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Korea’s Regional Cooperation and ODA Policy in Asia: Performance and Challenges Economic development, Economic cooperation

Author Kwon Yul, Jeonghwan Yun, Eunsuk Lee, Ju Young Lee, Aila Yoo, and Sung Hye Kim Series 21-18 Language Korean Date 2021.12.30

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The Asian region has drawn great attention as an emerging market with relatively stable growth since the 1990s. The COVID-19 pandemic crisis, however, has revealed its structural vulnerability, intensifying socio-economic inequality in the region. Economic activities have shrunk due to the lockdown measures, resulting in stagnation and widening the income gap. Uncertainties have also increased in the environment for development cooperation in the region, which calls for a new approach for effective implementation of official development assistance (ODA).
This study aims at deriving Korea’s mid-term ODA strategies towards the Asian region by analyzing changes in the development context and conditions for cooperation in the region since the pandemic, as well as progress in the Sustainable Development Goals (SDGs) and the development gap. As economic interdependencies with Asian countries have intensified, Korea’s ODA has given the highest priority to the region: fifty to sixty percent of its ODA has been directed to Asia and sixteen out of twenty-four priority partner countries are in the region. The Korean government has also pursued diplomatic diversification focused on strengthening partnerships with Asian emerging markets, particularly under the New Southern and Northern Policy. 
Establishing an effective ODA strategy in the post-COVID-19 era requires not only country-specific assistance plans but also a regional approach which incorporates the diverse development needs, so as to improve policy coherence as well as development effectiveness. As the demands from developing countries willing to share Korea’s experiences and know-how in response to COVID-19 have increased, the role of Korea’s ODA has gained its importance particularly in the health sector. The uncertainties further increased by the recent spread of the omicron variant, however, make more difficult the implementation of ODA projects in addition to normal economic activities.
While the Korean government continues to support the Asian region as a priority, the overall strategy lacks integrated regional approach as Korea’s ODA has been based on individual country strategies—Country Partnership Strategies (CPS). In this context, the study suggests ODA strategies which reflect the regional characteristics and specific ways for strengthening the strategic alignment between ODA and the government agenda based on the Third Mid-term Strategy for Development Cooperation (2021–25) and major foreign policies. In addition to health crises, it also considers the needs for responding to various challenges caused by climate change, natural disasters, and migration from a regional perspective.
As Chapter Two demonstrates, COVID-19 has increased socio-economic uncertainties in the Asian region in diverse ways. Economic growth has been slow due to the lockdowns and restricted economic activities. With the prolonged stagnation, poverty and food insecurity have increased, and educational outcomes and multifaceted inequality have deteriorated. International support has been limited with the implementation environment worsening, which has also had negative impacts on progress towards the SDGs in areas such as poverty reduction, food security, education, health, gender, environment, etc. To mitigate the negative impacts of COVID-19 and support the SDG implementation in Asian developing countries, development assistance must be allocated into relevant sectors by country, taking into account the differences in development needs and factors that hinder progress of the SDGs.
Chapter Three presents the target size of Korea’s ODA to Asia along with the financial requirements and four possible paths to achieve such a target. To achieve the 0.2% of GNI goal by 2030, it is estimated that a total of 20.6 billion USD is required for the next ten years. This normative target amount calls for a detailed review of practical resource allocation plans, as well as greater efforts to mobilize such resources for responding to the development needs caused by COVID-19 and supporting SDG implementation.
Chapter Four reviews Korea’s ODA to Asia in terms of its strategies and performances, finding that Korea’s ODA structure makes it difficult to implement integrative ODA programs in response to region-wide development challenges or in collaboration with regional bodies, since the focus of Korea’s ODA strategy has been on the individual countries. Although Korea has made efforts to promote government-wide strategic programs under the New Southern and Northern Policy, the current “bottom-up” approach, in which each ministry or agency initiates and implements its own ODA projects individually, impedes establishing integrated strategies and systematic and efficient delivery. To plan and design top-down strategic programs which reflect Korea’s policy priorities, as well as the regional development challenges, are essential in establishing a regional ODA strategy towards Asia.
Based on the findings in the earlier chapters, Chapter Five identifies the characteristics for a regional development cooperation strategy by conducting a comparative analysis of the regional assistance strategies of major bilateral and multilateral donors and detailed reviews of “top-down” strategic programs, and finally suggests policy directions for Korea’s regional ODA strategy towards Asia, as follows.
First, the worldwide crisis caused by COVID-19 has revealed that the development challenges which the Asian region is facing cannot be solved by individual countries but by regional or sub-regional efforts, which will require stronger foundations for integrated cooperation with regional communities. Strengthening inclusive partnerships would be a key to mitigate the development gap in the region, by supporting regional programs such as the ASEAN Connectivity, ASEAN Smart City Network, and Mekong Subregion development projects.
In response to the pandemic and health security crisis, Korea needs to extend its assistance not only to individual counties but also for region-wide programs. The establishment of the ASEAN Center for Disease Control, contribution to the Asia Pacific Vaccine Access Facility (APVAX), and increase in support to multilateral organizations and international initiatives can be good examples.
Lastly, new ODA modalities involving private capital in the form of public-private partnership (PPP) are required to support green and digital sectors as well as infrastructure development in the Asian emerging countries, by designing large flagship projects and encouraging participation of the private sector. Establishing strategic programs and active policy dialogues with development partners will improve the effectiveness and efficiency of Korea’s ODA. Government-wide efforts are also called for to diversify development finance through PPP, to strengthen the coordination of ODA projects with the private sector to maximize synergies, and to increase collaboration with multilateral development banks.

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