Making Korea an Exemplary Donor

Conference on Development Challenges and International Cooperation

(Korea’s Role in Afghanistan, Bangladesh and Pakistan)

Keynote Presentation by Kul Chandra Gautam·

Seoul, 24 November 2009

It is an exceptional honour for me to be invited to make this keynote presentation. Let me confess at the very outset that although I have deep neighbourly empathy towards Afghanistan, Bangladesh and Pakistan, I have no particular expertise on the development challenges facing these countries – the main focus of this conference.

And although I admire the Republic of Korea’s development experience, (and parenthetically, I deplore the largely man-made humanitarian disaster confronting the children of North Korea which I have witnessed first-hand many times), I claim no expertise on the Korean development model of either the South or North Korea.

That is why I feel all the more humbled to be given this opportunity to share my non-expert views.

You might be intrigued why I even mention North Korea. After all, most of us would agree that North Korea today represents a model of what not to do in terms of development. Yet it seems to be in the nature of us human beings that we do not want to learn from the history of other countries, and reserve the right to make our own mistakes.

And so it is that in my country Nepal, today quite a few political parties, including the largest, the best organized and most militant Maoist party, advocate for a DPRK-style “democratic people’s republic”.

Similarly, we have seen how the Talebans present themselves masquerading as a progressive force in Afghanistan, and how their brand of obscurantist ideology and theology has attracted many supporters in Pakistan and to a lesser extent in Bangladesh as well.

Sadly, it seems like the march of human progress requires us to occasionally take a few steps backwards even as we try to move forward. And the backward movements are always justified by true believers or pretenders who invoke some superior, faith-based convictions, pseudo-scientific ideology and self-righteous theology wrapped up in ultra-nationalistic jingoism.

Let us hope that the people of our countries, who already endure so much indignity of poverty inequality and injustice, do not have to suffer through more failed experiments of such ideologues.

The experience of South Korea, though not without its flaws, is certainly a better model for most developing countries. Rising from the ashes of the Korean War, the people of Korea have lifted their country from one of the poorest in Asia to the 13th richest economy in the world today.

Six decades ago, Korea was not much more developed than the countries of South Asia. In fact, it had fewer natural resources and poorer infrastructure than what the British Raj had left behind in its former colonies of the Indian sub-continent.

But the Koreans figured out early on that their greatest wealth were the people of the country. They started investing heavily on human capital, particularly on basic health and education of their children. The results were spectacular.

In the 1950s and up to early 1960s the per capita income of Koreans and South Asians were comparable, but in terms of human development indicators, the Koreans leap-frogged. Thus, by 1970, Korea’s female literacy rate had reached 81 percent, while Bangladesh and Pakistan remained at 12 per cent, and Afghanistan had a pitiful 2 per cent.

By 2007, Korea had attained universal female literacy, while Bangladesh moved up to an honourable 70 %; Pakistan barely reached 60%, and Afghanistan was stuck at 10 %. Figures for primary school completion are of comparable order of magnitude.

In terms of under-5 mortality, starting at a comparable level of over 200 deaths per 1000 live-births in the 1950s, Korea reduced U5MR to 120 by 1960, 34 by 1980, down to 9 by 1990 and a record-breaking 5 by 2007.

During the same period Bangladesh reduced its child mortality from 262 in 1960 to a respectable 61 by 2007; while Pakistan went down from 277 to 90; and Afghanistan moved from a shocking 380 to an unacceptable 257, experiencing total stagnation between 1990 and 2007.

Similar figures and trends can be cited for life expectancy at birth, decline in fertility and increase in contraceptive prevalence rates, access to water and sanitation, and status of maternal and child nutrition.

In the great chicken and egg debate on what comes first: economic development or human development, Korea’s answer is unambiguous: it is the early and heavy investment, and progress in human development, that made the “Miracle of the Han River” possible despite great odds.

Yes, as Professor Kim Ji-Hong of KDI outlined in his brilliant lecture yesterday on “Korea’s Economic Development Experience”, its spectacular economic growth enabled Korea to dramatically improve not just access but quality of basic social services that unleashed a virtuous cycle of human development and economic development reinforcing each other and turning Korea into a roaring Asian economic Tiger.

But had it not been for its stock of healthy, literate and educated human capital built up in the early decades of the 1950s and 60s, it is safe to say that the productivity of Korea’s labour force would have been like that of South Asia, and its economic growth would have been severely stunted.

Indeed, numerous case studies and reports by the World Bank, and UN agencies, including UNICEF, UNDP, UNRISD, and academic researchers suggest that robust and sustained investment in human capital, including education, health and general well-being of children from the early childhood years, were key factors that helped fuel the rapid human as well as economic development of Korea.

I recall in the late 1970s, UNICEF provided a distinguished British economist, Professor Hans Singer, as a consultant to KDI to review Korea’s development experience of the previous 3 decades and what lessons could be learned from it both for Korea and for other developing countries.

I have here his report published by KDI in 1980 and entitled “Young Human Resources in Korea’s Social Development: Issues and Strategies”. It concludes that Korea managed to achieve high literacy and widespread primary education when it was still among the poorest countries in the world; that this human resource development preceded physical capital accumulation; that this wealth of human capital combined with policies promoting high employment using labour-intensive technology, strong export-orientation and progressive land reform in rural areas, led to high productivity, and in the early decades, a fairly equitable income distribution.

Looking ahead at that time, Hans Singer recommended that in its Fifth National Development Plan in the 1980s, Korea should adopt 7 specific targets, which interestingly are quite similar to today’s Millennium Development Goals.

These included: to drastically reduce malnutrition; further reduce child mortality especially in rural areas; to provide free education up to the age of 15 and generous scholarships for gifted children from poor households; to significantly increase the number and quality of teachers with emphasis on women teachers; to make childhood immunization and access to water and sanitation universal; and to improve housing for families with children.

These targets were largely achieved by the mid-1980s. And UNICEF was ready to phase out its cooperation from Korea. But it stayed on for another decade, not so much because Korea needed UNICEF, but UNICEF needed Korea to share its experience with other developing countries.

I recall UNICEF brought many policy makers and programme specialists from developing countries of Asia, Africa and even Latin America to learn from Korea’s experience, especially in early child development, social development planning and the Saemaul Undong model of rural community development. KDI was our key partner which facilitated this model of South-South cooperation.

UNICEF finally closed its country office in 1994, and Korea became the first developing country in the world to “graduate” from being a recipient to a net donor for UNICEF.

Besides the Government of Korea, which has become a good donor to UNICEF, there now is a vibrant Korean National Committee for UNICEF which mobilizes significant amount of financial support from the private sector and from ordinary citizens for the children of developing countries like Afghanistan, Bangladesh, Pakistan, Nepal and many others.

This National Committee, along with a group of committed Korean Parliamentarians not only mobilize resources for UNICEF, but are strong advocates for the cause of children, population, environment and human development.

Now that it has emerged as a donor country, we count on Korea to become a “model donor”. After all, Korea has first-hand experience of being a successful aid recipient country. It knows better than other traditional donors what kind of development cooperation can be most effective.

And whereas most other donors may be stuck with certain modalities of cooperation that they cannot change readily, as an emerging donor whose ODA is likely to grow significantly in the coming years, Korea has more flexibility and room for maneuver which allows it to be truly innovative and effective.

Tomorrow, 25th of November 2009, we expect Korea to be formally inducted as a member of the Development Assistance Committee of OECD. In that context, I noted that the Ministry of Foreign Affairs and Trade and OECD/DAC undertook a fairly comprehensive Special Review of Korea’s development cooperation.

In that Special Review published in 2008, there is a good analysis of Korea’s emerging ODA objectives, the articulation of what Korea considers to be its comparative advantage as a donor, its chosen priority sectors and priority partner countries, and its aid architecture.

Looking somewhat superficially at Korean aid projects in Afghanistan, Bangladesh, Pakistan and even Nepal, I note that there are some discrepancies between the published ODA policy objectives and what the KOICA and EDCF-supported projects on the ground try or are likely to achieve.

On the positive side, in all of these countries Korea provides support for information and communications technology, including introduction of e-governance, an obvious area of Korea’s comparative advantage given that it is currently at the leading edge of the digital revolution, with wide-spread, high-speed and wireless internet services and pioneering experiments in e-governance.

Korea also supports vocational and technical training institutes, and training of government officials in a variety of specialized areas responding to the felt needs of these countries. Korea provides some expert services and volunteers, and occasionally support for Korean NGOs which do useful work that is both beneficial as a learning opportunity for Koreans and support for their national counterparts.

Korea provides much needed supplies and equipment for various institutions, although occasionally there are questions about the appropriateness and cost-effectiveness of such donations-in-kind. Certainly, Korea’s support for emergency humanitarian assistance is appreciated by all.

A common type of support provided in many countries is school construction. There is no question that these countries need more schools, and that the communities who get the Korean-funded schools are immensely grateful. What is less clear is the strategic rationale behind providing support for a few dozen schools in countries that need thousands of them.

Unless such support is well coordinated with much larger school construction programmes funded by governments themselves or with help from other donors, such schools become useful “gifts” for a few communities but do not really make a strategic impact in nation-wide development.

If somehow these schools were model schools designed to be low-cost, child-friendly, and conducive to better learning and teaching in an exemplary and replicable manner, then there would be good rationale for providing such support.

If so, there must be a plan for others to emulate and replicate such models in large scale. But one does not get the sense that KOICA or EDCF provide such support with any strategic policy dialogue with governments or other donors, or as part of any sector-wide programme support.

Similarly, Korea also supports construction and equipment of quite a few hospitals. Again, these are very useful for the communities where they are built. But it is not clear how these hospitals fit into larger national health sector development plans.

KOICA’s vision statement refers to supporting the achievement of the Millennium Development Goals. The field of public health in most developing countries is now quite crowded with many bilateral and multilateral donors, NGOs and foundations providing considerable support. It is unclear how Korea sees its help for hospital construction in a few localities contributing to achieving specific maternal and child health goals in a national context.

It is relatively easy and attractive to construct and equip buildings. But the software part of the training, helping with behavior change, and capacity building for sustainable progress is harder and messier, yet absolutely vital.

One would like to see KOICA and EDCF’s country development strategies more clearly articulating how their support is intended to help achieve MDGs or complement the efforts of others to do so.

This is not to downplay the importance of infrastructure building. Indeed, there is good justification for Korea’s support for hydroelectric power plants and transport networks that are vital arteries for the provision of basic services. Its support for community and institutional water supply schemes equally helps meet an urgent and essential human need.

Like other donors, Korea occasionally has a tendency to go for symbolic, visible projects which are good for public relations purposes both in the recipient countries and in donor countries. Such projects include Korea helping build a Vice Presidential Palace in Afghanistan or providing a few Taekwondo instructors in Nepal.

Such projects maybe diplomatically or politically justifiable and can earn much goodwill. But these should be seen as special “gifts” of friendship and goodwill, rather than as development cooperation.

However, support for even such projects can be creatively transformed into having a genuinely developmental impact. For example, instead of providing just a few Taekwondo instructors or building a single stadium, Korea could help develop the whole sports sector thereby helping a country’s children and youth to develop physically and mentally, channeling their energy into peaceful competition rather than disruptive gang fights.

Many developing countries need a carefully prepared youth and development policy and programmes of which sports can be a central rallying element. Perhaps Korea could take it up as a unique area for its support since no other donors are known to provide such support.

All of us realize that it is not always easy to separate a donor country’s foreign policy or public diplomacy with its development cooperation policy. However, if Korea is going to be a model donor, it will need to strive to do so.

For example, it is understandable that given Korea’s foreign policy alignment with the U.S. and NATO countries, its development cooperation in countries like Afghanistan and Pakistan might be influenced by the larger geo-strategic relationships involving all these countries.

But in my humble view, at least in terms of its development cooperation, it would be unwise for Korea to play a second fiddle with other larger donors with broader political interests in politically volatile countries. For a relatively small and emerging donor like Korea, it would be best to separate its development assistance from other projects of political or strategic solidarity with its allies.

Just like Korea as a recipient of foreign aid, would have preferred not to confuse real aid with symbolic gestures or strategic political support, it would be best if Korea would serve as an example of an enlightened donor guiding its ODA policies and programmes from a strictly developmental perspective.

I note that in terms of sectoral priority, KOICA has currently identified the following seven sectors – education, health, governance, rural development, information and communication technology, industry and energy, environment and gender.

I cannot judge if all of these areas fall under Korea’s real comparative advantage. But it seems to me that, as noted in the DAC special review, this listing of priority sectors maybe a bit too broad, unwieldy and incoherent. Korea might do well to further focus and narrow down its list of priorities, if not globally, certainly at individual country level.

Let us recall that in all likelihood, many other donors will be present in the same countries which are in Korea’s priority list. And most likely, these other donors will be helping in some of the same areas that are Korea’s priority sectors. And some of these other donors are likely to be bigger and more influential than Korea. So how will Korea shine and make a distinctive impact?

The current approach seems to be for Korea to provide a little bit of assistance in each of its 7 priority areas, and make its symbolic presence felt. Another possible way would be for Korea to become a little boutique donor in a couple of its niche areas. A third way would be for it to concentrate in those areas that open up markets for Korean investment and trade, and support a few prestige projects that give good publicity for Korea and benefit its investors. A fourth way is for Korea to tag along as a junior partner of some bigger donors and fill some gaps left by them.

Please forgive me for saying so, but it is my impression that at present Korean aid seems to follow a combination of the above four approaches in actual practice, if not in theory.

My humble and friendly advice to Korea would be that none of the above approaches are good enough for Korea. As a major emerging donor with an exemplary track record that many developing countries want to emulate, Korea should aspire to make a real impact in a couple of areas where its experience and comparative advantage are unquestionable.

For example, if we take Afghanistan, what is it that it has failed to do that Korea did well to pave the ground for it to become an Asian economic tiger? After six decades of failed development efforts, with many super powers coming to its rescue and spending hundreds of billions of dollars, rubles, pounds, Euros and yens, Afghanistan’s human development indicators have hardly changed. Life expectancy at birth is only 44 years, adult literacy 28 %, under-5 mortality of 257, total fertility rate of 6.6, safe water supply reaching only 30 % of households, malnutrition affecting nearly 60 % of its children.

There is no way that Afghanistan is likely to make an economic breakthrough with such state of its human capital. The obvious lesson to me from Korea’s experience is to invest heavily in human capital development. I would hope that instead of trying to help in many miscellaneous areas, Afghanistan and Korea would jointly set some ambitious goals in just a few areas of human development priorities, and concentrate all their cooperation in achieving such goals.

If we take the case of Bangladesh, which has made much better progress in human development, and might be ready for a take-off like Korea was in the 1970s, the lessons from Korea’s experience would be to help improve, not just access but the quality of basic services – especially health and education, create labour-intensive jobs, and help with its export promotion.

In Pakistan, and indeed in all countries of South Asia, malnutrition rates are among the highest in the world. So long as such rates of malnutrition persist, the growth and development of children of these countries will continue to be stunted, and they will not do well in school nor will they be very productive as adults. So a common focus of Korean cooperation in all countries of South Asia could be improving maternal and child nutrition.

Indeed, if I were to look for guidance as to what should Korea do to best help the countries of South Asia – and perhaps Africa as well – I would go back to Professor Hans Singer’s 7 recommendations for Korea’s own human resource development in the 1980s.

To recapitulate, these included: first and foremost, to drastically reduce malnutrition, further reduce child mortality, provide free and compulsory quality basic education, including significantly increasing the number and quality of female teachers, make childhood immunization and access to water and sanitation universal, and to improve housing for families with children.

As it becomes a member of DAC, and needs to further align itself with common DAC guidelines, Korea might wish to carefully sharpen its declared objective of supporting MDGs into a more manageable portfolio of health, nutrition, basic education and social protection.

Next year, Korea will be hosting and chairing the second G-20 Summit of 2010. As host, it is entitled and expected to champion one or two flagship initiatives. What will Korea champion?

I would like to make a humble suggestion that drawing from its own development experience, Korea consider proposing a global action plan to scale up investment in nutrition as one of its prime agenda for the G-20 Summit.

Recently a consortium of partners, including the World Bank, UNICEF, WFP, WHO, joined by some bilaterals including CIDA, DFID, USAID, and INGOs including Helen Keller International, IFPRI, the Micronutrient Initiative, the Bill and Melinda Gates Foundation, etc. have come up with a very thoughtful, bold and ambitious draft Global Action Plan for scaling up nutrition interventions.

Prepared rigorously by some of the best experts in the world, the Plan calls for an investment of the order of $11 billion per year in 36 priority countries that are home to 90 % of the world’s malnourished people. It proposes 7 major interventions that are considered the most cost-effective. Some of these interventions, such as combating micronutrient deficiencies, deworming, promoting breastfeeding, etc. may not sound very glamorous but these are considered the best bargain in development by a group of the world’s leading economists in their Copenhagen Consensus.

Canada that hosts and chairs the first G-20 Summit in 2010, has shown a strong interest in a major global nutrition initiative. I would recommend to Korea to coordinate with Canada and other key partners to put a major nutrition initiative on the G-20 agenda.

It would be very fitting for Korea to take the lead in such an initiative on nutrition which relates directly to a key feature of Korea’s success story in development.

In 2011 Korea will be hosting the next High Level Forum on Aid Effectiveness. As charity must begin at home, it would be important for Korea to present to the world how it sees itself being a role model of aid effectiveness.

The DAC special review points out a number of areas where there is room for Korea’s development cooperation to be revamped structurally, functionally and in terms of strategy and vision.

Every year a Washington, DC based think-tank called the Center for Global Development produces a critical comparative review of the performance of 22 donor countries using what it calls a Commitment to Development Index. Currently Korea ranks towards the bottom of the list, but there is a tremendous opportunity for Korea to rise towards the top in the next few years.

Drawing on these reviews, I would like to propose a 12 point agenda for Korea to position itself as a trusted partner of developing countries that would rank high in terms of the commitment to development index.

  1. On the quantity and quality of aid or ODA – Korea is already committed to increasing the volume of its ODA from the current 0.09 % of its GNI to 0.15 by 2012 and 0.25 by 2015. At that point Korea’s ODA will be some US$ 4 billion per year. Presumably beyond 2015 its ODA will continue to further increase until it reaches the global goal of 0.7 %. Korea will then be a major player in terms of the volume of ODA.

But in terms of quality of ODA, there is a need for Korea to make 3 key improvements:

a)Need to untie Korea’s ODA: Currently, it has the highest level of tied aid – some 98% of all bilateral aid is tied. To its credit, Korea has produced a Roadmap on Untying. This needs to be pursued more vigorously in order for Korea to comply with DAC recommendations for untying of aid. Tying of aid, adds to the cost of development projects by 15 to 30 %. And while it might seem beneficial for the donor country in the short-run, it is actually counter-productive in the long run. Instead of preying on tied Korean aid, it would be better for Korean businesses to be encouraged to compete for much larger amounts of all donor funded projects.

b)Need to better balance grant vs. loans: Currently Korea provides more concessional loans than grants. This is contrary to the DAC members’ commitment to debt reduction, especially for LDCs. Korea actually has a perverse practice of giving more grants to richer countries and loans to poorer ones. Thus in 2006, LDCs got only 40 % of bilateral aid as grant, whereas lower middle income countries got 74 %, and upper middle income countries got 100% as grant. Korea needs to do exactly the opposite, in order not to over-burden the poorest countries with debt.

c)Need to reduce mini-projects – Korean ODA comes in the form of too many small projects creating a heavy burden of reporting on the recipient countries, and processing the reports on the donor country as well. Korea should gradually move towards fewer but larger projects, especially as the size of overall ODA increases.

  1. Balancing Bilateral vs. Multilateral Aid – In 2006 only 17 % of Korea’s ODA was disbursed through multi-lateral channels, which is well below the DAC average of 26%, and much higher levels by some of the more mature European donors. Both because multilaterals can be good conduit for small/emerging donors like Korea, and as Korea does not have a strong network of bilateral aid offices, it would seem desirable for it to allocate more of its ODA through multilateral channels. However, Korea should be careful not to disperse its multilateral aid through too many organizations in too small quantities. Instead it should select a small number of what it considers to be the most effective UN agencies and multilateral development banks and channel significant chunks of its ODA through them. Consideration should also be given to channeling some modest ODA through effective Korean NGOs.
  2. Review criteria for selecting preferred country partners – Korea currently has over 100 partner countries and some 23 priority countries. To be really effective, it would be desirable to have a smaller number of priority countries. Korea channels less of its ODA (42%) to LDCs than the DAC average (56%). In selecting priority countries, it would be desirable to focus more aid to LDCs and low-income countries that are well-governed and have low level of corruption. Having said that, alternative modalities – e.g. working through NGOs – should be found to help poor and vulnerable groups in countries ruled by corrupt governments, so the poor do not become double victims.
  3. Need to streamline organization and management of Korean development cooperation – Currently, the Korean aid architecture is quite unwieldy and fragmented (with 2 major ministries and a further 30 ministries, agencies and even municipalities involved in providing small amounts of grant and technical cooperation). As Korea becomes a major donor, there is a need to consolidate these dispersed units and bring them under a single coordinating umbrella. Similarly, there will be a need to decentralize more of KOICA/EDCF’s operations to their country offices and provide more staff to these offices. Finally, there is a need to develop a single country strategy for all of Korea’s aid activities in each priority country.
  4. Trade – As a good donor, Korea must review its trade policy and allow greater import from LDC/LICs. Specifically, it should gradually reduce its whopping 980% tariff on rice imports.
  5. Investment – For its own development Korea benefitted enormously from FDI. Learning from that, Korea should promote development-friendly investment, but discourage corrupt practices by Korean investors abroad.
  6. Migration – Remittances by migrant workers have become a major source of economic well-being for many developing countries. Korea should allow more migrants, including students and refugees from developing countries. For example, in the case of Nepal, remittances by Nepali migrant workers in Korea are considerably higher than its modest ODA. Frankly, if there were a choice, I would rather encourage Korea to give more employment visas for Nepali workers than more ODA.
  7. Environment – Like other developed nations, Korea can make a meaningful long-term contribution to development by controlling its carbon emission and greenhouse gases both inside the country and outside, and supporting the concept of global public goods and global commons.
  8. Security – Korea has an excellent record of not engaging in arms sales to developing countries. Keep it up, and please resist any temptation to become an arms merchant. But Korea could do more to contribute to UN peace-keeping operations, and apply its military assets for humanitarian relief operations.
  9. Technology – Korea has a very good record in spending for research and development of value to developing countries. It also has a good policy that is not too restrictive in terms of intellectual property rights which can be beneficial for LDCs. Please continue these progressive policies.
  10. Humanitarian aid – While Korea has been providing increasing amounts of humanitarian aid, it lacks a clear policy framework for it. Korea should sign on to the Good Humanitarian Donorship principles and practices. It should ensure that its humanitarian activities are needs-based and not driven by donor visibility objectives, and are delivered within the framework of a coordinated international response.
  11. Build-up public support for development cooperation – Many donor countries find it difficult to justify increasing foreign aid with their tax-payers who feel that there are many unmet needs domestically which should be attended to first. Sometimes stories of corruption and misuse of foreign aid, make it hard to build public support for aid abroad. Fortunately, several recent public opinion surveys carried out in Korea show that there is generally strong support for ODA. To increase public awareness and support for ODA, MOFAT/KOICA produce a magazine on ‘International Development Cooperation’ and organize “ODA International Development Conference” periodically. The Paris Declaration on aid effectiveness discourages donors from over-emphasizing visibility objectives or “flying the flag”. So Korea must devise effective ways to communicate to its citizens the value of its ODA. It should also learn to take its share of credit for results achieved through coordinated multi-donor development efforts.

I apologize that I have been a bit too long-winded and have not focused my remarks on Afghanistan, Bangladesh and Pakistan. But I believe that if Korea became a model donor, refining its aid modalities along the lines I have outlined, all countries, including Afghanistan, Bangladesh, Pakistan, Nepal and Korea itself, would benefit immensely.

Before I conclude, let me reiterate my hope and recommendation that human development should be a centre-piece of Korea’s future development cooperation, and as part of that Korea would take up a major global initiative to combat hunger and malnutrition, as a key focus of the second G-20 Summit which Korea will host and chair in 2010.

I would also hope that during the fourth High Level Forum on Aid Effectiveness which Korea will host and chair in 2011, it will announce a long-term vision for Korea to become an exemplary donor and a champion of development effectiveness.

The whole world’s eyes are now on Korea, as the host of these two major conferences in the next two years. And many of us in developing countries look up to Korea as a role model, as the only developing country so far that has made a successful transition from a recipient to a donor country. We count on Korea to become a truly developing country-friendly economic power that we can all be proud of.

Thank you.

(Mr. Gautam is a former Deputy Executive Director of UNICEF and Assistant Secretary-General of the United Nations)