During the past decade, soaring population and rapid progress in economic and social development led to detrimental impacts on the global environment. The world has experienced much environmental destruction, climate change, as well as loss in biodiversity. Environmental issues have significant impact especially on developing countries since a majority of the population depend largely on natural resources. As has been witnessed in recent natural catastrophes caused by climate change, people in less developed countries are often hit harder than those in wealthier nations. Such facts has promoted understanding on the relationship between development and environment among stakeholders in international development. More people are concentrating on the intimate link between sustainable development and the environment.
The importance of the environment in development was first brought to attention at the UN Conference on Human Environment in 1972. Since then, the focus of discussions has been on sustainable development which continued throughout the 1980s and the 1990s. In recent decades, people have come to realize that human development is unattainable without direct intervention on environmental issues, namely global climate change. At the Rio Summit on June 2012, countries around the world have reaffirmed that sustainable development is a common goal for all of humanity. Thus, policy trends such as environmental “mainstreaming” and “integrating the environment and development” are being highlighted. Such transition in development and environmental issues suggest that environmental considerations must be included in setting the policy and making decisions regarding development. It also seeks to promote resource efficiency, avoid environmental destruction, and protect impoverished populations against negative environmental impacts caused by development. It emphasizes a close correlation between all regimes regarding development and environment.
While environmental ODA is one of its core international development topics, the approach taken by Korea in its ODA policy tends to focus on quantitative increases. It is a matter of fact that there is room to improve  in terms of environmental mainstreaming or integration of environment and development. In other words, policy improvement is necessary for the comprehensive pursuit of environmental issues in development programs. This study first examines previous discussions on development and the environment, then reviews the efforts made by aid organizations making efforts to incorporate environmental considerations into development work, and finally, the study suggests areas for policy improvement.
Chapter 2 begins by reviewing past discussions on development and environment at the international level. The chapter also outlines efforts made by OECD DAC in order to support sustainable development in developing countries. By utilizing the DAC policy marker system, we look at the progress and characteristics of “environmental aid” - ODA projects with environmental considerations - promoted by DAC members in chapter 3. In chapter 4, the study observes the cases of Australia, Canada, the World Bank and UNDP. Australia and Canada were chosen as examples, as they are non-EU members similar in the amount of environment-related assistance compared to Korea. Chapter 4 also provides case studies of the World Bank, known for its environmental strategies and safeguard system, and UNDP which emphasizes environmental capacity building for the recipient country. Finally in chapter 5, the study reviews environmental considerations in Korea's ODA policy. Based on the findings, the study draws practical policy improvement suggestions which correspond with  international trend and standards. For instance, while individual agencies in development implementation promote integrating issues in environment and development through guidelines, safeguard systems and so on; even a holistic consideration of the environment and development is indeed insufficient at the general ODA policy-making level. Consequently, the study suggests a revised role of the Green ODA Committee, so that it could serve as the core environmental consideration in all development assistance programs. Also, it proposes establishing an integrated system for development and environment, approach methods specified by stage, improved cooperation between the central bureau and the department of environment, and increased support for recipient countries' capacity building.

Financial development is a necessary condition for economic development. However, the current state of financial development in most developing countries is rather striking. Over half of the world’s adult population do not use formal financial services to save or borrow. This is especially true for those who live at the poverty level, and without access to formal financial services, their ability to build wealth, increase income and manage uncertainty is seriously restricted.
Well-functioning financial systems provide savings, credit, payment, and risk management. Without inclusive financial systems, poor people must rely on their limited savings to invest in things like education or setting up small businesses. Therefore inclusive financial systems that help poor people and other disadvantaged groups in this regard do would be very beneficial, contributing to improvement of income distribution and economic growth. As expected, the degree of financial access is higher in economies with higher national income as measured by GDP per capita. However, national income explains much less of the variation in financial access for low and lower middle income countries. At a given income level and financial depth, use of financial services varies significantly across countries. This suggests a potentially important policy challenge. That is, ODA in finance must be directed towards improvements in financial access in poor countries.
Economic stability and effective contractual and informational frameworks are crucial for an inclusive financial system. To create a deep, efficient and stable financial system, however, the government’s role is very important. Governments have an important role in building long-term financial institutions and making financial markets function properly. In this respect, it is worth exploring how the financial system has evolved in Korea, which achieved surprisingly rapid industrial development with strong government support.
Korea's experience in financial development cannot be separated from the government. It is well-known that, since the early 1960s, the Korean government was directly involved in allocating credit for the purpose of fostering rapid industrialization and export expansion. From the early 1980s to the currency crisis of 1997, however, various attempts were made towards financial liberalization. Even if the government did not completely abstain from interventions in the financial markets, many attempts were made to lift government control over financial institutions. But deregulation in the absence of appropriate laws and institutions essential to a truly liberal financial system would serve as an important cause of the 1997 currency crisis. At that time, the necessary institutional infrastructure was not firmly in place. The post-crisis period has seen a series of reforms based upon so-called ‘global standard.’ The key lesson from Korea’s experiences was that institutions simply transplanted from abroad may not function as expected due to differences in stages of development and local specificity. This lesson also applies to many developing economies.
In principle, the financial ODA to developing countries should be designed to fit the circumstances of the recipient country. Policy alternatives should be differentiated in accordance with recipient countries’ demands. For example, policy options should reflect whether the recipient country wants enhancement of basic financial access, fostering development finance, or opening financial markets. It is necessary to develop step-by-step ODA programs based on the demands of respective recipient countries in different stages of financial development.
Another consideration is that Korea is taking its first steps in the financial ODA program. First of all, international norms and guidelines as well as the existing ODA practices need to be analyzed. Based on those analyses together with Korea's own experiences, a uniquely Korean financial ODA strategy can be derived. Strategies should also reflect what recipient countries wants from Korea. Also, it is important to find where Korea's comparative advantage lies.
This report examined potential strategies for Korea's financial ODA and provide three main areas for ODA; fostering financial markets, supporting development finance, and building financial infrastructure. First, fostering financial markets is the most basic step, especially for poor economies. Sub-areas in this category include enhancing financial accessibility, increasing savings, and developing capital markets. Second, supporting the development finance will probably be the most wanted area for recipient countries who wish to share with the experiences related to Korea's development strategies. The sub-areas include development finance, export finance, SME finance, microfinance programs. Third, programs related to building financial infrastructure could be focused on the education of financial experts, the establishment of a financial supervision system, and the cooperation with international organizations.
Overall. this report presents a total of 10 challenges which are potentially important for Korea’s financial ODA strategy. Proposed action plans and initiatives can be organized, depending on the development stages and demands of recipient countries. For example, for the country whose per capita income is very low and with a wide range of people not served by financial institutions, improving financial access will be a priority. Meanwhile, for the (middle income) country wishing to develop the manufacturing sector and enhance export, putting the emphasis on development finance and export finance might be more effective.
In fact, the ODA to developing countries is generally of a diverse nature. The ODA program is typically divided into institutional/technical support and direct funding. Institutional/technical support includes building financial infrastructure, financial sector reforms, and step-by-step financial development plans. Direct funding is a form that is closer to the original aim of the ODA. Because extensive and complex financial issues are interconnected, however, direct funding may have only limited impact. Nevertheless, the focus of financial ODA should not be limited just to consulting, training and education. There is a need to select diverse programs for enhancing financial access, microfinance, development finance, export finance, via small but direct funding. In this case, it is recommended to follow a more practical approach, through cooperation with recipient country governments and local NGOs.
This report examined comprehensively the financial circumstances of developing countries and ODA-related challenges in light of Korea’s experiences. However, there are smaller systematic studies on financial ODA strategies and in fact, this report listed several menus on programs simultaneously. In the future, it is necessary to review closely individual programs conducted by other countries and international organizations, and sort out selective programs suited to the characteristics and development stages of recipient countries. In other words, the focus of Korea's financial ODA will be on how to select country-specific programs and how to combine institutional/technical support with direct funding, and putting them into practice effectively.

 

 

Industrial development is crucial for sustainable growth of developing countries. However, it has been neglected in development cooperation due to experiences of failed development policies after the World War II and a critical stance toward industrial policy in the academia. However, the rapid growth of emerging industrialized countries has rekindled interest in the role of government in industrial development. Recently, the G20 Seoul Summit recognized the importance of effective development and strengthening industrial capacities of poor countries to combat poverty in the long run. As a country that achieved rapid development based on industrial competitiveness, Korea may possess comparative advantage in building industrial capacity of developing countries in various areas of development cooperation.
This study investigates the issues in development cooperation for building industrial capacity to elucidate promising areas for Korea. In addition, it proposes the direction of ODA in industries and challenges in assistance, to ensure their effectiveness. In particular, this study discusses the scope and issues in terms of development cooperation for industrial capacity building and explores the current activities of international organizations and major donor countries. Based on these discussions, the current status of Korea’s assistance related to industrial areas is evaluated. The study  
concludes by recommending promising programmes related to industrial capacity building and suggests the direction and tasks for development cooperation.
This study recommends that Korea invest more effort in developing concrete programmes at the intermediate level of industrial capacity building, such as technology, human resources, financial system, and trade facilitation. Korea should focus on building technical and managerial capability of the manufacturing sector in lower middle-income countries in Asia and Latin America. The promising programmes could be found in the area of promoting global value chain participation, which could stimulate increased trade among recipient countries and also foreign direct investment into those countries.
To make cooperation more effective, first, the industrial capacity building programmes should be planned at the inception/designing stage of CPS, which will enhance the alignment of programmes with industrial development strategies of recipient countries. Second, Korea should select promising programmes to focus on, to assure a significant and sustained impact. Third, closer cooperation between industrial policy consultation, capacity-building programmes, and hardware construction projects is required. Fourth, a more systematic and specialized cooperation is needed to resolve the fragmentation of assistance. Therefore, cooperation in this area should actively utilize the currently available policy resources in public and private organizations. Fifth, the programmes should be designed so as to induce the participation of the private sector, particularly the business sector. It will enhance the overseas CSR activities of firms and elicit expert inputs from firms into ODA programmes. Finally, greater effort should be devoted to strengthening the effectiveness of training and consulting activities.

Development assistance of international society in the agricultural sector and rural areas plays a vital role in the economic development process of developing counties. The alleviation of poverty and starvation through agricultural and rural development is an important policy challenge that has to be resolved in most developing countries. It is mainly because three-fourths of the total population are rural residents and two-thirds of their total population is engaged in agriculture.
Based on these facts, the United Nations (UN), Organization for Economic Cooperation and Development (OECD) and other international organizations are emphasizing the importance of development assistance in the agricultural sector of developing countries. Major developed countries as donors of Official Development Aid (ODA) have recently focused on supporting the developing countries in terms of development assistance for improving the quality of life of rural residents, by enhancing the agricultural productivity and promoting rural development rather than providing simple food aids.
Especially, Korea’s advanced agricultural techniques and experience in successful rural development in the process of its overall economic development provide a successful role model that most developing countries want to learn from. So international cooperation and development assistance in the field of agriculture should be actively pursued, as they have higher possibility of success than any other areas. In this regard, Korea has to reinforce development assistance in the agricultural sector in efforts to enhance its position globally.
The active pursuit of development assistance toward developing countries with effective policy tools and strategies could ultimately be the most important direction in enhancing national recognition and stature in the international society. Top donors of ODA like the United States, Germany, France and Japan are improving their national recognition and stature by strengthening various agricultural and rural development cooperation programs, to meet the demand of ODA in the agricultural sector of developing countries for the long term.
However, current agricultural development cooperation of Korea through ODA has several problems in terms of scale, method and systems of aid. First, the scale of support by ODA in the agricultural sector is still very small even though it is a growing trend. In particular, the grant-type aid for international agriculture cooperation has focused on short-term projects such as invitation/training and seminars because of its small scale of operations. Also, the effectiveness of development assistance in the agricultural sector is often diminished because of the various agents involved in agriculture development cooperation; as well as lack of systematic coordination among projects and developing countries in development assistance. In other words, Korea’s current development assistance system in the agricultural sector has the same problems as other areas such as the disjointed nature of performing authorities for development assistance, lack of sustainability and linkage of projects, and aid oriented towards one-off or short-term projects.
The main objective of this research is to find promising development cooperation programs for the agricultural sector in developing countries. First, aid projects for developing countries in which Korea has comparative advantages include: support for installation of greenhouses, improvement of seeds and soil fertility, agricultural water management, diversification of agricultural export crops, improvement of agricultural marketing channels, and organization of producer cooperatives. Second, there are also a number of promising cooperation programs in crops such as: support for establishing agricultural research and extension systems in order to improve agricultural productivity and grain self-sufficiency, technology distribution system, technical support for after the harvest, Rice Processing Centers (RPC); installation of community-based, small processing facilities and food  processing factories. Third, promising cooperation programs in the livestocks industry are as follows: support for milk production facilities, slaughter and fresh meat facilities, Livestock Processing Center (LPC) and installation of daily processing facilities. In addition, the Saemaeul Movement, which was a vital part of the Korean experience in agricultural and rural development, can be a very useful role model for developing countries.
However, the most import point in achieving successful cooperation for agricultural development assistance is to discover the promising cooperation programs which are suited to specific circumstances in the recipient countries. To do so, we need to examine thoroughly the characteristics of a recipient country and the status of its agricultural infrastructure such as the degree of economic development, character of the region and population, characteristics of agriculture and rural areas, climate or water management situations, and agriculture development demands of that country. The efforts for localization of development cooperation programs increase the possiblity of success in individual aid projects for a recipient country.

 

Education is key to development and cooperation. It is the very basis of human development and critical to social and economic development. Education is also a powerful driver for Millenium Development Goals such as poverty reduction and sustainable economic development. Accordingly, there have been concerted efforts to support the Education for All Initiative by the international community over the last two decades.
Following this international trend, the Korean government has put greater emphasis on education ODA than other types of ODA. As of 2012, aid for education is the second largest (17.9%) among various types of ODA financed by the government. As Korea increased the amount of its ODA upon becoming a member of the OECD Development Assistance Committee in 2010, the amount of education ODA has been rising rapidly. Unfortunately, there are some problems that prevent the government from maximizing the increase of education ODA. For instance, there is little coordination among education ODA related institutions such as KOICA and EDCF; not to mention a shortage of Korean experts in education ODA.
This study aims to present the goals and strategies of Korea's educational development and cooperation plan. For this purpose, it has first reviewed the relationship between education and development and also investigated the role education has played in development. In addition, the study has analyzed the strengths and weaknesses of the education ODA programs in Korea. It has also examined the best practices of major OECD/DAC member countries (USA, Japan, Australia, and Germany) and multilateral donor organizations such as the World Bank and Asian Development Bank.
Based on the findings of the study, it set forward an educational development and cooperation plan of Korea. The idea is that the Korean government would help developing countries improve its developmental capacity through effective education ODA strategies. To realize this vision, the government should emphasize the effectiveness, expertise, and accountability of education ODA policies. In addition, it should reform education ODA-related policies in the following way. First, the government should determine the target region and priorities of education ODA programs strategically, based on its education ODA policy-related experiences and strengths. Second, it should make the implementation of education ODA programs efficient with following strategies: 1) systematic investigation of the demand of developing countries for education ODA; 2) the combined education hardware and software support program; and 3) integrated support of education ODA grants and loans. Third, the government should strengthen the partnership with international development agencies and also increase public-private partnership programs. Fourth, it should build the infrastructure for education ODA by 1) establishing an Educational Development and Cooperation Committee; 2) increasing the budget for education ODA; and 3) creating the HRD programs for education ODA. Lastly, the government should enhance the outcomes of education ODA programs by 1) building the database of education ODA; and 2) improving the monitoring and evaluating process of ODA programs.
Based on these findings, the study presents five new education ODA programs. Three criteria are chosen in developing these programs. First, the program should address the educational needs which have not been met so far in spite of concerted efforts by international communities since the 1990s. Second, it should help maximize the strength of Korea’s education ODA capacity and help minimize its weakness. Third, the program should promote cooperation between Korea and multi-donor agencies or development-related private sectors. The programs selected based on these criteria include: 1) The GPE(Global Partnership for Education) trust fund program; 2) Employment-linked Public Private Partnership Vocational Education and Training Program; 3) Korea Development Scholarship Program, 4) Korea-UNESCO IICBA ICT Training Program; and 5) Korea-ADB Education ODA Expert Program.

The Chinese distribution market has been rapidly increased in its importance and status in the world distribution market with its steady growth for the past 20 year, and it is predicted to provide the good business opportunity to foreign distribution companies as well according to the outlook on the domestic market expansion. Particularly, the Chinese retail market is an attractive market in that it provides a new market to the retail businesses of Korea which is suffering hardships due to the saturated domestic retail market and the government regulations.
Meanwhile, with the retail market environment of the coastal big cities in China getting worse due to intensifying competition and market saturation, etc. caused by the increase both in rental cost and in labor costs, the shortage of manpower, and entries of many foreign-invested retailers, increasing are the cases where multinational retail companies, which entered this region before including Carrefour, E-mart and best buy stores, etc., reduce the number of stores or close their stores. On the contrary, the foreign-invested retailers are recently showing an increasing trend for market expansion into the inland market because consumer market growth, good competitive environment & manpower supply in the inland region. Particularly, the consumer market of the central inland region in China is overall showing a rapid growth based on fast economic development, the multinational retail companies, such as the US Wal-Mart, Swedish IKEA, Japanese Uniqlo and MUJI, ZARA in Spain and H&M in Sweden, are making inroads into this region in succession.
However,  the situation is calling for a close survey on these regions in 6 central provinces in China because the retail market environment and characteristics of retailers in each region of the 6 provinces differ from one another. Hereupon, this study is intending to seek the market expansion strategy of the Korean retail companies and our government support measures by grasping the size of the retail market, major retail formats, distribution of major consumption cities in 6 provinces, influence & characteristics of the local retailers who have a high hold on the local retail markets, and the present situation and strategies of the foreign retail companies' entry into the central provinces retail market.  
For this purpose, this study is going to draw the entry strategies into the chinese retail market for our retail businesses by making an comparative analysis of the current status of the foreign-invested retail companies which already entered the central provinces and the competitive situation between foreign retailers and local retailers, and for practicality enhancement of the research results, this study is intending to suggest the suitable market access strategy respectively by dividing our retail companies into a large one and small& medium one, and subdividing the market entry strategies into the access strategy and management strategy.

After establishing diplomatic ties between Korea and China, they have rapidly achieved bilateral trades, investments, expansion of economic cooperation. In particular, export to China have significantly increased where 24.2% out of the total export volume of Korea in 2011 constituted export to China. However, it is necessary to enter into a Free Trade Agreement(FTA) with China for a more stabilized expansion of trade between the two countries. Through Korea-China FTA, Korea will be able to secure a stable share in its largest export market and also result in maximizing its economic benefits by dominating the future's largest consumer market well in advance.
However, with the suggestion that the effects of reducing tariffs may be less than it was estimated due to the recent changes in the trade structure between Korea and China, the removal of non-tariff barriers have become an important issue to be discussed with respect to the Korea-China FTA.
As a result, this study investigates and analyzes detailed cases where Korean companies have struggled with respect to non-tariff barriers imposed by China while recognizing the issue that the resulting effects from removing non-tariff barriers during negotiation talks for the Korea-China FTA is as important as the economic effects gained from the elimination of tariffs. Upon investigating the relevant issues, non-tariff barriers relating to customs clearance were raised the most by Korean companies and issues such as technical barriers, transparency and issues relating to processing trade, in such order, were considered to be the issues most concerning Korean companies. In particular, it was found that there was a discrepancy in the implementation of institutions and the application of law by region in certain cases. Therefore, it is necessary to prepare a systematic device to remove various non-tariff barriers imposed by China during negotiations for the Korea-China FTA.

The labor environment in China has been rapidly changing lately: wages are rising fast, and labor disputes have become frequent, while the country’s labor laws are becoming increasingly stringent. Coupled with a short supply of potential workers, the difficulties of managing South Korean companies operating in China have become more and more challenging in recent years. 
With the rapidly changing Chinese labor environment in the background, this research reviewed the changing labor environment in the Bohai Economic Rim, the top investment area for South Korean companies, and analyzed those causes that triggered such changes in the first place. This research also came up with some implications for the South Korean companies, as well as South Korean government by conducting a case study on the impact of the changing labor environment on the South Korean companies operating in the area. For an efficient analysis, this study employed a diverse array of research methods, including literature research, statistical analysis, and empirical analysis, as well as enterprise case studies along with field trip to the sites.
After an analysis on the changing labor environment in the Bohai Economic Rim, the study found that the minimum wage in the area rose rapidly beginning 2009, with an average yearly increase of 17.6% from 2009 to 2012. What is notable in the trend is the narrowing disparity among the minimum wages within the province. A review of the average wage, an index that shows the actual income level of workers, found that the average wage in the Bohai Economic Rim has increased since 2006. While the minimum wage was set at the same level across the key cities of the province, the average wage varied depending on the city. More stringent labor laws are likewise beginning to be enforced: starting from the New Employment Contract Law implemented in January 2008, to the Social Insurance Law most recently, China is strengthening its legal apparatus to protect the rights of workers in the labor-management relations.
The causes of such changes in the country’s labor environment include: changes in the demographic structure, depletion of surplus labors in the rural area, changes in the industrial structure, improvement in the general education level, rising prices and changes in the governmental policies. Among those causes, the governmental policies and rising prices were identified as the most significant factors behind the wage hike and the short supply of workforce. While changes in the minimum wage were driven by governmental policies, the rise in average wage level corresponded to rising prices. With regard to the average wage level, population and industrial structure along with the rising prices were also significant factors. A field study on the enterprise cases shows that almost all of the South Korean companies operating in the Bohai Economic Rim are struggling to keep up their management due to rapid wage hike and short supply of workforce. With rising awareness of their rights, an increasing number of workers are demanding wage hike, while the turnover rate of factory workers is rising as well. Adding headache to the already difficult labor management of the South Korean companies operating in the region is the legislation of the New Labor Contract Law, which prevents arbitrary dismissal of workers. Companies are witnessing the deteriorating work attitude and decreasing productivity level among their workers in the wake of the legislation.
To adapt itself to the changing labor environment, companies are reducing wages by reducing the number of indirect workers who are not put into assembly line directly, as well as sojourning employees, while actively trying to tackle the short supply of labor by relying on employment agencies, community centers or correctional facilities. Some even recruit workers by training them directly through close partnership with local occupational schools. In addition, they are striving to lower the turnover rate while raising labor productivity by introducing performance-based compensation and performance-related pay per task. Mechanization and automation of production facilities as well as outsourcing to local companies were also preferred measures by some companies to fight against the wage hike and short labor supply. Meanwhile some companies were not working on any countermeasures at all.
By conducting the aforementioned analyses, this research proposed the following countermeasures for the companies. First, increase productivity. With the wage level of China rising rapidly, South Korean companies operating in China are best advised to improve productivity and maximize the added values of its products. Second, increase outsourcing. Values should be created in such areas as planning, design, R&D and management, while the company’s non-core activities should be outsourced. Third, recalibrate the personnel management system. A fair and transparent performance-based compensation and promotion system as well as a responsible and transparent management should be in place, while it is also required to build up and capitalize on the public assembly. Fourth, develop the domestic market. The labor-intensive industry capitalizing on the low wage level has hit the ceiling now. As the Chinese government is actively seeking to expand the country’s domestic market, South Korean companies are best advised to turn their eyes to the domestic market. Fifth, relocate the manufacturing bases. South Korean companies may need to diversify their production bases by advancing to the mid- and western China, Southeast Asia and even back to South Korea. 
The government support is also urgently required. First of all, financial support to small businesses should be increased. Even many small businesses with highly developed competitive edge are having difficulties in conducting timely investments on their production facilities due to inadequate financial resources. Financial line-up to those companies should be extended. Next, the South Korean government should help them break into China’s domestic market. Small businesses are having difficulties breaking into the domestic market despite its rapid growth, making it necessary to provide government-level support, such as assistance to the development of distribution network and share of market information. The government should also enhance its support to those companies that are u-turning to South Korea. In addition, provision of legal support on the bankruptcy procedure, as well as hosting of investment road shows by South Korean local governments to attract them back to South Korea is also required.