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.

With the advanced economies’ low interest rate policies that began in early 2000, the concerns regarding the impacts of the expanding global liquidity on the international financial markets and the world economy have become more vivid. Following the global financial crisis and the European fiscal crisis, advanced countries began implementing ultra-low interest rates and quantitative easing policies. The most intensive expansionary monetary policies in the history raise the concerns of excess global liquidity. This research defines the global liquidity as the sum of the advanced economies’ (U.S., Eurozone, U.K., and Japan) money supply and empirically investigates the effects of global liquidity expansion on the world economy.

First, to assess the impacts of the global liquidity expansion on the international commodity prices, we employ GARCH model. The results implied that the global liquidity expansion had no statistically significant effects on the grain and cooper prices, but it did on the oil and gold prices. Increase in the global liquidity by 1% would lead to a 0.64-0.76% increase in oil prices; however, on the contrary to our concerns, the liquidity expansions had very little effects on the price volatility. For gold, an increase in the global liquidity by 1% would induce a price increase of 0.01%, but also significantly increased the price volatility.

Next, to examine the effects of global liquidity expansions on the liquidity-receiving countries macroeconomic variables and financial variables, the Panel VAR model is adopted in our analysis. A data set of 34 countries (excluding U.S., Eurozone, U.K., and Japan) from the 1st quarter of 1995 to 1st quarter of 2013 was used in the analysis. Our estimation results propose that the global liquidity expansion increases the liquidity-receivers’ real GDP persistently for more than 2 years, and also increases the inflation rates until the 2nd–4th quarter. Increased inflows of portfolio investment were also observed during 1st-2nd quarter and stock prices increased for 5 quarters, hence leading to a constant appreciation of the currency values. The liquidity receiving countries were divided into advanced and developing countries; for advanced, the global liquidity expansions had no significant improvements on the real GDP growth, but only a marginal increase in the short-term. Wereas the emerging countries’ real GDP growth saw significant increases up until the 19th quarter and the margins were far greater (2.6-2.8%). In emerging countries’ analysis, we observed that the inflow of portfolio capital decreases as the global liquidity expands; the reasons for this being that foreign investment did not increase significant in Latin America despite the global liquidity expansions, due to the foreign exchange crisis in the early 2000s, hyperinflation and et cetera in the area. The effects of the global liquidity in terms of economic stimulation were also observed to be larger and more continuous in emerging countries in Asia rather than in Latin America.

Lastly, we used the ‘Block exogenous VAR’ to analyze the effects on South Korea. Especially considering that global liquidity can affect Korean economy in frequency domain that is shorter than the business cycle fluctuation, we used the wavelet analysis to analyze the effects in short periodicity. Monthly data from January 2001 to November 2012 have been used for this analysis. From the raw data analysis, increased CPI resulting from the expansion of global liquidity was observed and the result was statistically significant. From the short periodicity analysis, statistically significant effects, such as the won-dollar exchange rate appreciation, and the rise in house prices and inflows of foreign portfolio investment and et cetera were also observed.

Though the analysis work from this report, it can be seen that the expansion in global liquidity has contributed to the stimulation of world economy; however when the global liquidity begin to decrease, there exist possibility that the shrinks of the global liquidity may bring negative shocks to the world economy. It is possible that the global liquidity expansion will be continued for the next couple of years, but after the advanced countries’ normalization of monetary policy, economic slowdown can occur in emerging countries due to the fall of asset prices and the rapid outflow of foreign capital can bring financial instability in emerging countries with weak economic fundamentals.

A Study on Multilateral Aid Strategies of OECD/DAC Members and Policy Implications for South Korea


Hyuk-Sang Sohn, Toh-Kyeong Ahn, and Jong Hee Park


Globally, UN organizations and international financial institutions (IFI) play an important role in effective development and cooperation. International society has increased the volume of multilateral aid, having recognized its importance through international organizations. Advanced donor states utilize efficiency, professional knowhow, and regional expertise of international organizations to supplement bilateral aid and also accomplish their own goals in international development and cooperation along with global development goals such as MDGs. In addition, they have actively carried out multilateral policy with strategies of international organizations in order to increase their influence on international organization and society.

Hence, Korea should draw policy implications through analysis of how advanced donor states implement their strategies along with policies of international organizations for effective accomplishment of policy goals through multilateral aid. This research thus aims to do the following: 1) provide basic data for the research of the KIEP, clarifying the overall trend of multilateral aid policy among advanced donor states through study of OECD DAC member states; 2) study and analyze multilateral aid policies of five advanced donor states (the UK, Sweden, Denmark, Switzerland, and Australia) to draw policy implications; and 3) based on OECD DAC research and case studies, elicit policy implications which can serve as reference in formulation of strategies for the promotion of Korean multilateral aid.

The research report consists of five chapters. The introductory chapter explains the background, objectives and necessity of the research as well as the range, method, and its composition. The second chapter conducts a comparison of DAC member states’ multilateral aid policies, covering the general situation and policies of OECD DAC member states regarding multilateral aid; in addition to analyzing the trend and features of their multilateral aid promotion strategies and monitoring systems. The third chapter is entitled, “Analysis of DAC member states’ multilateral aid situation.” The chapter covers the volume of multilateral and bilateral aid of respective DAC member states and highlights priorities of various international organizations, areas, and regions according to the time change via network analysis and time-series analysis. The fourth chapter, entitled “Major advanced donor states’ multilateral aid policies and promotion strategies,” assesses development and cooperation, multilateral aid situation, goals, and principles of various states through a case study of five states. It also analyzes the standards and monitoring systems used to classify multilateral aid volume and use of multilateral aid. The last chapter concludes with policy implications for increasing the efficiency of Korean multilateral aid, and policy implications for Korean multilateral aid in general.

Creative Industries' Export and Internationalization Strategies of Selected Countries and Their Policy Implications

Jeong Gon Kim and Eun-Ji Kim

Along with the emergence of knowledge-based economy, importance of nonvisible production factors, such as knowledge and creativity is widely recognized. With the spread of such recognition, the concept of creative industries has been diffused over the world. Identifying creative industries as an individual industrial sector, countries have come to find that creative industries are new sources of job creation and have the potential to lead cross-industry innovation. As creative industries play a role of pioneering new markets by developing innovative goods and services, internationalization strategy takes a core position in the relevant policies.

In this sense, it is necessary to develop a unique Korean concept of creative industries which expands the current category of cultural content industries by including design, architecture, and some ICT and R&D services.

As creative industries have high concentration of SMEs and micro firms, it is necessary to exert efforts on supporting competent SMEs. It is also important to reinforce competitiveness of creative services, such as architecture, R&D, and design. Architecture and R&D service markets, which account for the largest share of creative services trade, expand rapidly in emerging countries.

Creative firms give positive effects on identification of new consumer demands, provision of new solutions and concepts, creation of new approaches to known problems, joint development of innovative ideas, etc. The government needs to select competitive creative firms and help them link with domestic/foreign firms in various sectors, and give incentives for such activities.

Compared to industrial sectors such as manufacturing, creative firms (especially SMEs) face bigger difficulties in exporting. Accordingly, the government needs to provide export funding and foreign market information specialized for creative industries, support creative firms' participation in international trade shows and formation of networks, and include competitive creative firms in business delegations.

An important feature of strategies for creative industries’ internationalization is to expand the number of target countries. Such feature includes not only expansion of trade among developed countries but also diversification of target countries into emerging countries. Countries studied in this report select strategic target countries among emerging countries based on various factors, such as market size, growth potential, maturity of bilateral economic relationship, cultural intimacy, etc.

MOU is an effective means of helping creative industries enter emerging counties in that it can contain various interests through inter-discipline and inter-department cooperation. Cooperative relationship through MOU can also contribute to building a basis for emerging countries' creative industries.

As intellectual property right is a core of creative industries, it is needed to increase the level of intellectual property right protection of emerging countries through bilateral dialogue channels including FTA negotiations.

As creative industries are important components of a country's soft power, they require utilization and attention on the government level. Especially, it is required to establish a comprehensive country brand marketing strategy that utilizes Korea's core assets including creative industries.