Contextualising the ‘Innovative Development Finance’ Agenda: A Case Study of Korea's ‘Gaebal-Geumyung’

Abstract

In the era of ‘shared prosperity’ for development cooperation, there have been heightened interests in an innovative financing for development agenda. It was largely because the role of development finance has been underscored as a key to the successful fulfillment of the Sustainable Development Goals (SDGs)―particularly since the SDGs require moving from billions to trillions in resource flows. However, austerity-stricken traditional donors since 2007/8 financial crisis began to use their limited Official Development Assistance (ODA) resources to attract/mobilize private finance―by reducing risks/uncertainties for companies of donor countries investing in the developing region. As a result, the role of ODA has been reorganized from a core resource for a more ‘progressive’ public lending for poverty reduction to a catalyst for a more explicitly national interest-oriented blended financing for private sector- led economic growth. In order to better understand how the trend has manifested in terms of individual donors' national/domestic processes, the paper contextualises the innovative development finance agenda through the case of South Korea's ‘gaebal-geumyung (GG).’ In doing so, the paper showcases how such global agenda was actualised―within the particular political economic context of Korea's development cooperation. Hence, the study focuses on two queries: first, the political-economic context of the way in which the agenda was localised and institutionalised through the establishment of GG in Korea; 2) and how the key actors maneuvered the policy discourses/narratives to justify the strategic use of ODA through GG for shared prosperity.