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立 政 治 大 學
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N a tio na
l C h engchi U ni ve rs it y
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國
立 政 治 大 學
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N a tio na
l C h engchi U ni ve rs it y
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Given the growing importance of these two countries’ presence in Africa and the much needed development in the academic community about how they have implemented their financial assistance, we aim to clarify the significant underlying factors at work which have affected the two countries’ foreign aid policies in the Dark Continent. The findings can serve as a stepping-stone for further studies concerning the purpose behind donor countries’ aid strategy.
1.2 Definitions of Key Terms
Before moving to the main subject, we need to differentiate working definitions of related concepts such as International Development (ID), foreign aid and Official Development Assistance (ODA) in order to deal with the PRC and ROK’s foreign aid system. Some of these definitions of foreign aid are reported in mixed fashion and hence are easily confused. Therefore, there is a potential danger to misuse these terms and jump to hasty conclusions, especially in the case of China.15
First, China is not a member of the Organization for Economic Cooperation and Development (OECD). Therefore, they do not rely on the widely-used concept of ODA which was the standardized version created by this international organization.
In this sense, a precise and meaningful comparison between China’s foreign aid and those of other donor countries is rather daunting and requires a scrutinized interpretation.
15 There are some cases which show misinterpretations on the amount of Chinese foreign aid.
Brautigam (2009), op cit., 163-164.
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There is no united concept regarding ID. However, from our perspective, ID is the broadest concept among these definitions as it includes activities ranging from aid in promoting human development, better education, enhanced governance, secured human rights, to constructing economic infrastructure.
In terms of scope, foreign aid is in between those of ID and ODA. Some define it as an international transfer of capital, goods, or services from a country or international organization for the benefit of a recipient country and its population.16 This definition does not distinguish among different types of organizations (i.e., government vs.
non-government agency). It includes the private flows implemented by private companies and Non-Governmental Organizations (NGOs). Others define foreign aid as funding given from governments to promote economic and social development in less-advantaged countries.17 According to this definition, loans from governmental agencies such as Other Official Flows (OOF)18 can be categorized as foreign aid regardless of concessional characteristics as long as it is related to governmental activities. In this thesis, we adopt the latter concept of foreign aid in making comparisons between countries.
ODA, the term accepted by most developed donor countries, is the narrowest concept among the three terms used to describe aid activities. ODA owes its origin to the
16 Definition from the Encyclopedia Britannica. Source:
http://www.britannica.com/EBchecked/topic/213344/foreign-aid (accessed on Feb 13, 2011)
17 Brautigam (2009), op cit., 13.
18 Transactions by the official sector with countries on the List of Aid Recipients which do not meet the conditions for eligibility as Official Development Assistance or Official Aid, either because they are not primarily aimed at development, or because they have a Grant Element of less than 25 per cent Source: http://stats.oecd.org/glossary/detail.asp?ID=1954 (accessedon Mar 3, 2011)
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OECD Development Assistance Committee (DAC).19 According to the DAC, ODA refers to the official flows to developing countries that can be provided by official agencies. This ODA should satisfy two conditions: 1) administered with the promotion of the economic development welfare of developing countries 2) concessional in character so as to convey and grant an element of at least 25%.20
We believe that these distinctions important. Some time ago it was reported in the media that ODA was, in fact, not ODA but foreign aid or ID.21 22 As mentioned above, China is not a member of the OECD and therefore, does not produce ODA statistics. On the other hand, Korea is obliged to provide its ODA data annually as an OECD member. At this juncture, we have to compare these two countries under the situation of not having exactly comparable statistics. In this sense, we would say that when we refer to foreign aid of China, it means foreign aid – a broader concept than ODA. On the other hand, when we mention Korean foreign aid, it means ODA unless otherwise noted.
19 The DAC first defined ODA in 1969, and tightened the definition in 1972. ODA is the key measure used in practically all aid targets and assessments of aid performance. Source:
http://www.oecd.org/document/4/0,3746,en_2649_34447_46181892_1_1_1_1,00.html (accessed on Feb. 14, 2011)
20 Source: http://stats.oecd.org/glossary/detail.asp?ID=6043 (accessed on Mar 3, 2011)
21 The Nigerian Lagos-Kano railway project financed by China was reported as 9 billion USD aid in the New York Times, but according to an expert of Chinese foreign aid, it was mixed credit.
Brautigam (2009), op cit., 176.
22 The necessity of cautious of interpretation regarding Chinese foreign aid has been indicated in the US government agencies. Lum, Thomas, Fischer, Hannah, Gomez-Granger, Julissa and Leland, Anne (2009), “China’s Foreign Aid Activities in Africa, Latin America, and Southeast Asia”, Congressional Research Service, 2.