ISAS Insights

In spite of the current state of disarray in global economy, with its susceptibility to financial crises and resultant foreign aid budget cuts, Japan and South Korea have substantially increased their foreign aid, the official development assistance (ODA), in particular, to South Asian countries. This is puzzling. The Japanese and South Korean action certainly draws attention. In fact, Japan has been a key ODA provider for long with its focus on project financing, while South Korea is a rising ODA donor in the region, with its emphasis on enhancing the educational and healthcare sectors in the recipient countries. The active ODA engagement of Japan and South Korea with the region raises several important questions. What does the increase in foreign aid from Japan and South Korea mean to South Asian countries in economic and political terms? How relevant is such ODA in the current globalised economy that provides greater sources of capital even if only on commercial terms? How has South Asia benefitted from the foreign aid from these two countries? This paper addresses these important questions while briefly mapping the ODA situation in South Asia.