This is the first installment of a three-part series looking into South Korea‘s official development aid policies and projects. -- Ed.

Armed with development know-how and a technological edge, Korea is striving to carve out a niche as nations vie to secure a greater presence in emerging markets through more effective assistance.

Albeit relatively small in financial firepower, Seoul offers its experiences from its transformation within a few generations from an aid recipient to a member of the Organization for Economic Cooperation and Development’s Development Assistance Committee.

The country’s official development assistance spending topped $1.9 billion in 2015, making it the world’s 16th-largest aid provider, OECD data shows. It has provided a total of $16.2 billion in ODA since 1987.

Under last year’s comprehensive development framework, the government plans to increase annual expenditure to 0.2 percent of gross national income from the current 0.14 percent by 2020.

It has since been scaling up its aid commitments and personnel to help developing nations fight poverty, disease, climate change and other pressing tasks, with the Korea International Cooperation Agency taking the driver’s seat as the country’s grant aid distributer.

In line with the Sustainable Development Goals, Seoul currently focuses on improving education, health, science technology and rural development in developing countries through key initiatives. It also formulates a country partnership strategy every three to five years to better provide custom-tailored assistance.

Yet challenges remain, such as the limited overall aid budget, a lopsided reliance on concessional loans in proportion to grants, and fragmented policies among responsible state agencies.

While the share of loans in Seoul’s ODA has gradually risen, most of the other 28 DAC countries, except the US and Japan, have adopted a 100 percent grant principle. Korea’s GNI ratios are still far lower than the 0.3 percent rich-world average.

Conflicting goals between the Foreign Ministry and the Finance Ministry and have long been blamed for fueling tension and eroding the aid’s overall effectiveness, with the Prime Minister’s Office having failed to play a coordinator role. Officials from the OECD DAC, the UN and other nongovernmental agencies at home and abroad have relayed relevant concerns. 

Many diplomats complain that the Finance Ministry resists calls for a rise in grants while sharply ramping up its own loans program. Economic policymakers, for their part, say they have been struggling to prop up public finances amid listless growth that may take its toll on tax revenues and their long-pursued ambition to balance the country’s books.

Experts and relief workers have also been calling for a diversification of beneficiaries to include least developed countries based on humanitarian concerns rather than economic interests. From 2008-12, more than 55 percent of the country’s ODA was provided to Asia, in particular Southeast Asian countries, and the bulk of the remainder to energy-producing nations in Africa and Latin America.

Among the most hotly debated topics now is whether and how to define Korea’s ODA model. While agreeing on the need to capitalize on the nation’s specialty areas, many scholars stress the significance of consistency and the minimization of political influence.

“Korea is in general considered to have an edge in rural development, information communication technology, policymaker training and health, but we have to rethink about whether they are really uniquely Korean,” Sohn Hyuk-sang, a professor at Kyung Hee University’s Graduate School of Public Policy and Civic Engagement, said at a seminar last month of the Korea Association of International Development and Cooperation.

“I think the right way to go is to foster the convergence of knowledge in carrying out any program. The term ‘Korean-style ODA’ should also be embraced by recipient countries themselves rather than us promoting it.”

To streamline governance, Lee Tae-joo, who teaches cultural anthropology at Hansung University in Seoul, raised the need for a road map that integrates policy and implementation, and to empower ambassadors and consuls-general to best reflect the demands on the scene.

“No one would disagree with the notion that there is fragmentation among agencies and it has to be incorporated,” he said.

“But as an intermediate stage step, the heads of overseas diplomatic missions should have guidance and supervision authority over both the loans and grant projects so as to integrate ODA deliveries on the ground.”

Hong Seung-mok, chief of the Jeju International Development Cooperation Center, called for a change in mindset to boost grants, saying loans not only run counter to global norms, but also create little economic returns.

“Loans have been favored because of the perception that we can get the money back, rather than giving it away for free, but statistics show the overall repayment rate is less than 20 percent -- after a few decades, the money would have little value,” the former ambassador to Nepal said.

By Shin Hyon-hee (heeshin@heraldcorp.com)