Keywords

Introduction

This chapter analyses current development policy trends in Germany and Korea. It explores prospects for further changes in policy and for intensifying cooperation between the two countries. Although they may appear to be unlikely partners due to the considerable geographic distance between them, both countries are export-driven and energy-dependent economies that have thrived during times of relative global stability. Germany’s identity is closely related to that of the European Union (EU) as well as defined by its close ties with the US. Korea’s most relevant political and security ally is the US, while neighbouring China dominates its economic relations. With starkly different outcomes, both countries, moreover, share the experience of having been divided during the Cold War. Overall, they are important development cooperation actors and strong supporters of multilateral approaches.

Seven years since the adoption of the 2030 Agenda and its 17 Sustainable Development Goals, multiple crises have contributed to a situation in which human development declined across the globe in 2020 and 2021, thus erasing the gains made in the preceding five years. These challenging human development trends are taking place in a world characterized by strained international relations, leading to constrained global cooperation. The relationship between Western countries and China—and the latter’s more pronounced global ambitions—is a main driver of the shrinking room for global collective action. Geopolitical considerations appear to be increasingly dominating all areas of international politics (Klingebiel, 2022). The Russian invasion of Ukraine is a different and an additional game changer. The aggression is in sharp contrast to international law—especially the Charter of the United Nations (UN). It will have a fundamental and long-lasting impact on global cooperation and multilateralism. This includes the UN as well as “mixed club” governance platforms such as the G20, while leaving some potential for “like-minded clubs” such as the G7 and the OECD.

Our central argument is that in today’s challenging geopolitical context, although they may be perceived as unlikely partners by some, Germany and Korea stand to benefit from exploring opportunities for further dialogue, mutual learning and cooperation. Such deepened cooperation would have the potential to complement and reinforce the existing partnerships and groupings through which they engage. In the following sections, we further explore this potential by comparing the origins of development cooperation, contrasting recent budgetary choices and policy priorities, as well as describing respective institutional setups. On this basis, we identify and discuss a range of areas and topics where further cooperation could be focused.

German and Korean Development Policy: Origins and Foundations

Germany and Korea have followed distinct trajectories in order to become the international cooperation actors that they are today. Whereas the Federal Republic of Germany was a founding member of the OECD/DAC (1961) and has more recently grown to become the second largest bilateral development cooperation provider worldwide, Korea is a recent member (1996 and 2010 respectively) and has been regarded as—and presented itself as—a case for effective development cooperation. Germany’s Western allies encouraged it to use the socio-economic potential it gained in the 1950s and 1960s to contribute to the bipolar rivalry between the Eastern and Western blocs. The Cold War conditions were thus a key factor in the establishment and evolution of Germany’s development cooperation system. Korea’s motivation to enter into the field of development cooperation originates from the same period, as it was in part a response to the Democratic Republic of Korea’s attempt in the 1970s to gain international support in the developing world by providing development support to some countries (Song & Kim, 2022). This explains how Korea’s current approaches find their origins in the country’s experience as a South–South cooperation provider, as well as its role as a “bridge” between such providers and OECD members—a function it has successfully fulfilled since 2011, as host to the High Level Forum on Aid Effectiveness in Busan in that year, for example, and subsequently as the regular host of the Busan Global Partnership Fora.

Korea’s own development trajectory over the last three decades has been considerably faster and more transformational than all other OECD members. Its post-Korean War period as a developing country is vividly remembered by generations in the country. Thus, the process of “development” is recognized and valued in the country as a recent and “lived” experience. The year 2010 was a turning point regarding development cooperation—the country completed its transition from a former recipient to a key provider of international cooperation. The achievement was marked by its membership of DAC and by the UN Development Programme (UNDP) closing its office as a “country programme country office” that same year (Hong & Izmestiev, 2020; Kwon, 2022). In the years leading up to DAC membership, Korea applied development cooperation as a key means to strengthen its international position and soft power, with the country providing the Secretary-General of the UN in 2007 and becoming the base for the Green Climate Fund (GCF) in 2012. In 2022, newly elected President Yoon Suk-Yeol defined Korea as a “global pivotal state” and emphasized its mission to promote freedom, peace and prosperity based on its liberal democratic values, and invest in international cooperation to this end. Thus, development cooperation continues to be explicitly seen and pursued as an instrument to increase the soft-power capacity of the country.

Korea’s own development successes were achieved during a period when the country was receiving considerable levels of development finance, mainly from the US, Japan and multilateral institutions, including the UN development system. The transformation of the country into what it is today has brought about a strong demand in developing countries to learn from Korea’s development experiences. Knowledge exchange platforms and institutions such as the Korea Institute for International Economic Policy and UNDP’s Seoul Policy Centre play an important role as entry points for other countries interested in policies and best practices (Kwon, 2022; Song & Kim, 2022).

Based on its own development experiences and in a similar way to that of other countries in the region (e.g. Japan and China), Korea gives industrial development and physical infrastructure a high priority. This focus is visible in its policies and public communications. European donors have placed new emphasis on infrastructure only in recent years, with one prominent initiative being Europe’s Global Gateway initiative, while Germany has also placed a key emphasis on infrastructure investment in its capacity within the G7 Presidency. Korea’s development policy, on the other hand, has been premised on a co-prosperity concept from the beginning, with direct economic benefits being an explicit objective. Similar approaches are used by Japan as a DAC member and China as the most significant provider of South–South cooperation (Kwon, 2022). DAC donors from beyond the East Asia region have typically been less explicit about co-benefits, although here too “mutual benefit” type objectives are increasingly being made explicit in overarching policy statements.

Budgets, Policy Choices and Priorities

Germany’s official development assistance (ODA) budget is around 10 times that of Korea’s, in part due to—though not fully owing to—its larger population and economy. Yet both countries have in common that they have seen considerable increases in the size of their ODA budgets during the past decade. Table 2.1 presents comparative figures on development cooperation in both countries, reflecting the situation in the first year of the COVID-19 pandemic. ODA figures for 2022 show sustained growth in German ODA to 0.85% of its GNI (USD 35.8 million) and Korean ODA to 0.17% of its GNI (USD 2.8 million). A key difference is linked to the war in Ukraine, with in-country refugees representing 13.5% of Germany’s ODA in 2022 while only accounting for 0.4% of Korean ODA.

Table 2.1 Comparing recent ODA trends (data for 2022 and 2021)
Full size table

New governments took to the stage in Germany and Korea in, respectively, December 2021 and May 2022, with both facing the challenge of setting new directions in volatile global and domestic contexts. Germany announced initial “headline objectives” for development policy priorities under the new government, which are expected in a few months for Korea, yet the aforementioned volatile global context presents a considerable number of open policy questions for both countries and complicates the process of defining longer-term policy priorities. Both countries’ societies are characterized by adequate public support for development policy, combined with relatively low levels of public debate and broad cross-party support for the policy areas. Recent surveys show that 76% of Korean and 55% of German respondents generally support the countries’ ODA budgets and development cooperation engagement, which in the case of Germany shows a relative decline in 2023 with earlier years showing close to 70% of respondents to be in favour (Lee et al., 2021; Morini, 2023).

Germany’s current social-democratic-led coalition government between the Green and the liberal parties entered office on 9 December 2021. Among other key changes, it included the first new chancellor in almost 16 years, a three-party coalition and the first change in development minister in two legislative periods. As the former environment minister had done under the previous government, the current development minister introduced four main priorities for German development cooperation: (i) addressing the structural causes of hunger, poverty and inequality, (ii) providing socially fair responses to the global challenge of climate change within the framework of a Just Transition, (iii) avoiding future pandemics and being better prepared with functioning health systems should the worst happen, and (iv) implementing a feminist development policy to eliminate structural inequalities and discrimination. Germany’s government has also committed to considerably increasing the provision of international climate finance during the coming years. Key policy initiatives to date concern an ambitious new Africa strategy and a Feminist Development Policy, both published in the first months of 2023 (on the latter policy, see the contribution by Park in this volume).

Although Germany’s coalition agreement commits to providing 0.7% of its GNI as ODA, as well as 0.2% of its GNI to least developed countries in this context, the aforementioned crises put considerable pressure on its budget. Following the parliamentary budgeting process, BMZ’s budget for 2023 was determined at EUR 12.2 billion, EUR 190 million less than the ministry’s budget in 2022. Following challenging discussions linked to the constitutional court’s rejection of the government’s decision to derogate on its constitutional “debt break”, challenging discussions in the coalition government resulted in the decision to set the ministry’s budget at EUR 11.22 billion (2024), with further cuts to be made during the next year (mid-term financial planning). Since discussions are ongoing on austerity measures in the government’s budget, as well as continuing opposition to other measures announced by groups in society, further cuts may be introduced. This requires the government and relevant stakeholders to justify the country’s ODA and the returns it produces.

The Russian invasion of Ukraine in February 2022 prompted strong and far-reaching reactions from the German federal government, including through its development policy. Among other aspects, the invasion affected the development minister’s interactions with her European colleagues in various EU meetings, as well as her engagement with the G7 under the German Presidency. In 2022, 13.5% of Germany’s ODA budget was spent on in-country refugee costs, a large part of which was linked to Ukrainian refugees based in Germany. The invasion also led to considerable changes to the previous German federal budget and an increased focus on Ukraine as well as the global food security implications of the invasion.

The Korean administration, headed by President Yoon, came to office on 10 May 2022 after a close presidential election. Since this conservative candidate won the election, its effects have rippled out to the local elections as well as the appointment of the new prime minister, Han Duck-Soo, who carries the political responsibility for, and leadership of, Korea’s development cooperation. At the 46th Committee for International Development Cooperation (CIDC) held on 30 June 2023, he stated that even in these taxing times amidst the pandemic and polycrisis, Korea’s development cooperation would continue to grow stronger under his administration. This was also backed by President Yoon’s address on 20 September 2023 at the UN General Assembly, where he stated that such a focus on development cooperation will be championed by an increase in the ODA budget of 40% in 2024 compared to that of 2023, with a focus on realizing global values that entails the promotion of humanitarian values, the strengthening of international cooperation ties, and the realization of mutual and inclusive national interests through strategic ODA.

As presented in Korea’s Annual ODA Plan for 2024, announced in June of 2023, the country intends to increase its ODA volume and has proposed a total budget of approximately EUR 4.7 billion (KRW 6.8 trillion) for 2023, which is a 43.2% increase from that of 2022 (EUR 3.4 billion). This would continue the ODA growth path of the previous administrations, with Korea’s ODA budget growing at an average rate of 11% per year since it joined the DAC. Moreover, the plan puts particular focus on (i) humanitarian response to global polycrisis, (ii) support for innovation in developing countries through landmark package projects, (iii) reinforcement of partnerships through foreign policies such as the Indo-Pacific Strategy and the Busan Initiative, which is a project linked to Busan’s bid to host the 2030 World Expo that emphasizes international cooperation and Korea’s role in addressing global challenges, and (iv) effective systemization and management of ODA. If this plan is fully implemented, which is expected to be reviewed by Ministry of Economy and Finance (MOEF) and the National Assembly by January 2024, Korea’s ODA as a percentage of GNI will rise to 0.25%.

Starting with the onset of the COVID-19 pandemic in late 2019, unforeseen external calamities have struck Korea as well as the rest of the world, which have prompted changes in development cooperation. The Russian invasion of Ukraine, the escalation of the Israeli–Palestinian conflict (with the Hamas attacks on 7 October 2023), and other unceasing conflicts in Afghanistan, Ethiopia and Syria have brought the need for additional humanitarian assistance, which is reflected in Korea’s actions to increase the proportion of its humanitarian aid budget. Compared to 2023, which emphasized the sectors of transportation (13.1% of 2023 ODA budget), health (12.9%), and humanitarian aid (11.0%), in 2024, there has been a significant increase in humanitarian aid (20.6% of the 2024 ODA budget), transportation (14.3%) and health (8.0%).

Furthermore, as announced in the Korean Green New Deal of 2021, ODA will become even more important as climate crisis issues become more significant. Under this strategy, the government expects to significantly expand the proportion of Green ODA to exceed the OECD DAC average (28.1%) to strengthen support for the green transition of developing countries by 2025. In line with the aforementioned strategies, another priority for the new development plans is addressing the food crisis inflicted by both supply chain disruptions and climate change by cooperating closely with the UN, the World Food Programme and the Food and Agriculture Organization. Other priorities include strengthening partnerships with other development actors such as civil society, non-governmental organizations (NGOs) and academia; innovating projects and programmes by embracing digital, ICT and AI development; and strengthening development systems that will encourage knowledge-sharing and systemize performance management.

Organizational Approaches and Structures

The organizational approaches and structures for ODA management differ strongly between the Germany and Korea, both of which have made efforts to address organizational fragmentation (Table 2.2).

Table 2.2 Organizational structures of ODA management in Germany and Korea
Full size table

The German development cooperation system includes a self-standing ministry in charge of development cooperation: BMZ, which was established in 1961. As a dedicated development ministry, Germany’s BMZ stands out from the development ministries of other DAC member countries, yet its coordination mandate is rather “soft”. In addition, other federal ministries using ODA resources from the national budget are quite important as well. This, for instance, includes the budget for humanitarian assistance that is managed by the Foreign Office. The 2021 DAC Peer Review of Germany reported that BMZ provides 50% of Germany’s gross ODA, while 13 other federal ministries provide around 19% and the rest is managed by the 16 federal states, financial cooperation agencies and various other areas of expenditure. Another key feature of the German development cooperation system is the strong position of its two main implementing agencies: KfW Development Bank and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). KfW Development Bank is in charge of Germany’s financial cooperation in terms of large grants, loans and investment promotion, whereas GIZ is responsible for implementing various forms of technical cooperation that, among other goals, seek to contribute to capacity development.

The Committee for International Development Cooperation (CIDC), established in 2006 and chaired by the Prime Minister of Korea since 2022, ultimately guides and makes decisions on Korea’s development cooperation policies, and works to ensure that the involved ministries and agencies operate in a coordinated way. At the implementation level, each ministry can operate its own ODA projects, but the two pillars of Korea’s ODA are the Ministry of Foreign Affairs—with its implementing agency called Korea International Cooperation Agency (KOICA) overseeing grant aid—and the Ministry of Economy and Finance, through its Economic Development Cooperation Fund (EDCF), in charge of concessional loans. In contrast to GIZ and KfW, KOICA and the Export–Import Bank of Korea (Korea Eximbank), which is in charge of the EDCF, are both staffed by civil servants.

In recent years, Germany’s development policy has put considerable emphasis on bringing investment—and notably German companies—to developing countries, with a key focus on small- to medium-sized enterprises (SMEs). Notably, since the 2017 G20 Presidency, Germany has introduced various funds and initiatives, seeking to promote external investment, with a specific focus on the private sector and the African continent. Linked to its bilateral, G20 and G7 engagements, Germany is also a major proponent of the EU’s Global Gateway initiative that seeks to strengthen the EU’s external investment in the area of soft and hard infrastructure (see Chapter 6 by Keijzer). The Korean government appears to have similar ambitions, as Korea’s Ministry of SMEs and Startups has proposed a more than tripled ODA budget in 2024, increasing significantly from approximately USD 3.8 million in 2022, with the main goal of promoting sustainable economic development in cooperation with SMEs and startups in developing countries such as Uganda, Laos, Indonesia, Vietnam, Colombia and Mexico through multilateral channels. Moreover, other ministries and agencies have also recognized the importance of the role of SMEs in the socio-economic development of both Korea and the partner countries. This has placed special attention on cooperation in this field in terms of sharing knowledge, building technological capacities and providing consultations for development.

With the implementation of the Strategic Plans, which started in 2010 and are updated every five years, Korea selects priority partner countries and formulates Country Partnership Strategies that consider each individual country’s ODA volume, priority areas and national development strategies to improve aid effectiveness. According to Strategic Plan 2021–2025, Korea selected 27 priority partner countries (12 countries in Asia, 7 in Africa, 4 in Latin America and 2 in the Middle East) out of 130 partner countries, and aims to channel at least 70% of total bilateral ODA to these countries. This has been reflected in the Annual ODA Plan for 2024, and Korea will continue to focus primarily on Asia (38.5%), Africa (19.4%), and Latin America (7.5%), especially to low- and middle-income countries.

Germany’s reform strategy “BMZ 2030”, decided on in June 2020, introduced a focus on 65 partner countries. The country list consists of three main categories: 47 bilateral partners (including seven “reform partners” with a significant cooperation offer), eight “global partners” (cooperation on shared global challenges) and 10 “nexus and peace partners” (conflict-affected and fragile states). In addition, German cooperation includes a strong focus on supporting regional integration, including through its long-term support to the African Union, African Regional Economic Communities and dedicated initiatives such as the Sahel Alliance.

While centralizing political responsibility for development policy, both countries see an increasing number of line ministries getting involved in managing development cooperation projects, and a corresponding increase in various agencies and organizations involved in implementing these. The Ministry of Foreign Affairs, for instance, recently observed that 44 different agencies were involved in implementing Korean projects. For both countries—though to different degrees and with different priorities—this level of fragmentation raises questions about issues that include results reporting, the introduction and use of standard indicators, independent evaluations, consistent ODA reporting and promoting effective cooperation.

Conclusions

In the digital age, geographical proximity is no longer a requirement for cooperation and joint policy initiatives. Instead, converging norms, ideas and interests should reinforce cooperation, as cross-border cooperation remains a precondition for establishing the only path to ensure global sustainable development. This chapter has explored the case for cooperation between two countries that have made efforts to promote the 2030 Agenda, both domestically and internationally, and sought to describe how engaging in further horizontal dialogue and cooperation on shared priorities could be of mutual benefit.

Germany and Korea strongly support the 2030 Agenda, both domestically and through international cooperation, yet their policies and operations are confronted by a challenging global geopolitical and economic setting and a decline in human development across the globe. In a way, many countries are returning to a situation similar to the time of the Millennium Development Goals, when direct needs and public services were a key requirement—food security being a very evident one. The need for an additional focus on basic needs and humanitarian aid will be a reality of cooperation, also given the rising levels of inequality and the disproportionally distributed effects of climate change.

This chapter has argued that in this challenging global context there is significant scope for strengthening cooperation between Germany and Korea. Both countries face a challenging learning curve in responding to a crises-ridden world, with Germany experiencing challenges to uphold its commitment whereas Korea is urged to take a stronger stake in global development by increasing its resources and engagement. Further cooperation could complement the various partnerships and groups through which they conduct their international development cooperation.