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.
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