At a glance
- South Korea is the 15th-largest donor country. It spent US$2.2 billion on net official development assistance (ODA) in 2017 (in current prices). This corresponds to 0.14% of gross national income (GNI).
- South Korea became a member of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) in 2010. Although OECD data shows a decrease in ODA between 2016 and 2017 (-7%), the government is committed to increasing its ODA and strengthening its commitment to international cooperation.
- ODA is expected to reach 0.2% of South Korea’s gross national income (GNI) by 2020, up from 0.14% in 2017. South Korea further aims to reach an ODA level of 0.3% of GNI by 2030.
- The ‘Strategic Plan for International Development Cooperation for 2016-2020’ outlines the current strategic priorities of South Korea’s development policy and indicative volumes of ODA. It specifies that the country will continue to channel around 40% of its ODA in the form of loans.
- According to the ‘2019 Annual Implementation Plan for Development Cooperation’, funding is expected to focus on five sectors: transport, health, environment, education, and agriculture and fisheries.
- Overall, South Korea will likely continue to focus its bilateral investments on transport and energy infrastructure in Asia, a large share of which in the form of loans. 11 of its 24 priority countries are in Asia.
- The ‘2019 Action Plan’ that complements the implementation plan calls for greater synergies between loans and grants, stronger partnership with civil society and international organizations, and increasing investments in priority sectors, including humanitarian assistance.
- South Korea is expected to continue increasing its ODA in years to come, and a large part of the anticipated additional funds have yet to be allocated. This provides opportunities to engage with the South Korean government and shape the direction of development policy moving forward.
- South Korea will host an inaugural international conference on ‘Action with Women and Peace’ in 2019. The goal is to bring together stakeholders from the global development and security community to discuss best policy practices and bring attention to the issue.
- South Korea expects to host the fifth ‘Busan Global Partnership Forum’ in late 2019. The forum will bring together stakeholders to reinforce commitment to and track progress toward the Busan Principles of development effectiveness that came out of the 2011 ‘Fourth High Level Forum of Aid Effectiveness.’
- How much ODA does South Korea provide?
South Korea is a small yet growing donor; government plans to increase ODA to 0.2% of GNI by 2020
The Republic of Korea (referred to as South Korea in this profile) was the 15th-largest donor country in 2017. It spent US$2.2 billion in net ODA in 2017 (in current prices). This corresponds to 0.14% of South Korea’s gross national income (GNI), a decrease from 0.16% in 2016. This ranks South Korea 26th in terms of ODA as a share of GNI.
South Korea was an ODA recipient until 1995 and became a member of the OECD Development Assistance Committee (DAC) in 2010. Since then, it has increased its ODA volume steadily: ODA rose by 18% between 2015 and 2016. In 2017, however, ODA decreased by 7%. According to OECD data, this decrease is mainly due to lower core contributions to multilateral organizations in 2017 compared to 2016.
In 2017, South Korea provided US$2.2 billion in total ODA, or 0.14% of its GNI
In 2018, the total ODA budget increased to KRW3 trillion (US$2.7 billion), or 0.17% of GNI, and in 2019 is set to increase further to KRW3.2 trillion (US$2.8 billion). The government’s ‘Strategic Plan for International Development Cooperation for 2016-2020’ plans for ODA to increase gradually to 0.2% by 2020.
In 2017, South Korea reported that 11% of its bilateral ODA (US$167 million) targeted gender equality and women’s empowerment as either a significant or principal goal of the development activity. This is below the DAC average of 39%.
- What are South Korea’s strategic priorities for development?
Promoting rural development remains a key priority
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: poverty reduction, human rights, gender equality, sustainable development and humanitarianism, economic cooperation, and peace and prosperity in the international community. The latest amendment added support to developing countries in achieving the Sustainable Development Goals (SDGs) and protecting the human rights of adolescents as objectives of South Korea’s development cooperation.
The ‘Strategic Plan for International Development Cooperation for 2016-2020’, published in 2015, translates the Framework Act into concrete strategic priorities for medium-term development policy and indicative volumes of ODA. The current administration places a strong focus on transparency, accountability, and sustainability in development projects.
A key priority of South Korea’s development policy is to promote inclusive and sustainable rural development based on ‘Saemaul Undong’ (the ‘New Village Movement’). Saemaul Undong was a community-based approach that South Korea applied in the 1970s to raise the standard of living in rural parts of the country. Although the movement is associated with former President Park Chung-hee, the father of impeached President Park Geun-hye, it has retained support from the current government. The Korea International Cooperation Agency (KOICA), the Ministry of Public Administration, and regional governments are still implementing Saemaul Undong projects. Rural development is expected to remain a priority of South Korean ODA, and Saemeul Undong will likely remain a key program for implementation.
South Korea’s key development priorities for 2016 to 2020:
- Increased ODA: Gradually increase total ODA to 0.2% of GNI by 2020 (2017: 0.14%)
- Focus on bilateral ODA: Maintain ratio of bilateral/multilateral ODA of 70:30 (2017: 74:26)
- Keep grant/loan ratio: Maintain ratio of ODA provided as grants vs. loans at 60:40 (2017: 61:39).
The Strategic Plan also prioritizes the increase of development assistance to economic infrastructure and environmental policy issues, alignment with the SDGs, funding girls’ health and education, and agricultural development. Within the five-year Strategic Plan, South Korea’s development cooperation is guided by an annual document that outlines specific priorities, the ‘International Development Cooperation Action Plan’. The 2019 International Development Cooperation Action Plan, published in January 2019, outlines five sector priorities: transport, health, environment, education, and agriculture and fisheries.
South Korea has strengthened its action related to empowerment of women and girls including through opening a UNFPA office in Seoul in February 2019 and launching an ‘Action with Women and Peace’ initiative that involves greater support in the area of women, peace, and security, as well as strengthened efforts to tackle gender-based violence. The Ministry of Foreign Affairs (MOFA) has committed KRW1.1 billion (US$1 million) to UNFPA to implement the Action with Women and Peace initiative.
A key priority of South Korea’s development policy is to promote inclusive and sustainable rural development based on ‘Saemaul Undong’ (the ‘New Village Movement’).
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’. With these policies, South Korea plans to strengthen its engagement with the Association of Southeast Asian Nations (ASEAN) and India as well as expand its involvement in regional infrastructure connectivity projects (such as railways and power generation) in cooperation with North Korea, Russia, China, and former Soviet States in Central Asia. These policies will likely strengthen South Korea’s ongoing development focus on infrastructure activities in the Asian region.
In addition to its thematic initiatives, the government has become more active in global debates around development in recent years. In 2019, Tae-yul Cho, the permanent representative of South Korea to the United Nations (UN), was elected president of the executive board of the UN Development Program (UNDP), UN Family Planning Association (UNFPA), and the UN Office for Project Services (UNOPS) for 2019. Following South Korea’s hosting of the Fourth High Level Forum on Aid Effectiveness in Busan in 2011, it held ‘Busan Global Partnership Forums’ annually between 2014 and 2017. A fifth forum is expected in late 2019.
- How does South Korea spend its ODA?
Focus is on bilateral ODA; new multilateral ODA strategy highlights aim to enhance effectiveness
South Korea provides most of its ODA in the form of bilateral funding. In 2017, the South Korean government channeled US$1.7 billion bilaterally or 74% of total ODA, according to data from the OECD. This was above the average of the OECD Development Assistance Committee (DAC, 60%). The government plans to keep the share of ODA spent bilaterally at about 70% for the period 2016 to 2020.
Loans accounted for 39% of South Korea’s bilateral ODA in 2017, 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 this instrument when it was an ODA recipient. The Ministry of Foreign Affairs, on the other hand, is in favor of disbursing ODA as grants to prevent higher levels of debt in partner countries. Nonetheless, the government plans to maintain a stable, high share of loans.
South Korea channels most of its bilateral grants and loans through its own implementing agencies (83% in 2017), mainly KOICA and the Korean Export-Import Bank (Korea Eximbank). It also seeks to diversify its activities by promoting public-private partnerships such as the ‘Global Corporate Social Responsibility Program’, which promotes the involvement of the South Korean private sector in development cooperation. Despite this goal, the share of funding channeled through public-private partnerships was only 1% in 2017, and that channelled through private sector institutions was 0.3%.
Infrastructure is a focus area of bilateral cooperation
Supporting hard infrastructure through loans is a key area of South Korea’s bilateral ODA investments. In 2017, the government disbursed 17% of its bilateral ODA to infrastructure projects, down from 20% in 2016. Most of this funding was in the form of loans to Asian countries (70%). Other key areas of bilateral cooperation include education (13% of bilateral ODA in 2017); health and population (12%); water and sanitation (10%), and agriculture, including rural development (8%).
Supporting hard infrastructure through loans is a key area of South Korea’s bilateral ODA investments.
South Korea’s bilateral ODA is concentrated on Asia
South Korea’s bilateral assistance has a clear focus on Asia, particularly its Southeast Asian neighbors. Funding to Asia was on average 45% of bilateral ODA between 2015 and 2017. The largest recipient over this time was Vietnam, which received around 12% of bilateral ODA, predominantly as loans.
South Korea has 24 priority countries for ODA. Eleven of them are in the Asia-Pacific region, seven in sub-Saharan Africa, four in Latin America, and two in Central Asia (see box). The focus on Asia has been reaffirmed by the 2019 International Cooperation Action Plan, which allocates 39% of bilateral ODA to the Asia-Pacific region (up from 37% in 2018), 22% to sub-Saharan Africa (an increase from 18% in 2018), and 5% to the Middle East and Central Asia (a decrease from 12% in 2018). South Korea’s priority countries are mostly neighboring countries, many of which are middle-income countries (MICs).
MICs received almost half (46%) of South Korea’s bilateral ODA in 2017, well above the average of OECD DAC members (33%). At 37%, South Korea’s funding to low-income countries (LICs) is also far above the OECD average (24%).
For a deeper understanding of funding at the recipient level, please consult data from the International Aid Transparency Initiative (IATI). IATI is a reporting standard and platform on which organizations and governments voluntarily publish data on their development cooperation, including more recent activity than is available through OECD data.
Data can be searched by recipient country, the ‘publisher’ (including funders that do not report to the OECD), and other filters. Click here for more information on IATI’s data. Click here to go directly to IATI’s ‘d-portal’, a user-friendly interface for data searches.
- Who are the main actors in South Korean development cooperation?
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. The president’s directions are honored by ministries and agencies, including on ODA volumes and thematic priorities. Moon Jae-in (Democratic Party) has been president of South Korea since 2017, following the impeachment of the previous president, Park Geun-hye. Moon appointed Lee Nak-yeon as prime minister shortly after his inauguration. Within the prime minister’s office, Young Hyun Jang is Director-General of the ODA Bureau.
Under the overall policy and decision-making authority of the president, two ministries guide the definition of development policy: the Ministry of Foreign Affairs (MOFA) and the Ministry of Economy and Finance (MOEF, formerly the Ministry of Strategy and Finance).
- MOFA, currently headed by Kang Kyung-wha, 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 Hyun-joo Oh) is responsible for the development cooperation bureau.
- MOEF, currently led by Nam-ki Hong, 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 also veto MOFA grants and loans that do not meet project-approval criteria. Within MOEF, a director-general (currently Jang Heo) is responsible for the development finance bureau.
SOUTH KOREA'S DEVELOPMENT COOPERATION SYSTEM
Major ODA-related policies are decided by the Committee for International Development Cooperation (CIDC). The CIDC is composed of 25 members and includes the prime minister (who chairs the CIDC), 14 cabinet members, the president of KOICA, the chair of the Korea Eximbank, and seven experts.
The CIDC was established in 2006 and has since adopted major policies including the ‘Strategic Plan for International Development Cooperation for 2016-2020’ and annual ODA implementation plans. The CIDC meets approximately three times a year. 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 – meets usually before each CIDC meeting. The sub-committee reviews the alignment of South Korea’s ODA spending with the Sustainable Development Goals (SDGs) agenda and gives advice to CIDC.
Bilateral ODA priorities are articulated by the government in the Strategic Plan for International Development Cooperation for 2016 to 2020. Programming of bilateral funding for priority countries is set through Country Partnership Strategies (CPS). CPSs cover periods of three to five years, to match recipient countries’ national planning cycles; the strategies set out two to three priority sectors. In its latest Peer Review, published in 2018, the OECD found that CIDC involvement in priority setting has supported strengthened quality assurance and results management in South Korea’s development cooperation. Desk officers have a great deal of discretion over priority sectors at the country level and are decided during the update of the CPS (every three to five years).
Based on a CPS, South Korean policy-makers develop concrete project proposals for the following year. This process, occurring between July and September, is coordinated by inter-agency committees led by MOFA and MOEF, as well as the CIDC. Once proposals are developed, the MOEF can still veto any grant or loan; this has happened repeatedly in the past.
Major ODA-related policies are decided by the Committee for International Development Cooperation (CIDC).
- KOICA is another key player in the implementation of development policy in South Korea. KOICA was founded in 1991 and is responsible for providing bilateral grants and technical cooperation. Over the past 20 years, almost half of total ODA spending (46%) and three-quarters of all grants (75%) were provided by KOICA through country offices in 28 partner countries. KOICA 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. The direction of EDCF operations and policy-making responsibilities rest with the MOEF. The Korea Export-Import Bank (Eximbank) manages and implements EDCF loans. The Eximbank was established in 1976 to support South Korea’s economic development through strengthened exports, imports, and overseas investments projects. Its goals include the promotion of economic cooperation with developing countries, development of South Korea’s strategic industries, and unification with North Korea.
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 ultimately 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 also provides the legal basis for South Korea’s ODA policies, for example by approving the Framework Act on International Development Cooperation in 2010.
Civil Society: South Korean civil society organizations (CSOs) are involved in policy-making, yet they have raised concerns in recent years that the government has only consulted them in ad-hoc and selective ways. Nonetheless, six CSO delegates are members of the CIDC. CSOs play a minor role in implementing South Korea’s ODA. In 2017, only 3% of South Korea’s bilateral ODA was channeled through CSOs, an increase from 2% in 2016, but well below the average of member countries of the OECD’s Development Assistance Committee (DAC, 17%).
Programming of bilateral funding for priority countries is set through Country Partnership Strategies (CPS). CPSs cover periods of three to five years, to match recipient countries’ national planning cycles.
- How is the South Korean ODA budget structured?
MOFA and MOSF manage three-quarters of ODA budget; the budget is largely prescriptive
The majority (73%) of South Korean ODA is provided by the Ministry of Economy and Finance (MOEF, US$1.2 billion, 42% of total ODA in 2019) and the Ministry of Foreign Affairs (MOFA, US$891 million, 31%). The remaining 27% is spread across 41 other ministries and agencies.
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.
The 2019 budget prescribes that 78% will be disbursed as bilateral ODA and 22% to multilaterals. 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 22% of bilateral ODA.
Most of MOSF’s ODA budget is delivered bilaterally (90%), almost exclusively as loans administered by the Economic Development Cooperation Fund (EDCF).
Within individual agencies, most of MOEF’s ODA budget is delivered bilaterally (90%), almost exclusively as loans through the Economic Development Cooperation Fund (EDCF). Only a small amount (US$50 million, 5% of MOEF’s bilateral ODA) is delivered as grant funding. The rest of MOEF’s budget (US$118 million) comes in the form of assessed and voluntary contributions to multilateral organizations and international financial institutions.
The ODA-related budget of MOFA comprises two major funding lines, for bilateral grants and multilateral organizations. Bilateral grants account for 90% of MOFA’s ODA, broken down into projects/programs, technical assistance (channeled through 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 2019
Ministry of Economy and Finance 1,178 1,331 Bilateral 1,060 1,198 Economic Development Cooperation Fund loans 1,009 1,141 Grants (including Committee for International Development Cooperation spending) 50 57 Multilateral (assessed and voluntary contributions incl. Global Agriculture and Food Security Program) 118 133 Ministry of Foreign Affairs 891 1,007 Bilateral grants 800 905 Project and programs 363 410 Technical assistance 177 200 Development consultation and other spending 194 219 Public-private partnerships 57 64 Admin costs 10 12 Multilateral (assessed and voluntary contributions incl. Gavi and UNITAID and part of funding for the Global Fund) 91 102 Other ministries 124 141 Ministry of Health (incl. part of funding for the Global Fund) 48 54 Ministry of Agriculture (incl. Food and Agriculture Organization, International Fund for Agricultural Development) 68 77 Prime Minister’s Office (including Committee for International Development Cooperation spending) 8 10 International financial institutions 494 558 UN and other agencies (including UNDP, WHO, UNICEF, UNHCR, WFP, UN Women) 131 148 Total ODA spending 2,831 3,200
- What are important milestones in South Korea’s annual 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
The Ministry of Economy and Finance (MOEF) draws up budget guidelines including spending limits for each ministry.
- Ministries submit medium-term finance plans: Until the end of January, each ministry submits a medium-term spending plan to the Ministry of Economy and Finance (MOEF). On this basis, 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.