ASEAN-Korea Relations: Security, Trade, and Community Building

9. ASEAN–Korea Co-operation in the Development of New ASEAN Members: Korea’s ODA Policy

9 9 ASEAN–KoreaCo-operationin theDevelopmentofNewASEAN Members:Korea’sODAPolicy Sung-Hoon Park INTRODUCTION Korea was one of the major beneficiaries of international aid activities from the 1960s to the 1980s. Korea quickly reconstructed itself after the Korean War of 1950–53 and soon emerged as one of the world’s leading manufacturers of selected industrial products, such as home electronics, ships, and cars. Little wonder then that a number of international development organizations (including the World Bank) termed Korea’s economic development over the last five decades a “miracle”.1 However, it should be noted that Korea had benefited substantially from assistance provided by the international community . The international aid nurtured Korea’s industrial and developmental capacity in three ways. First, during the first decade of the post-Korean War period, the United States provided a total of US$2.5 billion as grant-type aid to Korea. This accounted for about 80 per cent of Korea’s total fixed capital formation.2 ThetotalamountofOfficialDevelopmentAssistance(ODA)received by Korea in the years 1945–80 is reported to be US$20.3 billion. This sum can be subdivided into grants of US$4.5 billion and loans of US$15.8 billion. Chap9.indd 111 Chap9.indd 111 1/24/07 2:10:11 PM 1/24/07 2:10:11 PM 112 Sung-Hoon Park Second, numerous developed countries had provided Korea with technical assistance, thereby aiding in the development of its industrial capacity and market economy system. Third, Korea is a long-time developing country, and due to its status as such, it was granted preferential access when it exported to its major trading partners. This was especially so under the generalized system of preferences (GSP) scheme, which lasted until the mid-1990s. Since becoming a newly industrialized economy (NIE) in the mid-1980s, Korea has begun to provide ODA. The establishment of the Economic Development and Co-operation Fund (EDCF) in 1987 under the auspices of the Korea Eximbank marked the beginning of Korean activity in dispensing ODA. The EDCF provided developing countries with loans for the development of their industrial capacity, the stabilization of their economies, and to strengthen their economic ties with Korea. Following the EDCF, the Korean Government established the Korea International Co-operation Agency (KOICA), which has since been responsible for grant-type aid. The development assistance programmes of Korea have been largely managed by these two institutions. Given that East Asia is Korea’s largest trading partner, much of Korea’s ODA is centred in this region. This chapter seeks to provide an overview of Korea’s ODA policy towards East Asian developing countries, specifically Cambodia, Laos, Myanmar, and Vietnam (CLMV). In so doing, the desirability and future direction of this policy will be discussed. Section two of this chapter discusses the main features of Korea’s overall ODA policy. Section three analyses Korea’s overall ODA policy by comparing it to selected member countries of the Organization for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC). Section four looks into Korea’s ODA activities vis-à-vis CLMV, which is followed by the conclusion in section five. CHANGES IN INTERNATIONAL ENVIRONMENT OF DEVELOPMENT ASSISTANCE AND KOREA The Millennium Development Goals (MDGs), adopted by the United Nations General Assembly in 2000, is the most important framework for the current international development assistance activities. The MDGs’ eight most immediate goals seek to reduce alienation and poverty prevailing in the developing and least-developed countries: (1) eradicate extreme poverty and hunger; (2) ensure universal primary education; (3) promote gender equality and empower women; (4) reduce child mortality; (5) improve internal health; (6) combat HIV/AIDS, malaria, and other diseases; (7) ensure Chap9.indd 112 Chap9.indd 112 1/24/07 2:10:13 PM 1/24/07 2:10:13 PM 113 ASEAN–Korea Co-operation in the Development of New ASEAN Members environmental sustainability; and (8) develop a global partnership for development. It is often suggested that the MDGs have set a new direction for international co-operation in the twenty-first century, with its strong emphasis on the global dimension of poverty and hunger. Indeed, poverty and hunger are no longer merely the problems of developing countries. Accordingly, the MDGs have declared that partnership between developing and developed countries is the main guiding principle for the international community’s future development assistance activities.3 Since adopting...