ed Upgrading overseas aid

The news that Korea’s overseas assistance grew at the fastest pace among major donor nations over the last five years is touching enough to recall that Korea is the world’s first and only country that has advanced from a recipient of aid to a donor.

According to the Ministry of Strategy and Finance, Korea expanded its official development assistance (ODA) by 18.8 percent annually on average from $816 million in 2008 to $1.6 billion in 2012. The pace put Korea at the top of the 27-member Development Assistance Committee (DAC), a club of donor nations under the Organization for Economic Cooperation and Development (OECD), to which Korea ascended in 2009.

This compares with the 0.8 percent annual growth posted by the 26 other DAC members. In 2012, the U.S. was the biggest donor with $30.6 billion, followed by Britain with $13.8 billion and Germany with $12.9 billion. Korea ranked 16th.

As the finance ministry said, Korea has increased its official aid steadily although a number of countries have cut back on aid since the global financial crisis in 2008. It is natural that Korea has done so, considering that Korea was able to achieve both industrialization and democratization thanks largely to aid from the international community.

But Korea has a long way to go before it fulfills its obligations commensurate with its enhanced international status.

More than anything else, Seoul often becomes the object of international criticism for attaching rigorous conditions to assistance in the form of tied aid or loans. A study by the National Assembly Research Service shows that the proportion of grant-type aid to the nation’s ODA remained at 55.8 percent in 2012, compared with the DAC average of 85 percent.

The percentage of untied aid to ODA stood at 51.1 percent, falling far short of the DAC average of 92.1 percent. As a result, the U.S.-based Center for Global Development put Korea’s commitment to development index at the bottom of the DAC, reflecting allegations that Korea is stingy with grants and untied aid. But it’s never a simple matter, given that this could result in fattening businesses from industrialized countries.

In 2010, Korea committed itself to raising its ODA to 0.25 percent of the gross national income by 2015, but this commitment seems unachievable, given our current budgetary conditions. This year, Korea assigned $2.14 billion or 0.16 percent of its GNI for official overseas aid.

Given this, it’s necessary to harmonize ideals and reality in such a direction as to upgrade our overseas aid. As a beneficiary of global trade and cooperation, Korea needs to develop its own ODA model based on its economic development experiences and pass on this knowhow to less-developed countries.