Does the “MCC Effect” Exist? Results from the 2012 MCA Stakeholder Survey

The Millennium Challenge Corporation (MCC) provides US foreign assistance to poor countries that first demonstrate their commitment to good governance against publicly available policy indicators. Can MCC’s indicator-based selection process itself encourage policy reform? Bradley Parks and Zachary Rice, of the College of William and Mary, share with the Center for Global Development the results of a global survey about whether this “MCC effect” exists. The short answer: yes, but more so in some areas (control of corruption and fiscal policy) than others (democracy indicators). And policymakers seem to support MCC’s performance-based aid allocation model and the idea that the agency can do more to expand the reach of its incentive effect.