Korean ODA Policy Guideline in the World Arena

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Introduction

Official Development Assistance (ODA) is especially vital for developing countries of the world. It is a statistic for measuring aid. This is regulated by the Development Assistance Committee (DAC). The loans and grants considered with ODA are proposed: a) to the official sector; b) to improve the economic welfare of a country; c) at concessional financial terms (ODA Korea 1). The role of this international formation is to have more opportunities for struggling against negative economic and social features. One of them is the struggle against poverty in developing countries, mostly those of Africa. The mission of DAC is to provide forums among member countries as of development, aid, and poverty decrease in developing countries. DAC list of donor countries includes 24 countries at the moment (OECD1 1). Some among them are: the US, the UK, Sweden, Spain, Japan, and, occasionally, South Korea. The World Bank, the IMF and UNDP also take an active part in worlds stabilization process by OECD.

Problem statement

The sphere of the international relations in case of stabilization of worlds peaceful situation props up against ODA in many points. Its influence on developing countries is grateful. On the other side the expenditures of developed countries are increasing. Thus, in 2004 it amounted to USD 78.6 billion (OECD1 1). Since that time the contributions began growing straightforwardly with the increase of new members in a DAC list. Korea successfully inherited the spirit of international cooperation (Lee 1). In this respect the country develops on its ODA participation for Asian and other countries of the world. Thus, being a non-DAC country, Korea increased ODA expenditures from $57.48 million in 1991 to $159 million in 1996 and $423.3 million by 2004 (OECD4 6.1). The ODA by Korea is significant for DAC in terms of international support and cooperation since the beginning of membership in November 25, 2009 (OECD2 1).

Purpose of the research

South Korea has already treaded to a new stage of international relations. DAC anchors its hopes on this country and gives new objectives for its ODA participation. The observers look at the economical growth of Korea and state that the country has all chances for working out all challenges from the side of OECD/DAC.

The purpose of the research paper is to designate the points for Korean advantages and, particularly, limitations among donor countries. Korea needs to work out particular effective policy guideline for ODA. Furthermore it considers the relevance in ODA projects between Korea and Japan.

Research questions

The main questions of the research presuppose, first, the role of Korea in ODA projects. Second, this study concerns Korea-Japan collaboration and constructiveness in terms of ODA. Third, it elaborates on the current contributions of Korea to ODA and its perspectives in the short and in the long run. Finally, the research describes optimal ways for the analysis of the issue.

Methodology

The basic motivation for the research presupposes current stage in development of Korea. The plan for it is constructed on the basis of previous and current studies. As a result, an observer can outline how the perspectives of the Korean government have been successfully materialized at present. The sphere of international relationships cannot, but omit such a great partner, as Korea. At least, in the East-Asian region this country is among most successful in providing ODA. Thus, the neoclassical theory of world economic relations and their improvements is included for the determination of predicted and found results.

The population for the research props up against the academic background of observers. Here the relation of them to international relations and economic studies is needful. For better understanding of the current developmental initiatives of Korea there are several charts and diagrams. These help to delineate comparative analysis of Korean economic and financial sustainability to pretend for a dominant position in the world. The research sample is structured, so that a reader could be able to get involved into the sphere of Korean external relations. The sample was chosen in terms of historical and statistical analyses. This plays a major role for making it clear and comprehensive for each observer. The instrumentation for the research consists of surveys by different authors. They were selected from different sources: journal articles and official reports from official web pages of OECD and ODA Korea. Other materials were collected from books and reviews.

Literature Review

In World development indicators it is reported that the financial aid of developed countries is increasing with each year. The thing is that the number of donors grows with one or two new countries in the DAC list. However, the aid for developing countries increases dramatically with each year. The strategy of the developed countries stands on suggesting of concessional conditions for recipient countries. Thus, at least 25 per cent are required for making a deal among ODA recipients reduced to 10 per cent. By this there is a theoretical approach to decrease poverty and levels of instability in the world. The report provides information as of ratio of ODA to GNI, not GNP. It is so since 1993 United Nations System of National Accounts (World Bank et al 6.1). Thus, new DAC members should make the ODA-GNI ratio not less than the average reading of 0.28% (World Bank et al 6.1).

The article Determinants of Koreas Official Development Assistance (ODA) Allocation by Lee et al continues on the Korean issue as of ODA. The thing is that Korean status for foreign aid considers building plants for energy resource extraction (Lee et al 3). Moreover, one of the intentions of the country is to make up aid contributions aligned to 0.7% of GNI. For this purpose Korea emphasizes on the export rates to the recipient countries. The authors provide a prediction for Korean development, as a DAC member under OECD, for the next 3 years. Hence, ODA-GNI is predicted to grow 0.026% a year, because of the annual GNI growth of 5% (Lee et al 6). Thus, there is a basis for Korea to join the ranks of developed countries. All in all, Korea actively distributes grants among worlds countries. The major part of them comprises Asian, Middle East and African countries. The variable of Korean loans to different countries has also increased for the previous 5 years. Korea also succeeded in extending the export market and in securing national interests by means of international unions and alliances. This along with international economic and political dynamics gives all grounds for the country to improve on its performance in the world arena. The scope of analysis by Lee et all encompasses also determinants of Koreas ODA allocation and its comparison to Japanese ODA. It is outlined in the study that Japan imports raw materials and uses ODA for securing its resources. Thus, energy production is not a standpoint for Korea in contrast to Japan.

The report of OECD DAC Chair Richard Manning develops ideas about the eligibility of Korea to become DAC member. The point is that, for instance, in 2004 Korean ODA expenditures equaled to $423 million (Manning 3). It is even higher than some current DAC members. In this respect there is a background for Korea to insist on its right to join DAC membership under OECD conventions. Moreover, at that time Korea announced another strategically vital plan to increase ODA up to $1 billion by 2010 (Manning 3). In fact, the countrys GNI is growing per capita and in terms of import-export relations. The export sector holds an extra significant place in the Korean plan for ODA participation. Doubling current ODA reading is a serious challenge for DAC. It considers that those countries that are intended to join the committee soon are really ambitious and rational in their plans. Korea is a great example in this respect. Along with Poland, Turkey and other non-DAC countries of the world Korea shows stability in economical growth and international cooperation.

Kazuo Sunaga in the article The Reshaping of Japans Official Development Assistance (ODA) Charter also designates the phenomenon of East-Asian success. Korea is reported here to be a great donor, notwithstanding its non-DAC position. Just as other East-Asian countries Korea succeeded in making more emphasis on the donor aid toward other least developed countries (LDC) of the world. Thus, it is vital to state on the Japanese economic wonder, as an approach for Koreas future programs under pressure of DAC. The author also dwells on the export direction in economic development of Korea, as a guarantee to become an eligible member of DAC.

Fortunately, Korea is a member of DAC. However, it has a little experience of participation as part of this international formation. On the other hand, the official sector of the country has a great experience in provision of transactions with recipient countries (OECD3 3). In this respect it is better for Korea to follow the example of most successful and powerful donors, namely: Sweden, Norway or Denmark. The major goal for Korea asserted by DAC is to take an active part in working out financial and other mechanisms for the poverty reduction (ODA Korea 1). In this direction the country makes great efforts in delineating social and political responses in both domestic and external dimensions.

One more report of OECD claims for the strategic interest of this organization about Korea. It is so because this country has an approximately two-decade experience in providing ODA. Moreover, owing to the initiatives of the government the Economic Development Co-operation Fund (EDCF) and the Korea Official International Co-operation Agency (KOICA) were established in 1987 and 1991 respectively (OECD4 6.1). This is a strong stimulus for most significant international organizations searching for new members. Of course, Korea can manage to succeed in the external relations, if only its internal situation is stable. In this respect Korea encounters today greater challenges as of further development under OECD and DAC.

Notwithstanding several political and economical collapses in the East Asia, it did not hurt the relations between Japan and South Korea (Matray 96). This objective is trustworthy and relates to the peace building process in the region by both countries. Thus the main goal to reduce poverty can be reached due to sufficient ODA programs by Korea, Japan and, supposedly, China. Japans economic links and the consultations with Nordic countries as of ODA optimal projects would be helpful for Korea at the time of its first steps in the field of participation under OECD/DAC (Hook 194). The examples of the largest ODA donor in the East Asia and the largest donors in Europe should remain prior for Korea at the moment. Constructing its policy guideline properly, the country may reduce the burden of mandatory requirements under DAC. The rationale of the country should stand on collaboration with other donor countries.

Shedding all political controversies as for Cold War identity and becoming a free-market democracy, Korea could have a possibility of an elite OECD member (Kim 225). Hence, Korean role in the process of globalization in most points relates to its ODA sustainability, as a donor. It is necessary to admit here that the country promotes loans for almost all countries in the East Asia. It fairly pretends on the dominant position.

Turning back to the discussion of stability in the internal relations, it is vital to admit that Korea, as a newly emerged donor country, should keep a strict eye on this factor. The thing is that multiple researches showed that donor countries with more improvements and positive reformation of various institutions grow rich (Ovaska 1). This objective is considered by the Korean government. However, still the country needs to rely on most efficient ways for making progress in ODA. World peace and mutual prosperity are stated for Korea among the paramount goals (ODA Korea 1). This objective is straightforward for providing decent life of people worldwide. It is not surprising that for the Koreas ODA Basic Policy Document this point stands first. Under the pressure of the World Community to provide larger volumes of the international development assistance Korea stands firm (Lee 1). It appeared to solve several problems. One of them is to provide rationality in appropriate strategies and instrumentation for driving ODA among, for instance, East-Asian LDCs.

Uniqueness

Due to the fact that the research encompasses different viewpoints of experts, it can be stated that it is rich in content. Hence, an observer should bear in mind that here the content validity is used. Different ideas are fixed in the sample to make emphasis on their holistic nature and mutuality according to the theme as well. This measure identifies the features of the content that are common regarding to the whole scope of reliable studies.

Objectiveness

The reliability of the research props up against the internal consistency in it. In other words, there is a scale of variables that need analysis. Looking through them, an observer finds out relevant feedback about the issue. Most of the points are directly structured in order to answer essential questions stated in the beginning. Moreover, the trustworthiness of the studies observed is incontestable. To say more, references of some sources are repeated in other used materials. There is a case of overlapping of ideas related to the subject matter in the paper.

The limitations of the research, first, refer to the fact that there are less up-to-date materials on the significance of this study. Moreover, the problem of Korea is less studied at the modern period of time, unless mentioning native authors. This problem needs more authoritative opinions. Thus, the bibliography should be extended respectively.

Significance of the study

The research showed that Korea is really competitive for reaching the top positions in Asian market. Its economy is built up on more export regulations with worlds countries. Moreover, Korean economy has enough power to provide more loans for LDCs. In this respect DAC supposes to get the achievement of $1 billion ODA aid from Korea. On the current stage the country resolves this objective by means of implementation of new plants for energy resource extraction. Different sectors of Korean economy intend this country to make huge intakes into the social and economical stability of countries worldwide. Nowadays this country leaves its privileged spheres for the international cooperation not one jot or little.

Thus, Korea is a newly emerged member of DAC under the previous conventions by OECD. Its current relations with Japan solely help this country to involve more investments and their destination for the ODA projects. The future of Korea among donor countries is to increase its ODA-GNI ratio up to the readings of the Nordic countries being major donor power in DAC.

The statistical data collected during the research are organized in the form of charts and diagrams that can show the progress or evolution of Korea on the pathway to the effective international collaboration. This is supported by the respectful notes of experts in this field. The first diagram depicts Koreas ratio of aid to LDCs in terms of time frame of 1991-2007. A special attention should be grabbed here on the variables of Bilateral ODA total and Loans. It is seen that on the current stage the country moves toward consistent and proved performance in the region.

Ratio of Aid to Least Developed Countries out of Korea's Bilateral ODA — Figure 1: Ratio of Aid to Least Developed Countries out of Koreas Bilateral ODA. (Lee et al 8)

This diagram can be supported by means of the following chart. It shows the reliability of Koreas ambitions as for increasing its performance among donor countries. One should highlight the current growth of all mentioned readings in accordance with real situation on countrys development.

Prediction based on Korea's plan to increase ODA — Figure 2: Prediction based on Koreas plan to increase ODA (2007-2012).(Lee et al 6)

Information on the statistics provided in the research is really extended. It is so, because the significance of ODA programs is among prior for the government of Korea and for the Ministry of Foreign Affairs and Trade of Korea, particularly. The information about the regional distribution outlined in the research can be comprehended in the next figure:

Regional Distribution of Korea's Grant — Figure 3: Regional Distribution of Koreas Grant.(Lee et al 10)

Thus, all data state the reliability of Koreas partnership for DAC. Its role acquires more significance for regulations in the East Asia along with Japan and China.

Conclusions and Recommendations

To sum up, the research paper considers the scope of issues as of Korean participation in ODA projects under DAC and OECD. Since the beginning of membership in November 25, 2009 Korea confronted some challenges. They are concerned with the rates of GNI and ODA planned and realized at the time. Making ODA-GNI ratio total to 0.7% the country can successfully complete its obligations before DAC. The findings in the research support the idea of Koreas soon successes in ODA programs for LDCs. It is stated on the statistics provided.

The recommendations for this study suppose the continuation of researching the problem of Korean relations with European countries. In this respect the further bibliographies should include data on the cooperation of South Korea with the Nordic countries (Sweden, Finland, Norway, and Denmark). More attention should be grabbed on the experience of these countries that counts more than three decades of participation.

Works cited

Hook, Glenn D. Japans international relations: politics, economics, and security. London: Routledge, 2001.

Kim, Samuel S. Koreas globalization. Cambridge: Cambridge University Press, 2000.

Lee, Doo Won, Kim, Kyu Won & Shim, Hyun Seok. Determinants of Koreas Official Development Assistance (ODA) Allocation. School of Economics. Seoul: Yonsei University. Web.

Lee, Ho-Chul. Koreas Efforts in Official Development Assistance. ERI Working paper 54 (1997): 1-30.

Manning, Richard. Will Emerging Donors Change the Face of International Cooperation? OECD/DAC, 2006. Web.

Matray, James Irving. Japans emergence as a global power. Stamford, CT: Greenwood Publishing Group, 2001.

OECD1. Official Development Assistance increases further but 2006 targets still a challenge. 2006. Web.

OECD2. OECD Development Assistance Committee (DAC) welcomes Korean membership. 2009. Web.

OECD3. Is it ODA? Factsheet. (2008): 1-4. Web.

OECD4. Environmental Performance Reviews Korea. Paris: OECD Publishing, 2006.

ODA Korea. Philosophy. Ministry of Foreign Affairs and Trade, Republic of Korea, 2009. Web.

Ovaska, Tomi. The Failure of Development Aid. The Cato Journal 23 (2003): 131-142.

Sunaga, Kazuo. The Reshaping of Japans Official Development Assistance (ODA) Charter. FASID Discussion Paper on Development Assistance 3. (2004): 1-35. Web.

World Bank and International Economics Dept. Development Data Group. World development indicators. Washington DC: World Bank Publications, 2006.

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