DSA Annual Conference November 5, 2010 Eun Mee Kim

1. Lessons from the ‘Seoul Alternative’ of Development and Development Cooperation: Republic of Korea’s Experience from Recipient to Donor of Aid DSA Annual Conference November 5, 2010 Eun Mee Kim Professor, Graduate School of International Studies Director, Institute for Development and Human Security Ewha Womans University

2. Table of Contents • Introduction • South Korean Development Experience • South Korea and Official Development Assistance (ODA) • South Korean Alternative for Development Cooperation • Concluding Remarks

3. I. Introduction • South Korea’s phenomenal economic development • 2010 Ascension to OECD/DAC • 2010 G20 Seoul Summit: November 11-12, 2010 • 2011 Busan HLF-4 (High-Level Forum on Aid Effectiveness): November 29-December 1, 2011 • New challenges for South Korea in the global arena • “South Korean Model of Development Cooperation”

4. Three questions: • What are the key factors of South Korea’s development experience (1960-1980)? • Challenge 1: What are the changes in the global political economy in the 21st century? • Challenge 2: What are global guidelines for development assistance (donor guidelines)?

5. II. South Korean Development Model • Post-WWII key questions in development studies: • Why are some nations underdeveloped? • How do nations attain development? • Modernization theory: 1950-60s • Dependency theory: 1970-80s • East Asian cases treated as anomalies in Modernization and Dependency theories: Japan, S. Korea, Taiwan, Hong Kong, Singapore, and China

6. II. South Korean Development Model • Institutionalism and the Developmental State • Focus on key institutions to explain economic development • East Asian nations became key examples for theory-building (first among development studies) • Japan and the MITI • Four Asian Tigers • Emphasis: Earlier phase of industrialization

7. II. South Korean Development Model • S. Korean scholarship on economic development • Highlighted political and social problems associated with development • Authoritarian and dictatorial rule of the military regime • Suppression of democracy • Exploitation of labor • Unequal development between urban and rural areas and between large business groups and SMEs • Capitalist development without democratization during early phase of growth • Post AFC: Emphasis shifted to the changes/ transformation of the developmental state

8. II. South Korean Development Model (1960s-80s)

9. III. South Korea and ODA - Recipient • Received ODA from 1945-1995 • Began in 1945: US Government Appropriations for Relief in Occupied Area (GARIOA) and Economic Rehabilitation in Occupied Area (EROA) • GARIOA: Emergency relief aid to assist with US-occupied areas in need of basic subsistence including food, medicine and fuel after WWII. • EROA: To assist with infrastructure in US-occupied areas after WWII. • Republic of Korea established in August 1948. • Korean War (1950-1953) devastated over 80% of the Korean peninsula.

10. III. South Korea and ODA - Recipient • 1995: S. Korea graduated from being a recipient by paying off the World Bank loan • The S. Korean government was able to utilize ODA funds to support its industrial policies • Significant in world history that a major aid recipient became an emerging donor of ODA in less than 5 decades

11. Summary of South Korea as a Recipient of ODA

12. III. South Korea and ODA - Donor • 1963: Participated in a training grant with USAID • 1987: Economic Development Cooperation Fund (EDCF) • Established in 1987to handle concessional loans • Housed in the Korea Export-Import Bank • 1991: Korea International Cooperation Agency (KOICA) • Established in 1991 to handle grant aid • 2009: South Korea’s ODA • Volume: $816 million • ODA/GNI: 0.1% • DAC members’ average ODA/GNI: 0.28% • UN goal for ODA/GNI for MDGs by 2015: 0.7% • 2010: G20 Summit Meeting – Development Agenda • 2011: HLF-4 Meeting in Busan • 2015: South Korea’s Promise for ODA • Total volume: $ 3 billion • ODA/GNI: 0.25%

13. III. South Korea and ODA - Donor • It was never a colonizer of other nations, thus freeing it from the “white man’s guilt” • Its successful economic development in less than a generation from being one of the poorest nations in the world sends out a strong message of “possibility” and “hope” to other developing countries

14. IV. South Korean Alternative for Development Cooperation 1. South Korea’s own development experience from the 20th century • Country ownership in its development planning and usage of ODA • State-intervention in the market • Industrial policies, effective use of carrots and sticks (performance-based incentive structure), prevention of moral hazard and corruption • Extensive use of authoritarian state apparatus for development 2. Global political economy & Global norms for ODA • End of the Cold War • WTO Regime • OECD/DAC Guidelines for ODA

15. 1. Changes in the Global Political Economy

16. 2. Domestic Political System for Development • Domestic Political System: 20th vs. 21st Centuries

17. 3. Global Norms for ODA Global standards and norms for development cooperation as exemplified in the OECD/DAC guidelines must be taken into consideration when South Korea is developing its own “model” of development cooperation • OECD/DAC donor guidelines • Paris Declaration for Aid Effectiveness

18. OECD/DAC • The Development Assistance Committee (DAC) is a key forum of major bilateral donors. They work together to increase the effectiveness of their common efforts to support sustainable development. • The DAC concentrates on two key areas: • How international development co-operation contributes to the capacity of developing countries to participate in the global economy, and • The capacity of people to overcome poverty and participate fully in their societies. • Members of the DAC are expected to have certain common objectives concerning their aid programs -> DAC provide Guidelines, Manuals and Reports for development practitioners.

19. OECD/DAC Guidelines on National Development Economic Development Political Development OECD/DAC guidelines recommend capacity building for national development.

20. Paris Declaration for Aid Effectiveness (2005) • Background • The 2nd High Level Forum on Aid Effectiveness Conference to efficiently manage increasing aid volume • Paris, France, March 2005 • Endorsed by 107 countries, 26 development institutions, 14 civil society organizations (UN, WB, EU, etc.) • Five Key Principles Alignment Ownership Harmonization Managing for Results Mutual Accountability

21. 4. Other Alternatives for Development Cooperation • Washington Consensus: Capitalist market, economic liberalization • Paris Model: Traditional donor’s model of foreign aid (national interest -> humanitarian needs of recipients); Colonial past • Beijing Model: National interest of donor (energy, resources) + Recipient sovereignty • South Korean Alternative?

22. V . Concluding Remarks • South Korea’s success in attaining development has made it a Poster Child for ODA: • Many less developed countries look to South Korea for a model for economic development • OECD/DAC welcomes South Korea’s input in the donor discourse • “Seoul Alternative” for Development Cooperation • Balance between global standards and South Korea’s distinct experience of economic development • Developmental State & Country Ownership

23. South Korean Alternative

25. System III. Overview of South Korea and ODAIII-2. South Korea as a Donor of ODA • Economic Development Cooperation Fund (EDCF) • Established in 1987 to handle concessional loans • Housed in the Korea Export-Import Bank • Korea International Cooperation Agency (KOICA) • Established in 1991 to handle grant aid • Total volume of ODA • Total volume: $ 815.8 million • ODA/GNI: 0.1% • South Korea’s Promise for ODA by 2015 • Total volume: $ 3 billion • ODA/GNI: 0.25% S. Korea’s ODA System Source: ODA Korea

26. III-2. South Korea as a Donor of ODA

27. III-2. South Korea as a Donor of ODA

28. III. Overview of South Korea and ODAIII-1. South Korea as a Recipient of ODA

29. System III. Overview of South Korea and ODAIII-2. South Korea as a Donor of ODA • Economic Development Cooperation Fund (EDCF) • Established in 1987 to handle concessional loans • Housed in the Korea Export-Import Bank • Korea International Cooperation Agency (KOICA) • Established in 1991 to handle grant aid • Total volume of ODA • Total volume: $ 815.8 million • ODA/GNI: 0.1% • South Korea’s Promise for ODA by 2015 • Total volume: $ 3 billion • ODA/GNI: 0.25% S. Korea’s ODA System Source: ODA Korea