The
Millennium Challenge Account (MCA), run by the
Millennium Challenge Corporation, is a bilateral
developmentInternational development or global development is a concept that lacks a universally accepted definition, but it is most used in a holistic and multi-disciplinary context of human development – the development of greater quality of life for humans,...
fund announced by the
Bush administrationThe Presidency of George W. Bush began on his inauguration on January 20, 2001 as the 43rd President of the United States of America. The oldest son of former president George H. W. Bush, George W...
in 2002 and created in January, 2004.
Origin
At the
Inter-American Development BankThe Inter-American Development Bank is an international organization established and headquartered in Washington, D.C., United States, in 1959 to support Latin American and Caribbean economic and social development and regional integration by lending mainly to governments and...
on March 14, 2002, President
George W. BushGeorge Walker Bush was the 43rd President of the United States from 2001 to 2009 and the 46th Governor of Texas from 1995 to 2000....
called for a new compact for development with accountability for both rich and poor countries. He also pledged to increase development assistance by 50% by Fiscal Year 2006 (which by the end of 2004 did double, and is to double again by 2010). Other development programs like USAID (
United States Agency for International DevelopmentThe United States Agency for International Development is the United States federal government organization responsible for most non-military foreign aid...
) have been thought to suffer from many different and sometimes conflicting goals, which often are a result of political pressures, and for not delivering long-term economic improvements.
The Millennium Challenge Corporation (MCC) was established in January 2004 as a United States government corporation. The first CEO was Paul Applegarth, a private businessman with experience managing emerging market investment funds. Applegarth was followed by Ambassador John Danilovich, a private businessman who had previously served as the U.S. Ambassador to Costa Rica from 2001 to 2004, and then U.S. Ambassador to Brazil.
Countries that participate in the MCC are selected on a competitive basis through a set of 16 indicators designed to measure a country’s effectiveness at ruling justly, investing in people, and fostering
enterpriseA business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself...
and
entrepreneurshipEntrepreneurship is the act of being an entrepreneur which is a French word meaning one who undertakes an endeavor. Entrepreneurs assemble resources including innovations, finance and business acumen in an effort to transform innovations into economic goods. This may result in new organizations...
. The focus of the MCC is to promote
economic growthEconomic growth is a term used to indicate the increase of total GDP. It is often measured as the rate of change of gross domestic product . Economic growth refers only to the quantity of goods and services produced; it says nothing about the way in which they are produced...
in the recipient countries. The program emphasizes good economic policies in recipient countries. The Bush administration has stated their belief that development aid works better in countries with good economic policies, such as free markets and low
corruptionPolitical corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...
.
Early evaluations noted that environmental safeguards would be needed to prevent widespread environmental damage that comes with economic growth. Before the creation of the Threshold program, there were also arguments to allow countries that narrowly failed the criteria to be allowed to compete for funding.
Criteria for eligibility
All indicators used and the whole process of qualifying are publicly available at the homepage of the MCA. On September 11, 2006, two new criteria were adopted for the Fiscal Year 2008 selection process, both of which relate to the environment. They will measure candidate countries ability to provide "clean drinking water, expand sanitation services, streamline the property registration process, and make land rights accessible and secure for poor and vulnerable populations." The Corporation announced in December 2006 the creation of a gender policy to promote the role of women in the process of forming the compacts and in their impact.
Criteria
| Criteria |
Category |
Source |
| Civil Liberties |
Ruling Justly |
Freedom HouseFreedom House is a Washington-based international non-governmental organization that conducts research and advocacy on democracy, political freedom and human rights...
|
| Political Rights |
Ruling Justly |
Freedom House |
| Voice and Accountability |
Ruling Justly |
World Bank Institute The World Bank Institute is the capacity development branch of the World Bank. It provides learning programs, policy advice and technical assistance to policy makers, government and non-government agencies and development practitioners of developing countries...
|
| Government Effectiveness |
Ruling Justly |
World Bank Institute |
| Rule of Law |
Ruling Justly |
World Bank Institute |
| Control of Corruption |
Ruling Justly |
World Bank Institute |
| Immunization Rate |
Investing in People |
World Health OrganizationThe World Health Organization is a specialized agency of the United Nations that acts as a coordinating authority on international public health...
|
| Public Expenditure on Health |
Investing in People |
World Health OrganizationThe World Health Organization is a specialized agency of the United Nations that acts as a coordinating authority on international public health...
|
| Girls' Primary Education Completion Rate |
Investing in People |
UNESCOThe United Nations Educational, Scientific and Cultural Organization is a specialized agency of the United Nations established on 16 November 1945...
|
| Public Expenditure on Primary Education |
Investing in People |
UNESCO and national sources |
| Natural Resource Management |
Investing in People |
CIESIN/Yale |
| Inflation Rate |
Economic Freedom |
IMF WEO |
| Trade Policy |
Economic Freedom |
Heritage FoundationThe Heritage Foundation is an American think tank based in Washington, D.C.The foundation took a leading role in the conservative movement during the presidency of Ronald Reagan, whose policies drew significantly from Heritage's policy study Mandate for Leadership. Heritage has since continued to...
|
| Land Rights and Access index |
Economic Freedom |
IFAD / IFC |
| Regulatory Quality |
Economic Freedom |
World Bank Institute |
| Fiscal Policy |
Economic Freedom |
national sources, cross-checked with IMF WEO |
| Business Start-up |
Economic Freedom |
IFC |
Additional information is provided via third party indexes, such as the Global Integrity Index.
Eligible countries
In the first year (2004), 17 countries were made eligible for an MCA grant:
ArmeniaArmenia , officially the Republic of Armenia , is a landlocked mountainous country in the Caucasus region of Eurasia...
,
BeninBenin , officially the Republic of Benin, is a country in West Africa. It borders Togo to the west, Nigeria to the east and Burkina Faso and Niger to the north; its short coastline to the south leads to the Bight of Benin....
,
BoliviaBolivia, officially Plurinational State of Bolivia , is a landlocked country in central South America. It is bordered by Brazil to the north and east, Paraguay and Argentina to the south, and Chile and Peru to the west....
,
Cape VerdeThe Republic of Cape Verde is an island country, spanning an archipelago located in the Macaronesia ecoregion of the North Atlantic Ocean, off the western coast of Africa, opposite Mauritania and Senegal....
,
El SalvadorEl Salvador is the smallest and most densely populated country in Central America. It borders the Pacific Ocean between Guatemala and Honduras. It lies on the Gulf of Fonseca, as does Nicaragua further south. It has a population of approximately 5.7 million people as of 2009 on...
,
GeorgiaGeorgia Georgia Georgia is a country in the Caucasus region of Eurasia. Situated at the juncture of Western Asia and Eastern Europe, it is bounded to the west by the Black Sea, to the north by Russia, to the south by Turkey and Armenia, and to the east by Azerbaijan...
,
GhanaThe Republic of Ghana is a country in West Africa which borders Côte d'Ivoire to the west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south...
,
HondurasHonduras is a republic in Central America. It was formerly known as Spanish Honduras to differentiate it from British Honduras...
,
LesothoLesotho , officially the Kingdom of Lesotho, is a landlocked country and enclave — entirely surrounded by the Republic of South Africa. It is just over 30,000 km² in size with an estimated population of almost 1,800,000. Its capital and largest city is Maseru. Lesotho is the southernmost...
,
MadagascarMadagascar, or Republic of Madagascar , is an island nation in the Indian Ocean off the southeastern coast of Africa. The main island, also called Madagascar, is the fourth-largest island in the world, and is home to 5% of the world's plant and animal species, of which more than 80% are endemic to...
,
MaliMali, officially the Republic of Mali , is a landlocked nation in Western Africa. Mali is the seventh largest country in Africa, bordering Algeria on the north, Niger on the east, Burkina Faso and the Côte d'Ivoire on the south, Guinea on the south-west, and Senegal and Mauritania on the west...
,
MongoliaMongolia is a landlocked country in East and Central Asia. It borders Russia to the north and the People's Republic of China to the south, east and west. Although Mongolia does not share a border with Kazakhstan, its western-most point is only 24 miles from Kazakhstan's eastern tip. Ulan Bator,...
,
MoroccoMorocco, officially the Kingdom of Morocco, is a country located in North Africa with a population of nearly 32 million and an area just under . Its capital is Rabat, and its largest city is Casablanca. Morocco has a coast on the Atlantic Ocean that reaches past the Strait of Gibraltar into the...
,
MozambiqueMozambique, officially the Republic of Mozambique , is a country in southeastern Africa bordered by the Indian Ocean to the east, Tanzania to the north, Malawi and Zambia to the northwest, Zimbabwe to the west and Swaziland and South Africa to the southwest. It was explored by Vasco da Gama in 1498...
,
NicaraguaNicaragua officially the Republic of Nicaragua , is a representative democratic republic. It is the largest country in Central America with an area of 130,373 km
2. The country is bordered by Honduras to the north and Costa Rica to the south. The Pacific Ocean lies to the west of...
,
SenegalSenegal , officially the Republic of Senegal, is a country south of the Sénégal River in western Africa. Senegal is bounded by the Atlantic Ocean to the west, Mauritania to the north, Mali to the east, and Guinea and Guinea-Bissau to the south, and it also encircles The Gambia on its three sides,...
,
Sri LankaSri Lanka , officially the Democratic Socialist Republic of Sri Lanka , is an island country in South Asia, located about off the southern coast of India...
, and
VanuatuVanuatu , officially the Republic of Vanuatu , is an island nation located in the South Pacific Ocean...
. Madagascar and Honduras were the first countries to receive actual funding from the MCA. As of May 2005, Nicaragua, Cape Verde and Georgia are next in line to receive money. On June 16, 2006,
The GambiaThe Gambia , commonly known as Gambia, is a country in Western Africa. The Gambia is the smallest country on mainland Africa, bordered to the north, east, and south by Senegal, and has a small coast on the Atlantic Ocean in the west.Its borders roughly correspond to the path of the Gambia River,...
was suspended from eligibility, citing deterioration in 8 of the 16 criteria categories.
MaliMali, officially the Republic of Mali , is a landlocked nation in Western Africa. Mali is the seventh largest country in Africa, bordering Algeria on the north, Niger on the east, Burkina Faso and the Côte d'Ivoire on the south, Guinea on the south-west, and Senegal and Mauritania on the west...
was approved in October 2006 for a 461 million dollar program to develop modern irrigation systems and an industrial park.
JordanJordan , officially the Hashemite Kingdom of Jordan, is a country in Western Asia spanning the southern part of the Syrian Desert down to the Gulf of Aqaba. Jordan shares borders with Syria to the north, Iraq to the northeast, Saudi Arabia to the east and south, the Gulf of Aqaba to the southwest,...
was granted full compact eligibility, despite objections from Freedom House for its lack of full political and civil rights. The country of
FijiFiji , officially the Republic of the Fiji Islands , is an island nation in the South Pacific Ocean east of Vanuatu, west of Tonga and south of Tuvalu. The country comprises an archipelago of about 322 islands, of which 106 are permanently inhabited, and 522 islets...
is no longer eligible due to its military coup, which under US law precludes the country from receiving financial aid of this type. MPs in
UgandaThe Republic of Uganda is a landlocked country in East Africa. It is bordered on the east by Kenya, on the north by Sudan, on the west by the Democratic Republic of the Congo, on the southwest by Rwanda, and on the south by Tanzania...
from the opposition party hailed their country's rejection from full compact status, demanding instead a stronger effort in stopping the corruption that disqualified their country. The funding of
TanzaniaThe United Republic of Tanzania is a country in central East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi and the Democratic Republic of the Congo to the west, and Zambia, Malawi and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.The United...
's compact has been pushed forward from May 2007 to an earlier date to accelerate the process of reform. In June 2007, MCA eligible countries in Africa held a meeting in
AccraAccra is the capital and most populous city of Ghana, a nation on the coast of the western region of Africa. The city also doubles as the capital of the Greater Accra Region, and of the Accra Metropolis District with which it is coterminous. It is the administrative, communications, and economic...
to discuss their experiences in the program. The country of
MalawiThe Republic of Malawi is a landlocked country in southeast Africa that was formerly known as Nyasaland. It is bordered by Zambia to the northwest, Tanzania to the northeast and Mozambique, which surrounds it on the east, south and west. The country is separated from Tanzania and Mozambique by...
qualified for a full compact in 2007, while
MauritaniaMauritania , officially the Islamic Republic of Mauritania, is a country in northwest Africa. It is bordered by the Atlantic Ocean on the west, by Senegal on the southwest, by Mali on the east and southeast, by Algeria on the northeast, and by the Morocco-controlled Western Sahara on the northwest...
became threshold eligible.
Threshold eligible
Several countries were chosen in 2004 for a new part of the program called Threshold Program Assistance, which are smaller compacts used to assist a country close to meeting account eligibility to become eligible for a full program.
JordanJordan , officially the Hashemite Kingdom of Jordan, is a country in Western Asia spanning the southern part of the Syrian Desert down to the Gulf of Aqaba. Jordan shares borders with Syria to the north, Iraq to the northeast, Saudi Arabia to the east and south, the Gulf of Aqaba to the southwest,...
received a Threshold program aimed at democracy and trade totaling 25 million US dollars.
YemenYemen , officially the Republic of Yemen is a country located on the Arabian Peninsula in Southwest Asia...
was previously eligible for a threshold agreement, but was suspended after their indicators fell too low to qualify. But having successfully competed a democratic election and various economic reforms, the Millennium Challenge Corporation has once again made Yemen eligible for a threshold agreement. On December 12th 2007, the MCC Board selected
MalawiThe Republic of Malawi is a landlocked country in southeast Africa that was formerly known as Nyasaland. It is bordered by Zambia to the northwest, Tanzania to the northeast and Mozambique, which surrounds it on the east, south and west. The country is separated from Tanzania and Mozambique by...
for a compact and
MauritaniaMauritania , officially the Islamic Republic of Mauritania, is a country in northwest Africa. It is bordered by the Atlantic Ocean on the west, by Senegal on the southwest, by Mali on the east and southeast, by Algeria on the northeast, and by the Morocco-controlled Western Sahara on the northwest...
for a threshold agreement, as well as allowing
AlbaniaAlbania , officially the Republic of Albania , is a Mediterranean country in South Eastern Europe. It is bordered by Montenegro to the north, Kosovo to the northeast, Macedonia to the east and Greece to the south-east...
,
ParaguayParaguay, officially the Republic of Paraguay , is one of the two landlocked countries which lie entirely within the Western Hemisphere, the other being Bolivia, both in South America....
, and
ZambiaThe Republic of Zambia is a landlocked country in Southern Africa. The neighbouring countries are the Democratic Republic of the Congo to the north, Tanzania to the north-east, Malawi to the east, Mozambique, Zimbabwe, Botswana, and Namibia to the south, and Angola to the west. The capital city is...
to submit a first ever second stage threshold agreement. In 2007 the American ambassador to
SwazilandThe Kingdom of Swaziland , sometimes called Ngwane, is a landlocked country in Southern Africa, bordered to the north, south, and west by South Africa, and to the east by Mozambique. The nation, as well as its people, are named after the 19th century king Mswati II.Swaziland is a small country, no...
highlighted the progress on the MCC indicators over the last few years and encouraged the country to work toward eligibility.
Funding
Congress has consistently provided less funding for the program than the president has requested. In Fiscal Year 2004, 650 million USD were provided for the program, with an increase up to 1.5 billion the next year. For Fiscal Year 2007, 2 billion dollars were provided, a 14% increase over the previous year but still under the 3 billion target. Again for Fiscal Year 2008, less funding will be provided than was hoped for, and only 1.2 billion is currently budgeted, and the CEO of the MCC commented that it would undercut the program's efforts. Congress declined to re-authorize the program, which technically was not needed since the program had been authorized already, but also since there was argument over the authorization language. In discussions of the Fiscal Year 2009 budget, the United States Senate has proposed that only half of the money needed for a compact be provided up front, as opposed to full funding for each one provident in advance, which officials at the corporation insist would be a "large step backward" causing too little aid to make an impact on recipient countries. Senator Richard Lugar, the author of the amendment, responded that more "realistic" funding levels allowed for more compacts, thus spreading the "MCC effect".
The amendment did not make it into the final bill. President Bush's 2008 Fiscal Year budget requested $2.225 billion, the first time since the programs inception that the amount was not $3 billion, and enough money for 5 compacts, several thresholds and administrative funding. There is currently debate in congress as to how much to fund the program, with early numbers indicating it will be cut by 525 million, but there is a push by other senators to restore the funding.
Reception and impact
Studies by groups such as the conservative
Heritage FoundationThe Heritage Foundation is an American think tank based in Washington, D.C.The foundation took a leading role in the conservative movement during the presidency of Ronald Reagan, whose policies drew significantly from Heritage's policy study Mandate for Leadership. Heritage has since continued to...
in the United States have shown that many developing countries that have received foreign aid have seen their per capita income fall or stagnate over the last 40 years, and the Heritage Foundation has consistently supported the MCC's approach, which has also utilized their trade measure from the
Index of Economic FreedomThe Index of Economic Freedom is a series of 10 economic measurements created by the Heritage Foundation and Wall Street Journal. Its stated objective is to measure the degree of economic freedom in the world's nations.- History :...
. In April 2005, the United States Government Accountability Office issued a favorable report about the work of the MCC and its work thus far. The
Program Assessment Rating ToolThe Program Assessment Rating Tool, or PART, is a program run through the United States Office of Management and Budget instituted by President George W. Bush in 2002 to rate all federal programs on their effectiveness...
, or PART, which reviews the efficiency and results produced by US government programs, was scheduled to be reviewed in 2007. A study in 2006 looking at the "MCC effect" estimated that potential recipient countries improved 25% more on MCA's criteria than other countries, after controlling for time-trends. The
World Policy CouncilThe World Policy Council of Alpha Phi Alpha Fraternity is a nonprofit and nonpartisan think tank established in 1996 at Howard University to expand the fraternity's involvement in politics and social and current policy to encompass important global and world issues...
, headed by
AmbassadorUntil the 19th century, the area of southern Africa that is now Botswana was inhabited by the Batswana people. The name was commonly spelled and pronounced as Bechuana and the area was thus called Bechuanaland by Europeans....
Horace DawsonHorace Greeley Dawson, Jr. was an American diplomat.Dawson was born in Augusta, Georgia. He was a diplomat, and served as the United States Ambassador to Botswana....
and
SenatorThe United States Senate is the upper house of the bicameral United States Congress, the lower house being the House of Representatives. The composition and powers of the Senate and the House are established in Article One of the U.S. Constitution . Each U.S state is represented by two senators,...
Edward BrookeEdward William Brooke, III , is an American politician and was the first African American to be elected by popular vote to the United States Senate when he was elected as a Republican from Massachusetts in 1966, defeating his Democratic opponent, Endicott Peabody, 58%–42%...
, recognizes the MCC as the most recent and most promising program in its area, and recommended that the Bush administration and the
Congressional Black CaucusThe Congressional Black Caucus is an organization representing the African American members of the United States Congress. Membership is exclusive to African Americans, and its chair in the 111th Congress is Representative Barbara Lee of California.-Aims:...
focus on full funding and an accelerated pace of spending.
Doing Business 2007 cited the Millennium Challenge Accounts as a catalyst for reforms underway in 13 countries. Also,
Freedom HouseFreedom House is a Washington-based international non-governmental organization that conducts research and advocacy on democracy, political freedom and human rights...
, an organization that monitors the level of freedom in the world, released subcategories for the first time since it was being used as part of the MCC's measurements to allow for finer distinctions in their ratings. Also, the number of days it takes to start a business in both low and low-middle income countries has decreased significantly since 2002, which is one of the factors the accounts measure since rapid business registration is thought to increase economic activity.
Some critics have charged that the program uses indicators by conservative groups such as the Heritage foundation and are therefore biased toward free market economics. The program is thought to have also resulted in countries receiving less funding from other US government development organizations and not more. Some development agencies have also felt frozen out of the process since the compact programs are designed primarily by the country involved. Implementation has also been difficult in Armenia, with concern about effectiveness is currently being discussed.
External links