Carrots, Sticks, & Aid Dollars: Documenting the “MCC Effect”

Global Integrity
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New from the Millennium Challenge Corporation (MCC), an analysis of the “MCC effect” — the catch-all term for the American aid agency’s indirect impact via their big money, pay-for-performance approach to policy change in countries receiving aid.

Via email:

I would like to bring a new publication to your attention entitled The “MCC Effect”: Creating Incentives for Policy Reform; Promoting an Environment for Poverty Reduction. As many of you know, MCC has had a substantial impact in many developing countries that goes far beyond its direct investments. These impacts include policy and institutional reforms that governments have implemented to achieve or maintain MCC eligibility; advances in country ownership, monitoring and evaluation, and donor coordination that partner countries have made as they develop and implement threshold and compact programs; and improvements to the quality, coverage, transparency, and actionability of cross-country indicators.

This “Compendium” of MCC Effect examples is part of a broader initiative at MCC to systematically track such impacts across nearly 100 low income and lower-middle income countries. Please note that the Compendium itself is by no means exhaustive; it provides a “cross-section” of examples that we hope will facilitate additional research and debate. If you are interested in learning more about any of the specific examples in this publication, please feel free to send our Development Policy team a note at developmentpolicy@mcc.gov.

The full text of the publication is available online at
http://www.mcc.gov/documents/mcc-102108-mcceffect.pdf.

Worth a close a read.

Our previous coverage of the MCC process is here.

— Jonathan Eyler-Werve

Global Integrity
Global Integrity

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