Executive summary

Fourteen years after joining the DAC in 2010, Korea is at a pivotal juncture as it rapidly scales up official development assistance (ODA) and works to align its interests and ambitions with global values to assume more global responsibility, as outlined in its 3rd Mid-term Strategy and President Yoon’s strategic plan for Korea. Korea’s own development story has helped bolster public support for Korean development co-operation, which continues to increase. The 2024 approved ODA budget of USD 4.8 billion represents a 39.5% increase in ODA from 2023 and is an amount that would exceed 0.25% of gross national income (GNI). In 2022, ODA represented 0.17% of GNI. Although it no longer sets an ODA-to-GNI target, Korea would be on track to meeting its previous target to reach 0.30% by 2030.

Korea could work to expand its global influence and footprint in development co-operation through more strategic dialogue and partnerships with key bilateral and multilateral partners – likely to be important conduits for scaling-up in the short term. With the increase in ODA, it will be important for Korea to consider the capacity of different partners to absorb a significantly larger ODA budget using the full range of instruments and modalities available. Aside from grant aid, technical co-operation, and loans for infrastructure, these also include programme- or policy-based loans extended by the Economic Development Cooperation Fund (EDCF) that initially served to quickly bridge finance gaps during the COVID pandemic.

The 2022 Framework Act on Sustainable Development has the potential to bring greater coherence between domestic and international policy as it stipulates that the economic development of Korea should not come at the expense of the environment and social justice of other countries. To adopt more development-friendly and coherent policies, Korea should fully operationalise the National Council on Sustainable Development under the Office of the President to consider the transboundary effects of Korea’s policies, building on the Council’s mandate to review the implementation plans of ministries. Korea could also encourage the inter-ministerial Committee for International Development Cooperation (CIDC) to raise awareness on the effects of domestic policies on developing countries.

Korea has put greater emphasis on providing climate finance and greening ODA as a central pillar of its external climate action, as illustrated by the recent increase in the share of climate-related ODA to 35% – higher than the DAC average of 29%. Building on the Green New Deal ODA Strategy and as it rolls out the EDCF’s pilot Climate Change Impact Response Framework, Korea could complement current efforts to expand climate-related ODA volumes by extending such an approach to all parts of the Korean administration. This would set a strong trend for policy continuity throughout this administration and beyond.

Korea concentrates its bilateral ODA largely in countries most in need and could build on this foundation to support stronger partner engagement. Country partnership strategies do not generally set out a theory of change linking priority areas to poverty reduction, but there are good examples of Korea working to reach those left behind while simultaneously taking action to ensure complementary and supportive policies to ensure sustainability. Nonetheless, working to support partner countries’ capacity and accountability to manage for results and sustain programmes over time continues to be an important challenge. More upstream and regular dialogue in partner countries on the overall policy environment over time could help increase sustainability and effectiveness of Korea’s investments. Adapting more quickly to changing priorities and needs will also require more reactive systems and structures, and these are likely to be best supported through greater delegation to Korean International Cooperation Agency (KOICA) and Export-Import Bank of Korea (KEXIM) country offices.

The 2024 budget proposal to more than double humanitarian assistance is a welcome response to growing needs. Since the 2018 Peer Review, Korea has developed a humanitarian-development-peace (HDP) nexus implementation plan, revised its humanitarian assistance strategy, and recently amended the Overseas Emergency Relief Act to expand the legal scope of humanitarian activities. These form a strong basis for Korea to consider a more comprehensive cross-government response to crises and to implement the HDP nexus.

The Korean government has clarified its partnerships with civil society through a new policy and implementation plan – a clear achievement since the 2018 Peer Review. ODA funding to civil society, at just 2% of bilateral ODA, is lower than the DAC average. The new policy is an opportunity to strengthen the capacity of Korea’s civil society to deliver effectively. There is potential to provide greater incentives for Korean civil society to partner with regional or local civil society that it does not support directly to help build mutual capacity and allow for greater focus on locally led development.

The cross-government experience and expertise Korea brings is a strength, but with 45 different ministries and agencies it also represents risks in terms of quality and impact of Korea’s growing development co-operation programme. Strong leadership by the Prime Minister’s Office (Office for Government Policy Coordination) working with the Ministry of Foreign Affairs (MoFA), Ministry of Economy and Finance (MoEF) and the line ministries is essential to deliver on Korea’s ambition to scale up ODA based on medium-term objectives and results. For this reason, the Expert Committee for Evaluation under the CIDC has commissioned a cross-government institutional capacity review to identify any gaps in performance management. The review is an opportunity to prioritise ODA increases to implementers with high performance management quality and capacity and to draw on the strengths of KOICA and KEXIM in performance management and evaluation to support the delivery and quality assurance of ODA across government.

Korea’s strong emphasis on accountability could be more balanced with learning across the system. Different governmental bodies in Korea, in addition to carrying out evaluations, also conduct audits. Organising and responding to such exercises each year take a considerable amount of time away from other tasks. More clearly communicating Korea’s contribution to sustainable development and sharing lessons across implementers could reinforce the learning component of performance management.

The 2020 revision of the Framework Act is a sign that Korea expects to adopt a more coherent, cross-government approach to implement a larger budget. It strengthened the integration and co-ordination function of the CIDC, which piloted the strategic packaging of grants, loans, and public and private ODA across a number of Korea’s many government entities managing ODA to increase project size and build on synergies. As plans for integrated programmes continue to be refined, Korea should build on lessons learned from this pilot and the grant and loan committees organised by the MoFA and MoEF to bridge and sequence investments to determine how to realise greater efficiencies and impact, including by delegating greater authority to country level to scope, identify, co-create, and manage large-scale, integrated programmes.

Securing sufficient human resources is a key challenge as Korea scales up its ODA. Strengthening and working with civil society, academia, contractors, and the private sector should help increase the pool of development experts. Korea’s joint inter-agency plan to cultivate and increase the number of ODA professionals in 2022 could be used to plan for increases and incentivise greater mobility across ministries and implementers. Increasing senior-level and sector expertise in overseas missions and country offices will be essential for Korea to secure and strengthen partnerships and the sustainability of operations in countries where it works. Higher ODA volumes should create more and better opportunities for locally employed staff.

Private sector mobilisation efforts require political will to embrace a greater risk appetite and to expand untied aid, building on tools already available to KEXIM. More private sector engagement will be instrumental to Korea’s planned ODA scale-up. Strategic partnerships and co-financing with multilateral development banks (MDBs) and bilateral development finance institutions are being explored as an effective means to rapidly expand private sector operations. Blending operations could also be expanded based on KOICA’s experience with private sector programmes, including its Development Innovation Program. Its active private sector also puts Korea in a strong position to drive conversations on responsible business conduct in partner countries where it is present.

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