sub-Saharan Africa, four in Latin America, and two in Central Asia (see box). The largest recipient of South Korea’s bilateral assistance in 2018 was Viet Nam, receiving 8% of all bilateral ODA, predominantly in the form of loans.
Programming of bilateral funding for priority countries is set through Country Partnership Strategies (CPS). Country Partnership Strategies (CPS) outline two to three priorities for bilateral funding in priority countries.
Half of South Korea’s bilateral ODA (50%), went to lower-middle-income countries (LMIC) in 2018, well above the average of OECD DAC member average of 23%. 20% of South Korea’s bilateral funding went to low-income countries (LICs), close to the DAC average of 19%.
25% of South Korea’s ODA is channeled multilaterally
Only 25% of South Korea’s ODA is channeled as core funding to multilaterals, compared to the DAC average of 41%. This share has been relatively constant since South Korea joined the DAC in 2010. 12% of funding in 2018 was earmarked to multilaterals, close to the DAC average of 14%.
The government has said it intends to expand multilateral collaboration in response to global challenges including climate change and humanitarian crises. In 2016, they published a ‘Multilateral Aid Strategy’ identifying five UN agencies (United Nations Development Programme (UNDP); World Food Programme (WFP); United Nations Children’s Fund (UNICEF); World Health Organization (WHO); and United Nations High Commission for Refugees (UNHCR)) that they intend to collaborate with based on their policy focus.
The government announced its first commitment of US$3 million a year from 2020 to 2022 to the Coalition for Epidemic Preparedness Innovations (CEPI) to support the international response to the COVID-19 crisis.
Unless otherwise indicated, all data in this section is based on the cash-flow basis measurement system. For more information, see our Donor Tracker Codebook.
- Main actors
Ministry of Foreign Affairs and Ministry of Strategy and Finance steer policy; KOICA and the Korea Eximbank implement
The President of South Korea leads the government and sets broad strategic guidelines for development cooperation including ODA volumes and thematic priorities. They are supported by the Prime Minister. The President’s directions are honored by ministries and agencies. Moon Jae-in (of the Democratic Party) has been President of South Korea since 2017, following the impeachment of the previous President, Park Geun-hye. Chung Sye-kyun has been Prime Minister since January 2020. Within the Prime Minister’s office, Jang Young Hyun is Director-General of the ODA Bureau.
Two ministries guide development policy under the overall policy and decision-making authority of the President: the Ministry of Foreign Affairs (MOFA) and the Ministry of Economy and Finance (MOEF, formerly the Ministry of Strategy and Finance).
- MOFA, led by Kyung-wha Kang since 2017, sets policies and priorities for bilateral grants and multilateral ODA channeled through the UN and other multilateral instruments, such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund). Bilateral grants are implemented by the Korea International Cooperation Agency (KOICA), which is supervised by the MOFA (see below). Within MOFA, a director-general (currently Cho Yeong-moo) is responsible for the development cooperation bureau.
- MOEF, led by Hong Nam-ki, sets policies for ODA loans and manages contributions to multilateral development banks. It also supervises South Korea’s Economic Development Cooperation Fund (EDCF), which finances bilateral loans, and the Export-Import Bank of Korea (Korea Eximbank) that implements them (see below). In addition, the MOEF sets the national budget, and its Budget Office can veto MOFA grants and loans that do not meet project-approval criteria. Within MOEF, a Director-General (currently Park Il-Yeong) is responsible for the Development Finance Bureau.
Within these ministries, key actors include:
- KOICA, overseen by MOFA, is a key player in development policy implementation in South Korea. KOICA was founded in 1991 and provides bilateral grants and technical cooperation. KOICA has 42 country offices and representatives dispatched to the UN and the OECD. It elected its first female President, Mi-kyung Lee, in November 2017.
- EDCF was established in 1987, with the purpose of promoting economic cooperation between South Korea and partner countries through loans. MOEF is responsible for EDCF operations and policymaking. The Korea Export-Import Bank (Eximbank) manages and implements EDCF loans. The Eximbank supports South Korea’s economic development through strengthening exports, imports, and overseas investment projects. Its goals include promoting economic cooperation with partner countries, developing South Korea’s strategic industries, and promoting unification with North Korea.
SOUTH KOREA'S DEVELOPMENT COOPERATION SYSTEM
These actors are overseen by the Committee for International Development Cooperation (CIDC), the coordinating body responsible for deciding on major ODA-related policies. The CIDC was established in 2006 and meets approximately three times per year. It consists of 25 members including the Prime Minister (who chairs it), 14 cabinet members, the president of KOICA, the chair of the Korea Eximbank, and seven civilian experts. The Sub-Committee for Evaluation — composed of the directors-general of MOFA and MOEF, executives from KOICA and Korea Eximbank, as well as nine representatives from academia and civil society — usually meets before each CIDC meeting to advise CIDC and to review how South Korea’s ODA spending aligns with the Sustainable Development Goals (SDGs) agenda. The latest OECD Development Co-operation Peer Review, published in 2018, found that CIDC involvement in priority-setting has strengthened quality assurance and results management in South Korea’s development cooperation.
Major ODA-related policies are decided by the CIDC.
Parliament: The National Assembly of the Republic of Korea, the Parliament, can influence the direction of South Korea’s development policy and budget. The National Assembly votes on, amends as necessary, and approves the budget bill presented by the government. Within the National Assembly, the Foreign Affairs and Unification Committee is responsible for development cooperation and can change overall ODA spending amounts and specific allocations through its Sub-Committee on Budget. The Parliament provides the legal basis for South Korea’s ODA policies. South Korea’s next general election is on April 15, 2020, meaning that the chair and members of the Foreign Affairs and Unification Committee may change.
Civil Society: South Korean civil society organizations (CSOs) are involved in policymaking, however, they have raised concerns in recent years that the government only consults them in ad-hoc and selective ways. CSOs play a minor role in implementing South Korea’s ODA.
- Budget structure
MOFA and MOSF manage three-quarters of ODA budget; the budget is very prescriptive
The majority (76%) of South Korean ODA is provided by the Ministry of Economy and Finance (MOEF, 41%) and the Ministry of Foreign Affairs (MOFA, 35%). The remaining 24% is spread across 39 other ministries and agencies, including 16 ministries and 10 regional or provincial governments, all of which have their own ODA budget.
South Korea’s overall ODA budget includes breakdowns by sector, region, ministry, and implementing agency. It also sets out how much funding is allocated to bilateral and multilateral channels within each ministry’s budget. In addition, the annual budget lists concrete activities to be funded from each ministry’s budget. This leads to very limited ministerial discretion over their respective budgets once each has been approved by the Parliament.
According to the government’s planned budget, 81% of the 2020 budget will be allocated as bilateral ODA, including earmarked funding to multilaterals, the remaining 19% as multilateral. Within bilateral assistance, 54% will be allocated as grants and 46% as concessional loans. South Korea will also continue to focus its development cooperation on Asia and Africa, with the latter receiving around 18% of bilateral ODA.
Over 40 ministries and agencies are involved in disbursing the ODA budget; the majority is managed by the Ministry of Economy and Finance and the Ministry of Foreign Affairs.
Within individual agencies, 89% of MOEF’s ODA budget will be delivered bilaterally, almost exclusively as loans through the Economic Development Cooperation Fund (EDCF). Only a small amount (US$50 million, 6% of MOEF’s bilateral ODA) will be delivered as grant funding. The rest of MOEF’s budget (US$118 million) will be provided through assessed and voluntary contributions to multilateral organizations and international financial institutions.
MOFA’s ODA-related budget has two major funding lines, bilateral grants, and multilateral organizations. Bilateral grants account for 90% of MOFA’s ODA, broken down into projects/programs, technical assistance channeled through Korea International Cooperation Agency (KOICA), and funding delivered through public-private partnerships. MOFA’s multilateral ODA comprises assessed contributions to international organizations and voluntary contributions to international organizations.
Korea's ODA budget 2020
Ministry of Economy and Finance (MOEF) 1,293 1,422 Bilateral 1,148 1,263 Economic Development Cooperation Fund loans 1,077 1,185 Grants (including Committee for International Development Cooperation spending) 71 78 Multilateral (assessed and voluntary contributions incl. Global Agriculture and Food Security Program) 145 159 Ministry of Foreign Affairs (MOFA) 1,089 1,198 Bilateral grants 975 1,073 Project and programs 418 460 Technical assistance 193 212 Development consultation and other spending 301 331 Public-private partnerships 59 65 Admin costs 6 6 Multilateral (assessed and voluntary contributions incl. Gavi and UNITAID and part of funding for the Global Fund) 114 125 Other ministries, of which 362 398 Ministry of Health (incl. part of funding for the Global Fund) 53 58 Ministry of Agriculture (incl. Food and Agriculture Organization, International Fund for Agricultural Development) 81 89 Prime Minister’s Office (including Committee for International Development Cooperation spending) 8 9 International financial institutions (IFI) 429 472 UN and other agencies (including UNDP, WHO, UNICEF, UNHCR, WFP, UN Women) 164 180 Adjustment (some financing for IFI and UN and other agencies comes from ministry budgets - i.e. health ODA is provided by Ministry of Health) -221 -243 Total ODA spending 3,115 3,427
- Budget process
Overall ODA levels are set by the Ministry of Economy and Finance between January and April; specific allocations are made between July and October
- Ministries submit medium-term finance plans: Each ministry submits a medium-term spending plan to the Ministry of Economy and Finance (MOEF) by the end of January. Based on this, the MOEF draws up budget guidelines including spending limits for each ministry.
- Ministries develop budgets: Between May and June, ministries develop their budgets for the coming year, based on the limits set by the MOEF. At this stage, relevant ministries, particularly the Ministry of Foreign Affairs (MOFA), develop proposals for sectoral and geographic allocations of ODA. Key stakeholders are the directors-general of the ministries, as they submit the ministerial budgets for review in June.
- The CIDC debates budget allocations: Between July and September, ministries that have a role in dispersing ODA negotiate their sectoral and geographic allocations. This process is led by the Committee for International Development Cooperation (CIDC). It includes expert consultations followed by a review by the Cabinet.
- The government submits its draft budget: By the beginning of September, the government submits its draft budget to the Parliament (National Assembly) for debate, amendments, and approval. Once the budget has been submitted, committees within the National Assembly review the draft budget in detail. The Foreign Affairs and Unification Committee is responsible for the ODA budget. Following the review, the Special Committee on Budget and Accounts conducts an overall review of the budget draft.
- Parliament approves the budget: In December, the National Assembly votes on the ODA budget in a plenary session.
The Ministry of Economy and Finance (MOEF) draws up budget guidelines including spending limits for each ministry.