Investing in People by Investing in Data: How Best to Incorporate the New MCA Eligibility Indicators

Sarah Rose, Sheila Herrling, Steve Radelet

08/27/2007

This MCA Monitor Analysis looks at the decision faced by the Board of Directors of the Millennium Challenge Corporation (MCC) about how to officially incorporate two new natural resources indicators into MCC's eligibility criteria. An earlier proposal by the same authors for how best to add the new indicators has received broad support from the Board, and many of the recommendations will be adopted. One of the recommendations, however, was the that the MCC add a new education indicator in the Investing in People category alongside one of the new natural resource indicators. After much research and consultation by the MCC, it emerged that the MCC should ideally include an educational quality indicator, but that no viable indicator that meets MCC's criteria currently exists.

This essay discusses other options (none of which are ideal) for the Investing in People category given the unavailability of an appropriate education quality indicator.

• Option 1: Expand the number of Investing in People indicators to six by adding an education enrollment indicator until a quality indicator exists.
• Option 2: Keep the number of Investing in People indicators at four by combining the two existing health indicators into a single index.
• Option 3: Accept five indicators in Investing in People as an interim step, but aggressively encourage the development of a viable educational quality indicator.

Because Options 1 and 2 offer somewhat skewed measurements of policy, the authors support Option 3 as the best choice for now. As part of deciding on Option 3, the Board should require that the MCC:

• Report which countries narrowly fail due to the three out of five requirement and consider those countries on a case by case basis;
• Publish supplemental education indicators to help inform decision making around countries on the margin; and 
• Take steps to vigorously stimulate the development of a viable education quality indicator and periodically report progress to the Board, and commit to reassessing the five-indicator IP in two years if credible progress is not being made on developing a new educational quality indicator.

Access detailed data on the impact of the three options on countries

Rights and Permissions

We welcome the use of CGD work-just let us know in advance! For contact information see our Rights & Permissions page. CGD rights and permissions are managed under the terms of the Creative Commons license below.