29/01/2013 - An aid recipient less than two decades ago, Korea is now a donor and sharing its experience of how to use development co-operation as a catalyst to promote long-term sustainable growth in other countries.
Korea has trebled its official development assistance (ODA) to USD 1,325 million per year, or 0.12% of its gross national income over the past five years and is committed to further doubling it by 2015. The OECD's first ever Review of the Development Co-operation Policies and Programmes of Korea says that the government must manage this steep increase carefully to make its aid effective.
The Review commends Korea for the steps it has taken to improve its development co-operation since becoming a member of the Development Assistance Committee (DAC) in 2010. Building on this progress, the Review recommends that Korea's aid legislation and forward planning be more transparent, setting out aims, priorities and objectives as well as publishing spending figures in its 26 developing country partners and the sectors it supports.
Compared to other donors, Korea allocates a high proportion of its aid as loans rather than grants - about 40% of its total support to most countries and 18% to highly indebted poor countries. Based on its own experience, Korea believes that loans encourage fiscal discipline in the recipient countries. However, the Review recommends that when extending loans to the poorest countries and fragile states Korea should consider carefully the economic context and financial governance of these countries to ensure debt sustainability.
As staffing will become a major issue for Korea as it expands its aid programme, the government says it will increase the number of employees working on development. The Review recommends that Korea assesses the skills, training and resources needed to run the programme, streamlines procedures, works more with civil society organisations, and supports fewer - but larger - projects.
The Review also recommends strengthening the committees and mechanisms that ensure coherence amongst the ministries overseeing Korean aid, ensuring better co-ordination both at headquarters and with partner countries.
To further increase the effectiveness of its development efforts, says the Review, Korea should better evaluate the impact of its aid. It should also follow the example of other DAC members which, on average, have untied 88% of their aid to least developed countries compared to Korea's 27%.
The Peer Review of Korea took place over an eight month period, including visits to Seoul and Cambodia, culminating on 11 December 2012 with the DAC peer review meeting in Paris. Australia and Germany acted as peer examiners, with supporting analysis provided by the OECD Secretariat.
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For more information about this or OECD's other national development peer reviews, please contact Michael Ward (Michael.Ward@oecd.org or by telephone + 331 45 24 76 47) in the OECD Development Co-operation directorate.