Executive Summary
  
I. Introduction 

II. Literature on Determinants of International Migration

III. International Labor Migration to Korea 
1. Trends and Characteristics 
2. Labor Migration Policy 
3. Source Area Composition and Trade Links 

IV. Data and Model 
1. Data 
2. Empirical Model 

V. Empirical Results 

VI. Conclusion 

References 

Appendix 

Since the 1990s Korea has emerged as one of the major migration destinations in Asia. This paper represents one of the first attempts to examine the determinants of bilateral labor migration to Korea across source countries and over time. We analyze the effects of economic, demographic, and policy factors. We also examine the role played by trade between Korea and origin countries. The results suggest that economic fundamentals, including income level in Korea, as well as demographic factors both in origin countries and Korea, play an important role, while different patterns are observed for skilled and unskilled migrant workers. We also found that trade is an important predictor of the size and composition of foreign migrant population in Korea. We speculate that trade influences migration to Korea through the information effect and foreign labor policy channel.

Russia is important not only as one of the four major powers in Northeast Asia but also as a strategic economic partner for strengthening “Eurasia Cooperation.” The total trade volume between Korea and Russia is continuously growing. In 2012, it reached $ 22.4 billion, an all-time high level despite the global slowdown. However, given the size of the two economies, there are more rooms for cooperation though direct investment and diversifying trade structure.
In a bid to enhance Korea-Russia economic cooperation both in quantitative and qualitative ways, the authors selected electricity infrastructure and medical services industries as promising sectors considering interests of Korean investors and Russia’s recent industrial policies. The study carries out an in-depth analysis on the two industries and suggests ways to extend cooperation in the fields between Russia and Korea.
The study is consisted of five chapters. The first chapter introduces background and purpose of the study and previous research. Then, an overview on the Russian economy, industries and policies is presented in the second part.
In the third chapter, the structure, related policies and growth potential of the electricity infrastructure industry in Russia are discussed. Russia is no. 4 in the world in terms of electricity production and consumption. However, dilapidation of relevant facilities are lowering efficiency Responding to this, the Russian government has released “electricity modernization policy” and actively adopting measures to improve the situation. In the meantimes, international cooperation is also likely to be activated, which can be a chance for Korean companies.
In the fourth chapter, the structure and features, major industrial policies, international cooperation trends, and growth potential of the medical services sector are analyzed. The private medical services sector is growing rapidly in recent years. After the collapse of the Soviet Union, Russia suffered with deterioration of medical services and population decline. With the government’s policies and the middle-class’s pursuit for better medical services, international cooperation is going to be one of key factors for improvement. These recent trends can be an opportunity to Korean counterpart. For better collaboration, comprehensive strategy for the medical sector in Russia needs to be prepared.
The chapter five summarizes previous parts and presents challenges and measures to enhance cooperation in the electricity infrastructure and medical services sectors between Korea and Russia.

Microfinance and Financial Inclusion: Focusing on the Analysis of ODA Support Cases and Poverty Reduction Effects

Sungil Kwak and Ju Young Lee


The activities of Microfinance Institutes (MFIs) have important meanings in developing countries because MFIs not only serve as suppliers of financial service, such as savings, loans, remittance, and insurance, mainly to the poor and small and medium enterprises(SMEs) that cannot obtain credits from formal financial institutions because of lack of collaterals, but also make effort to increase financial demand through the provision of non-financial services, such as various capability building programs: letter education, fund management, and income earning. Therefore, ESCAP (2006) emphasizes that MFIs are a major tool for financial inclusion and a core element to the development of finance in an inclusive way. This study analyzes “ODA for microfinance” cases supported by Germany and Australia, and finds empirical evidence that the access to microfinance reduces poverty. Finally, the results from the study provide some policy implications when provision of ODA for microfinance sectors is considered.

We can summarize the results as follows. First, the aim of German's ODA support for microfinance sector is to promote developing countries' balanced economic growth by comprehensively fostering the financial sector. Most activities are performed in a macro perspective. On the other hands, Australia's supports are based on a micro perspective, since the supports are given after establishing the systematic aid strategies, such as introducing performance management systems considering financial/social aspects. Second, according to the results of the estimation, when the average MFI loan amount per person increased by 10%, the poverty rate defined as a headcount significantly decreased by 0.463%. This result is consistent with that of Imai et al. (2012). When the sizes of total MFI loan amounts compared to GDP which indicate the sizes of microfinance markets by country increased by 1%, the poverty rate defined as a head count significantly decreased by approximately 3.4%. Therefore, it can be concluded that increases in the number of MFI users contribute to poverty reduction.

The results from this study provide evidence that microfinace deserves to be supported by ODA. However, Korea has no experience of support for the area. Hence, Korea should evolve ODA policies considering the following risk factors. First, since most ODA recipient countries do not have the capability to promote financial development, “master plans for financial development” should be prepared for them based on Korea's experience. The experience in operating cooperative unions, such as agricultural cooperatives and the National Credit Union Federation of Korea, will give many implications to developing countries. Second, to enable MFIs to support more various non-financial services than before, not only simple ODA provision, but also technology provisions and even measures to link private businesses' participation in CSR should be considered. Through the foregoing, Korean financial institutions' advancement into developing countries may also be considered. Finally, although this study highlighted relatively more positive aspects of microfinance, poverty problems are not solved just by improvement of financial access. Since not only the improvement of financial access is a necessary condition-not a sufficient condition-for poverty reduction, but also negative effects of MFIs are reported as some MFIs have been commercialized, ODA support for microfinance should be appropriately determined considering these conditions. In particular, to avoid negative effects, the subject countries of the support should be carefully reviewed and assessed in advance.

Country Results Management and Country Evaluation: Approaches, Donor Practices and Implications for South Korea

Jisun Jeong and Tae Hyun Oh

In the midst of rising emphasis on country-based programming and results-based management in international development, there is a growing consensus on the importance of country strategy and country evaluation as aid management tools. One of the growing tendencies among major donors for the last couple of decades is to strategically allocate their aid to a limited number of so-called priority countries for increased effectiveness and quality of aid. In this context, in an attempt to enhance its aid effectiveness, South Korea selected twenty six priority countries for concessional loans and grants in 2010 and approved the Country Partnership Strategies (CPS) for each country. However, developing the CPS is not the goal itself. The CPS fulfills its fundamental role when used as a management tool to implement, monitor and evaluate country-level strategy and performance as well as to provide lessons-learned and recommendations for the next round of the CPS. In this background, the paper aims to provide policy implications for South Korea to strengthen its results-based monitoring and evaluation system at the country level and improve accountability and value-for-money of its ODA.

The paper begins by reviewing the history of development evaluation from the sixties to the present era. After the categorization into three branches in evaluation theories, namely methods branch, valuing branch and use branch; two different approaches largely adopted in country evaluation, Logical Framework Approach and theory-based evaluation, are presented. The study then moves on to illustrate how the country has emerged as the basic unit of aid, along with subsequent introduction of country evaluation and country results management in accordance with the change of development paradigm. The recent status and trends in evaluation of DAC aid agencies with specific focus on country evaluation were outlined. It was noted that the main unit of account for evaluation has shifted from projects to sectors, programs, strategies and countries. The paper then analyzes the key issues in country evaluation as follows: (i) evaluation criteria for Country Evaluation; (ii) attribution and contribution; (iii) feedback and learning. Then, the paper moves on to examine different approaches and practices of the United Kingdom and Ireland, focusing on each donor’s country results framework and country evaluation. The UK was featured as a model of a strong results-management framework and performance-based country allocation whereas Ireland is cited as a model for adoption of diversified evaluation approaches as well as a strong feedback system. Subsequently, the paper reviews the status and recent changes in Korea’s aid allocation system, country evaluation and results-management framework. As for the current system, evaluation practices of Korea’s main aid agencies, the Korea International Cooperation Agency (KOICA) and the Economic Development Cooperation Fund (EDCF) of the Korea Eximbank, were assessed. This was followed by the discussion on the integrated evaluation system led by the Sub-committee for Evaluation under the Committee for International Development Cooperation (CIDC).

The paper suggests that the Korean Government must develop an integrated CPS results framework for each priority country and it should be led by the newly-designated evaluation team within the ODA Policy Bureau of the Prime Minister’s Office which happens to be a secretariat of the CIDC. From the early phase of the development of the CPS results framework, the local participation and ownership should be ensured. In order to create an environment for decentralized country evaluation and results management, further decision making power and responsibility should be delegated to the country office with corresponding allocation of budget and human resources as well as local capacity building.

Furthermore, it was recommended that the integrated results management framework for the whole ODA, including goals and indicators for aid channels and priority sectors be developed through a multi-stakeholder approach including relevant ministries, aid agencies, civil society, industries and partner country from the initial stage. It was argued that the country-level performance and evaluation reports should be referred to when allocating budgets for priority countries to ensure evidence-based decision making in the aid allocation process. The paper suggests diversifying approaches in country evaluation depending on types and environments of priority countries. In particular, approaches such as contribution analysis and joint evaluation must be more actively adopted as a way to measure country-level outcomes more effectively. Additionally the paper recommends strengthening of the feedback mechanism to ensure that country evaluation reports are read and acted upon. Lastly, the importance of communications and information sharing on country evaluations with domestic and partner country stakeholders were highlighted.

Korea’s Multilateral Aid: Recent Developments and Future Challenges

Yul Kwon, Jione Jung, Jisun Jeong, Ju Young Lee and Aila Yoo

Amid the growing demands in addressing cross-border issues such as climate change, disaster relief and conflict, there is an increasing consensus on the importance of multilateral organizations in international development. Traditional donors invest in multilateral co-operation in an effort to help achieve Millennium Development Goals (MDGs), create synergy with bilateral co-operation and increase influence in global development fora. One of the most significant trends in multilateral development is the sustained growth of non-core multi-bi aid over the past few years and subsequent bilateralization of multilateral aid.

While South Korea has attempted to implement various policy measures to enhance its aid effectiveness since joining the OECD Development Assistance Committee (DAC), the newly-emerging donor has yet to establish a coherent, government-wide multilateral strategy. The fragmentation of multilateral aid among line ministries and agencies as well as the lack of strategic guidance on multilateral resource allocation are regarded as major challenges undermining the effectiveness of the Korea 's multilateral aid system. In this context, the paper aims to propose policy directions for Korea's future multilateral strategy and possible measures to improve its multilateral effectiveness by analyzing the current status of Korea's multilateral aid system. The paper is expected to provide key policy implications for the multilateral chapter in the upcoming Strategic Plan for International Development Cooperation for 2016 - 2020, which represents the second phase of the basic framework for Korea's ODA policy.

The paper begins by analyzing trends and major issues in the global system for multilateral aid. The continuous rise of non-core multilateral aid was one of the most significant trend over the past few years. It was noted that the emergence of new contributors, such as BRICS countries and the private sector, led to the diversification of multilateral donors. In the context of growing demand for accountability and transparency due to budget constraints, various approaches for evaluating multilateral effectiveness such as Multilateral Organisations Performance Assessment Network (MOPAN) and those of bilateral donors were examined.

The following chapters analyze the current status and challenges in Korea's multilateral aid to UN agencies, global funds and Multilateral Development Banks (MDBs). Acknowledging the general rise of multilateral aid, it has been shown that non-core funding to UN agencies by more than 17 ministries and government agencies resulted in a high level of multilateral fragmentation. As attention toward global public goods increases, the paper suggests that Korea needs to engage in more active investment in global funds, mobilizing not only traditional ODA but also innovative development financing. Chapter 4 examines the current trends in co-operation with the World Bank, ADB, IDB and AfDB, focusing on the performance and management of trust funds.

Based on the previous chapters, Chapter 5 provides a set of policy recommendations to enhance Korea's multilateral development cooperation. It was proposed that the Korean Government must state multilateralism as one of key pillars in its development cooperation. While focusing on core funding, it was recommended that non-core funding be used strategically to enhance the multi-bi linkage and strengthen domestic accountability. Accordingly, it was argued that Korea should take a more decentralised approach by increasing multi-bi projects and programmes with multilateral country offices. Followed by suggestions on Korea's multilateral principles, the paper proposes the appropriate volume and share of multilateral aid as a percentage of total ODA. In order to ensure the accountability of multilateral allocation for core funding, it was recommended that assessment of multilateral organizations be undertaken by looking at the existing performance results of the MOPAN and other bilateral donors while considering their strategic relevance to Korea's development priorities. For non-core funding such as trust funds, Korea as a donor should ensure result-based managements of trust funds by multilateral organizations.

The paper concludes with suggestions to improve the management and operation of Korea's multilateral aid. Case in point, fragmentation in UN cooperation is an issue that stands out in Korea’s multilateral aid as too many ministries and public agencies channel multilateral funding to UN agencies. To address this issue, it was advised that inter-ministerial partnership mechanism be set up, led by the Ministry of Foreign Affairs and participated by line ministries. The predictability of multilateral allocation is another issue to be addressed in terms of effectiveness. Recognizing the importance of the private sector in development financing, it was pointed out as critical to engage in joint efforts with the international community to mobilize more private resources in multilateral financing. In ending, the paper recommends that Korea build up its multilateral management capacity as a donor and develop human resources with expertise in multilateral cooperation.