Academic journal article Review of European Studies

Comparison of Aid Allocation Patterns of Two Emerging Donors: Korea and Greece

Academic journal article Review of European Studies

Comparison of Aid Allocation Patterns of Two Emerging Donors: Korea and Greece

Article excerpt

Abstract

This study analyzes how the aid allocation pattern of the OECD DAC's emerging donor Korea is different from that of Greece. By using the dataset of 153 aid recipient countries from 1996 to 2008 and 1987 to 2011 respectively, this study reveals that Greece and Korea display similar patterns of aid disbursement. They favor recipients with higher income level, with larger population, closer trade ties, better social development, protection of freedom and human rights, and nearby located neighbors. However, in case of Korea, this study conjectures that aid fragmentation and obscure processes in approving the ODA-funded projects may be latent challenges in upholding coherent aid practices.

Keywords: foreign aid, aid allocation, emerging donors, Korea, Greece

1. Introduction

In spite of the global recession, donors have been more forthcoming about their concern for international development cooperation. In 2013 alone, five countries joined OECD's Development Assistance Committee (DAC), which is dedicated towards sustainable development including poverty eradication, pro-poor growth and improvement of living standards. As the first country that transformed oneself from an aid recipient to an aid donor, Korea is now cited as a model for other developing countries striving to witness another miracle in their own nation.

Nevertheless, despite of the international community's huge interests and eyes on the role of Korea in the new paradigm of the international development cooperation, not many studies have been conducted to analyze how Korea is different from the traditional OECD DAC member states. Thus, the aim of the study is to compare how Korea is especially performing differently from Greece, which used to be the last country to join the OECD DAC in 1999 before the entry of Korea in 2010.

In order to analyze and compare how Korea and Greece allocate their aid to partner countries, this study is divided into the following parts. First, it examines the history of receiving and providing the official development assistance (ODA) of Greece and Korea. After analyzing the aid disbursement patterns of the two donors, the second section of the study endeavors to look at the determinants of aid disbursement of Greece and Korea. In this section, the dataset of 153 aid recipient countries from 1996 to 2008 and 1987 to 2011 respectively is used with one regression question involving one dependent variable (ODA disbursement per capita) and various types of explanatory variables. However, in order to investigate deeper analyses and detail findings, this study also examines how the two donors' aid motivations are portrayed in recipient countries that are divided by the income level. In the following third section, the study analyzes what kind of challenges can be encountered based upon the findings depicted in the second section. And finally, the conclusion summarizes the study with offering policy recommendations to Korea.

2. Greece and Korea's ODA History

Greece and Korea are the two OECD DAC members who joined in 1999 and 2010, respectively (Note 1). Greece as a somewhat emerging donor in Europe and Korea as a new emerging donor from Asia, they share similarities and differences in certain aspects. Table 1 compares some of the key points of the two countries as donors.

The two donors are alike in the sense that they share the history of having been a recipient country. Greece received aid from the international community after World War II to 1980s and Korea received aid from as early as 1945 until it stopped receiving aid from the World Bank in 1995 and was removed from the DAC recipient list in 2000. Both made transformation from a recipient to donor by establishing respective agencies and are allocating around 0.11 percent of its GDP each year. Furthermore, out of their priority countries, each has the tendency to focus on their strategic, regional partners who are Eastern European countries in the case of Greece and East Asian countries for Korea. …

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