ODA in Retreat: Global Aid Cuts and Reshaping Development Cooperation

Preliminary data released by the OECD in April 2026 confirmed that official development assistance (ODA) from members of its Development Assistance Committee (DAC) fell 23.1 percent in 2025 to USD 174.3 billion, the steepest decline since records began. The contraction stems not only from volatile items such as humanitarian aid and in-donor refugee costs but also from a retreat in the core of development cooperation, including development programs. It is also highly concentrated: the five largest donors account for 95.7 percent of the total decline, and the United States alone for 75.1 percent. At the same time, it marks a structural shift, with deep cuts to grants and to support for the UN alongside growth in private sector instruments (PSI) and in support for multilateral development banks. The policy realignments of major donors point the same way. Through its development policy reform, Germany has made economic cooperation that reflects its own industrial structure one of four overarching goals; the United States has dismantled the US Agency for International Development (USAID) while sharply expanding the authority and resources of the US International Development Finance Corporation (DFC); and Japan is strengthening offer-type cooperation and security-focused cooperation. South Korea occupies a distinctive position in this landscape. Its ODA declined only modestly in 2025 and its budget request for 2027 rebounded, but the number of projects has fallen sharply, leaving fewer and larger projects, while the shares going to health and to low-income countries have actually risen. This paper proposes three tasks for restructuring Korea’s development cooperation: putting a Korean model of development finance on an institutional footing, building the foundations for implementing proposal-based ODA, and strategically staking out a position in the gaps left by the withdrawal of major donors.