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Aid effectiveness, US global development policy, USAID, MCC
Casey Dunning was formerly a senior policy analyst for the US Development Policy Initiative at the Center for Global Development. Dunning previously worked as a senior policy analyst for the Sustainable Security and Peacebuilding Initiative at the Center for American Progress. Before that, in a previous position at CGD, she conducted the center’s analysis on the Millennium Challenge Corporation and researched the application of aid effectiveness principles within USAID, with a particular emphasis on country ownership, aid selectivity, and innovative aid-delivery models. She has worked on harmonizing gender violence and rule-of-law programs in Liberia with Emory University’s Institute for Developing Nations, and at the Carter Center and the International Rescue Committee. Dunning graduated from Emory University with a specialization in international political economy and has also completed studies at Oxford University and Trinity College, Dublin. She holds a masters degree in public policy from George Washington University.
This blog is a preview to a forthcoming MCA Monitor Report from the Field on Honduras.
You know the old maxim: "Give a man a fish and he eats for a day; teach a man to fish and he eats for life." Well I'd like to amend it to include the following: "Show a man how to catch the most expensive fish and then sell it to a guaranteed buyer for a hefty profit and he, his family, and his community will all be eating whatever they want for life." Trade fishing for farming and that’s exactly what you have as a result of the Rural Development project from the Millennium Challenge Corporation’s (MCC) recent compact in Honduras.
In this extremely tight U.S. budget environment, it's all about the sustainability of U.S. foreign assistance, and the MCC made sure to build long-term sustainability into each of its investments in Honduras. The compact officially closed in September 2010, meaning Honduran farmers have had 14 months to either expand upon MCC investments or drop them completely and revert back to inefficient ways of producing. “Expand upon MCC investments” seems an understatement. The MCC’s method of farmer training turned over 6,000 farmers into businessmen who have amplified their incomes since the compact’s conclusion by purchasing more land and further increasing yields.
The MCC’s selection process is unique this year. The MCC recently adopted a new selection system and will run both the new and old selection systems for FY2012. The new system includes two hard hurdles that countries must pass to be considered eligible for compact selection. The MCA Monitor’s annual hard hurdles note offers a breakdown on how FY2012 candidate countries fare on both the control of corruption hard hurdle and a new “democratic rights” hard hurdle.
How will the selection systems work? In both systems, countries will be measured in relation to their income-level peers. In the old system, countries will be assessed on 17 indicators in three policy categories: ruling justly, investing in people, and economic freedom. To pass the indicators test, countries must pass half of the indicators in each category and the control of corruption hard hurdle. In the new system, countries are evaluated on 20 indicators in the same three policy categories. To pass the indicators test, countries must pass half of the indicators overall, one indicator in each category, the control of corruption hard hurdle, and the democratic rights hard hurdle.
Some of the hard hurdle highlights this year include:
Corruption remains a major concern of foreign aid policymakers. The Millennium Challenge Corporation (MCC) was created, in part, to address this concern by working with well-governed, poor countries that must pass a control of corruption indicator. This also means the MCC is held to a higher standard and is often the first aid agency forced to respond to corruption concerns. Our message to the policymakers: keep in mind that corruption, especially in poor countries, is relative.
Reps. Nita Lowey (D-NY) and Ileana Ros-Lehtinen (R-FL) raised concerns about corruption with MCC CEO Daniel Yohannes in recent hearings before the House foreign aid appropriators and authorizers. Both Lowey and Ros-Lehtinen are right to focus on corruption and to have concerns especially in MCC countries. But it is important to unpack what corruption means in—and across—developing countries to calibrate responses to these concerns.
Last Thursday, December 15, the Millennium Challenge Corporation (MCC) board of directors convened for its annual meeting to select eligible countries for FY2012 MCC assistance. As a result (and largely in line with MCA Monitor predictions), the board selected Benin and El Salvador to develop second compacts, and selected Honduras and Nepal to develop threshold programs. In addition, the board reselected Georgia, Ghana, and Zambia to continue compact development and approved Cape Verde’s second compact.
Second Compacts for Benin and El Salvador
Benin and El Salvador are FY2012’s newly compact eligible countries and will now begin developing second compacts. Both countries are notable for having passed the new indicators system while failing the old system (due to only passing one indicator in the Investing in People category). Under the new system, El Salvador passes 14 indicators and Benin passes 11 indicators.