The Millennium Challenge Corporation (MCC) is seeking approval from Congress to expand its operations over the coming years via the Millennium Compacts for Regional Economic Integration (M-CORE) Act.
In a recent testimony before the Senate Foreign Relations Committee, MCC CEO Dana Hyde argued that the organization would be more effective if given the authority to make regional investments, in addition to the single-country investments it is currently authorized to make.
“By making coordinated regional investments across multiple eligible countries, MCC can help countries work together to build and grow regional markets…and help generate new business and market opportunities for U.S. and other companies,” Hyde said.
The MCC has a singular mandate: reduce poverty through economic growth. The organization does this by initiating joint public-private investment projects in countries working toward democratic governance, open markets and human development.
Since its creation in 2004 by President Bush, the Millennium Challenge Corporation has committed $10 billion in over 58 projects in 25 countries. Around 70 percent of this investment has gone into infrastructure projects like highways and ports and an increasing percentage is being invested in energy.
The organization is currently only allowed to initiate projects within single countries, which, according to Hyde and other experts, is an impractical development strategy.
According to Hyde, countries cannot develop economically if they are unable to trade with their neighbors. Regional projects like cross-border highways and railways could make a bigger impact – especially among groups of small states.
“It’s easy to think about how regional engagement might be beneficial in the context of electricity,” said Center for Global Development President Dr. Nancy Birdsall. “The logic of a shared grid across borders is clear. To work, countries involved need to commit to a strong regulatory and financial structure outside the auspices of a single government for power trading and pricing.
However, initiating projects across multiple countries also poses a number of challenges. One such challenge occurs because neighboring countries are often not at the same level of development. For example, if the MCC wanted to begin a project across two countries, one may meet the required indicators for open governance and human development while the other might not.
The organization currently bridges this gap by undertaking threshold programs designed to assist near-eligible countries to become ready for investment.
Now, it wants the additional authority to conduct threshold programs at the same time it begins investment projects – meaning countries can begin projects before they are fully eligible to do so.
It may seem counter to MCC’s mandate, but Hyde argued that it is a necessary.
In her testimony, Hyde said the Millennium Challenge Corporation has a proven record of implementing successful country projects and is well equipped to take on the challenges of regional investments without straying from its mandate.
– Ron Minard
Sources: American Progress, Senate.gov 1, Senate.gov 2, MCC