Amid economic slowdown, South Korea lowers ODA to GNI ratio target

With South Korea set to lower its ODA to GNI ratio target to 0.2 percent until 2020, how does this impact the country’s development portfolio? Photo by: Republic of Korea / CC BY-SA

South Korea will lower its overseas development assistance to gross national income ratio to 0.2 percent in the next five years following an economic slowdown that may adversely affect the East Asian nation’s rise as a formidable emerging donor in the region.

The country’s economic growth in the third quarter of the year decreased 0.7 percentage points to 1.6 percent, compared with the 2.3 percent recorded the previous quarter. Economic growth has propelled the country from aid recipient to aid donor in just one generation, in the process becoming one of global development’s major success stories.

Seoul announced Nov. 10 that Park Geun-hye’s administration is decreasing its ODA to GNI ratio projection to a more “doable target” from the original 0.25 percent target originally set to be achieved this year. In real terms, however, the country’s development portfolio has continuously increased, albeit at a slower rate than previous years. In 2014, ODA grew at 11 percent.

“The goal is ambitious but a doable target for the Korean government, given the economic and fiscal difficulties in and out of the country,” Hyewon Kim, an official from South Korea’s development policy division, told Devex. “The target can be achieved when we maintain this level of growth rate for the future.”

The ODA to GNI ratio of the member countries or development donors of the Organization for Economic Cooperation and Development’s Development Assistance Committee — which South Korea joined in 2009 — is pegged at 0.7 percent. The government’s decision to lower the target follows an announcement that last year the country’s ODA to GNI ratio was 0.13 percent, almost half of the original 2015 target.

Despite this, Kim added that the government remains committed to increase the country’s aid in real terms to its 24 priority cooperation countries, particularly those in Asia, Africa and South America. The official explained that the country has “maintained the highest rate of ODA growth [among DAC members] over the past five years” with over 12 percent annual growth. In 2014, the government allocated more than $2 billion in development aid.

South Korea’s “Cinderella story” has shown that it is possible to transition from aid recipient to aid donor. Aside from giving now what it received from others in more difficult times, another government official told Devex that growing ODA could lead to a more high-profile global presence for the country, in a continuously diverse donor environment.

“[South] Korea intends to return the favor it once received from the international community and actively engage in addressing global challenges in a way that benefits its growing global presence,” said Sanghyun Ko, an official from the country’s ministry of strategy and finance.

In terms of priority areas despite the lowered target, Ko confirmed that the government will maintain focus on “Asian countries, while steadily increasing our ODA percentage to Africa.” The official concluded that South Korea “plans to expand ODA in such areas as economic infrastructure and environment to bring them in line with the [Sustainable Development Goals].”

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About the author

  • Lean Alfred Santos

    Lean Alfred Santos is a former Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. He previously covered Philippine and international business and economic news, sports and politics.