The Millennium Challenge Corporation (MCC) was established to provide large-scale grant funding to poor, well-governed countries to support their efforts to reduce poverty and generate economic growth. However, the statutory definition of which countries are “poor” for the purposes of MCC candidacy is inadequate. Based solely on GNI per capita with a rigid graduation threshold, it does not portray a clear picture of broad-based well-being in a country. Using a new, comprehensive country-level dataset of median consumption/income, the authors explore the merits and limitations of such a measure and suggest how it might be applied as an additional determinant of MCC candidacy.
MCC’s model has received much recognition. However, since the agency controls just a small portion of the US foreign assistance budget, it alone has not fulfilled — and cannot be expected to fulfill — the founding vision of transforming US foreign assistance policy. Partly in response to the recommendations stemming from the 2010 Presidential Policy Directive (PPD) on Global Development, the larger agencies, especially the US Agency for International Development (USAID), have commendably worked to incorporate many of the same principles included in MCC’s model. For the most part, however, those principles are applied to a still-limited portion of the overall US foreign assistance portfolio. The next US president should continue to support MCC as a separate institution and support efforts to more thoroughly extend the good practices promoted in MCC’s model throughout US foreign assistance in general.
With MCC entering its second decade, there are active questions about what it can do to expand its impact. One question is to ask how MCC might expand the set of partners with which it works.
The Millennium Challenge Corporation (MCC) is at a crossroads. Many of its early compacts—large-scale, five-year grants that support country-led solutions to poverty reduction through economic growth in a select set of poor but well-governed countries—are coming to a close.