Author: Iain Watson, Ajou University
In 2021, the OECD’s Development Assistance Committee (DAC) reported that its member states’ official development assistance (ODA) amounted to 0.33 per cent of total gross national income (GNI). South Korea provided just 0.16 per cent of its GNI to ODA, well below the OECD’s long-term target of 0.7 per cent. At the same time, South Korea registered an increase of 20.7 per cent to US$2.86 billion disbursed as ODA which included an increase in bilateral aid and concessional loans.
South Korea became a member of the DAC in 2010 following active foreign aid strategies aiming to ‘bridge’ South Korea as a new donor with recipient partners. South Korea’s choice of recipient partners reflects each president’s understanding of South Korea’s role as a regional middle power. Since 2010, these have been ‘global Korea’ (Lee Myung-bak), the ‘Eurasian strategy’ (Park Geun-hye), ‘new southern policy’ (Moon Jae-in) and ‘global pivotal Korea’ (Yoon Suk-yeol).
As a new member of the DAC, Seoul could make the case that it should focus on promoting new agendas such as aid effectiveness and prioritise sectors in which it had a comparative advantage — including infrastructure and green growth niches. As the first country to have transitioned from aid recipient to a DAC aid donor, South Korea’s credibility has been based on sharing its rapid development experience. Seoul has promoted its aid through public diplomacy as an empathetic and ‘win–win’ development partner.
But concerns have been raised that South Korean ODA has a high level of tied aid for a DAC member and that its ODA policy is directly and indirectly used to further Chaebol interests. The Moon administration drew up South Korea’s ‘2021–2025 Comprehensive Plan for International Cooperation’ for fostering ‘win–win’ and increasingly bilateral partnerships with 27 priority recipient countries. It also made commitments to increase multilateral aid to achieve sustainable development goal targets in neighbouring low-income countries.
South Korea’s newly-elected conservative president, Yoon Suk-yeol, will need to shore up the domestic credibility of policies in priority ODA sectors. These include building post-COVID-19 health and education capacities and supporting environmental governance and administration. Domestic economic credibility will also form a key aspect of South Korea’s ODA legitimacy. The narrative of being a ‘new donor’ is no longer viable and cannot be used to justify the aspects of South Korean ODA out of step with DAC norms, such as an emphasis on concessional loans and tied aid.
The Yoon administration should maintain the current ODA policy to avoid the inconsistencies and institutional fragmentations that can often accompany fixed five-year presidential administrations. On both counts, Yoon could move away from the ‘soft power’ narratives of South Korean ODA that have long legitimated relations with recipient countries. This shift would mean moving away from previous elite-led emphasis on promoting South Korea’s development history and instead facilitating opportunities for younger South Koreans to generate genuine ‘creative economy’ networks with similar demographics in recipient countries.
During the recent election campaign, Yoon hinted at the significance of demographic changes in South Korea for government policy — potentially including its ODA strategy. Domestic encouragement and support for start-ups and small businesses founded by younger South Koreans could nurture networks with local businesses in recipient countries.
Yoon could also capitalise on the aid community’s growing interest in the role of public–private partnerships (PPPs) and pivot South Korea into these agendas. For some stakeholders, PPPs represent the ‘privatisation of aid’. But an open acknowledgment of economic interests alongside the shift of international norms toward PPPs may yield spaces for managing these tensions.
To ensure that the benefits of such partnerships reach beyond big businesses, efforts could be made to generate a creative economy in the donor and recipient countries through small business models of PPPs. This could nurture South Korea’s role as a donor willing to learn from recipients and generate networks based on mutual trust and information flow.
PPPs could also provide a link to Seoul’s other niche initiatives in aid effectiveness and green growth. This approach to ODA could ensure South Korean ODA’s credibility and resilience in low- and middle-income recipient countries seeking aid and investment. Efforts can also be made to ensure that the independence of small- and medium-sized businesses in both South Korea and recipient countries is protected from often predatory Chaebol supply chain monopolies.
These networks could reframe South Korea as an ODA platform donor that meshes local and grassroots ODA projects while strengthening the South Korean domestic economy, forming a genuine ‘win–win’ ODA agenda and pivot with recipient countries. Cultivating these ‘win-win’ relations may also provide an opportunity for South Korea to open up new partnerships with other donor countries, thereby expanding Seoul’s trans-regional and strategic options as a genuine pivot state and facilitating less dependency on traditional regional economic partners.
Iain Watson is an Adjunct Professor at the Department of International Development and Cooperation at Ajou University in South Korea.
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