On September 23, 2005 Malawi signed a funding agreement with the MCC under the MCA's Threshold Program. Malawi was only the second threshold country to reach this step, and the first to reach agreement on a proposal that tackles the thorny issues of corruption and financial management.
The MCC Between a Rock and a Hard Place: More Countries, Less Money and the Transformational Challenge
In this companion note to "Round Three of the MCA: Which Countries are most likely to Qualify in FY 2006" Sheila Herrling and Steve Radelet offer advice to the MCC Board on how to balance the increase in qualifying countries, the desire for larger compacts, and limited funding.
This note draws on the MCC's selection process and newly released data to explore which countries are most likely to be selected for FY 2006. The analysis has several highlights.
In this MCA Monitor Analysis Steve Radelet and Mvemba Dizolele address the challenges the new leader of the Millennium Challenge Corporation will face when Paul Applegarth leaves office, including scaling up activities to provide countries with a strong commitment to development with substantial funding for high priority activities to support growth, and increasing the speed of country approval without compromising country ownership.
This MCA Monitor Analysis assesses the potential impact of five new global governance indicators--rule of law, government effectiveness, voice and accountability, control of corruption and regulatory quality-- on country qualification for FY 2006 Millennium Challenge Account (MCA) funding.
It has long been understood that economic growth is the essential foundation for poverty reduction. The key to income growth is the expansion of jobs that pay sustainable remunerative wages, and the two keys areas of production in this vein have almost always been agriculture and labor-intensive manufactured exports. Rising average incomes, both personal and national, are a necessary ingredient for improved livelihoods, but they do not guarantee broad-based poverty reduction. Economic history shows that countries, and communities within countries, with similar growth rates can have very different degrees of success in connecting growth to the poor and translating it into sustained poverty reduction.
Does tourism promote poverty reduction? In this MCA Monitor Analysis, Sarah Lucas assesses the potential effects of tourism on poverty reduction and suggests lessons for maximizing its poverty-reducing potential.
In September, the Millennium Challenge Corporation named seven countries as eligible for the MCA Threshold Program: Albania, East Timor, Kenya, Sao Tome e Principe, Tanzania, Uganda and Yemen. This paper reviews the selection process and the countries selected, and offers recommendations for improving the program.
On August 31, 2004, the Millennium Challenge Corporation (MCC) announced some modest changes in the process it will use to select countries for MCC eligibility in FY 2005. This note appraises those changes, focusing on the "school completion rate" and "inflation" indicators.
This note reviews the President’s 2005 international affairs budget request and offers insight into the potential MCA allocations in the context of the broader development assistance budget. The authors note that requested funding for the MCA is lower than promised and may be indirectly coming at the expense of existing development assistance programs.
On May 6, the Millennium Challenge Corporation announced the selection of 16 countries eligible to apply for funding under the Millennium Challenge Account. This note examines the seven cases in which the Board used its discretion to either include countries that did not meet the indicators test, or exclude countries that passed the tests. Although several of the discretionary cases appear justified, several are more questionable, particularly the exclusion of Guyana and the inclusion of Georgia.
In this MCA Monitor analysis, Steve Radelet uses the MCC’s recently-released data to predict which countries are most likely to qualify for funding from the Millennium Challenge Account during the first year. The MCC Board is expected to meet in early May to officially announce the countries that will qualify.
This note examines how countries are selected to receive funding under the Millennium Challenge Account. The authors argue that while the Millennium Challenge Corporation’s proposed selection process is a reasonable starting point, there are several simple steps that could be taken to improve the system.
In March 2002 President Bush proposed establishing the "Millennium Challenge Account"(MCA), a new foreign aid program designed to provide substantial assistance to low-income countries that are "ruling justly, investing in their people, and encouraging economic freedom." The MCA could bring about the most fundamental changes to U.S. foreign assistance policy since the Kennedy administration. The significance of the initiative lies partly in its scale: the proposed $5-billion annual budget represents a 50-percent increase over the FY02 foreign aid budget and a near doubling in the amount of aid focused strictly on development objectives. Perhaps even more important, the MCA brings with it the opportunity to improve significantly the allocation and delivery of U.S. foreign assistance as well as a recognition of the value of both hard and soft power in the pursuit of a safer and more secure world. If the new program is not implemented carefully, however, it could lead to greater fragmentation and confusion in U.S. foreign assistance policy, weaken the U.S. Agency for International Development (USAID), and impede coordination with other donors. Much will depend on the details of how the MCA is established during its first year, as well as the extent to which the administration implements changes in other assistance programs. This policy brief is a preview to the analysis and recommendations in Challenging Foreign Aid: A Policymaker's Guide to the Millennium Challenge Account by Steven Radelet, available April 30, 2003.
Recent discussions surrounding the Millennium Challenge Account (MCA) proposal suggest that it seeks to address two somewhat distinct goals in the general area of foreign aid: increasing aid volume and making aid more selective. This brief comment seeks to clarify the nature of these goals and suggests that taking these goals seriously has fairly obvious implications for how the MCA should be implemented.
In this analysis, Steve Radelet reviews the Millennium Challenge Account’s (MCA) foundational tenets of country selection, ownership and organization. He also identifies some concerns, particularly the proposal to include lower-middle income countries at a later date; the statistical difficulties with requiring countries to pass a survey-based corruption indicator; and the potential coordination problems that may arise with two separate U.S. foreign assistance agencies.
This paper examines the Bush administration's proposed methodology for how countries qualify for the funding from the Millennium Challenge Account in detail, exploring the judgments required and examining some alternative methods.