What is the Millennium Challenge Corporation?
The United States has many agencies of humanitarian assistance and the Millennium Challenge Corporation (MCC) stands as one of them. The MCC is “an innovative and independent U.S. foreign assistance agency that is helping lead the fight against global poverty.” Founded by the United States Congress in 2004, the agency focuses on a country’s policies and results. This agency aims to strengthen the institutions and economies of developing nations that already show signs of good governance. The MCC is uniquely selective in delivering aid by choosing to aid nations that have existing yet fragile institutions to promote democracy and competent governance.
The agency measures a nation’s eligibility to receive aid from the Millennium Challenge Corporation through 20 different indicators based on different political freedoms, civil liberties, economic freedoms and economic conditions. A nation is eligible to receive aid if it passes 10 out of 20 of the indicators, passes the “Control of Corruption Indicator” and/or passes either the “Political Rights Indicator” or the “Civil Liberties Indicator.” A nation passes an indicator if it performs better than the median score in the nation’s income group, a score that a particular third party will measure.
The MCC is diverse in its approach to stabilizing developing nations. It generally delivers three types of aid packages: Compacts, Concurrent Compacts for Regional Investments and Threshold Programs. Compacts are large five-year grants to specific grassroots projects targeted at poverty reduction or economic growth that meet MCC’s eligibility standards.
Concurrent Compacts for Regional Investments are grants designed to promote trade, economic integration and collaboration between nations.
Threshold Programs help nations that are not quite eligible to receive MCC Compact packages by allowing countries a chance to show their dedication to “democratic governance, economic freedom and investments in their people.”
Comparing USAID and MCC
One of the key differences between the U.S. Agency for International Development (USAID) and the Millennium Challenge Corporation is that USAID grants aid exclusively on the merits of a proposed project toward some form of a democratic goal. USAID also has programs that have “unrestricted ineligibility” where any nation may receive aid for a particular project.
On the other hand, the Millennium Challenge Corporation has strict standards on different aspects of a nation’s governance to determine whether a program receives a grant. It requires that nations meet certain political and economic standards determined by reputable third-party sources in order to receive aid. The Millennium Challenge Corporation grants are also restricted to five years whereas USAID programs can extend the period of a grant or contract.
While USAID and the Millennium Challenge Corporation have various differences, both collaborate closely in delivering and developing aid programs. For example, the USAID administrator holds a role as a permanent member of the Millennium Challenge Corporations Board of Directors.
The Millennium Challenge Corporation learns from USAID’s decades of technical expertise while USAID also benefits from the Millennium Challenge Corporation’s rigorous economic and political analysis to improve the outcomes of aid programs.
USAID and the Millennium Challenge Corporation both serve important roles in delivering aid to struggling nations. USAID has an emphasis on building up new institutions whereas the Millennium Challenge Corporation has more of an emphasis on strengthening already existing institutions in struggling nations. The goals of these agencies often overlap, leading to large amounts of interagency collaboration.
– Alexander Richter