Economic Aid: Who Gets What, and Why?

MCC Selection Criteria: An Examination of the Hard Hurdles and Sustainable Economic Growth

Reviewed by Ragnhild Nauste
June 10, 2014

“MCC Selection Criteria: An Examination of the Hard Hurdles and Sustainable Economic Growth” by Caroline Andridge examines aid allocation and development. Specifically, Andridge evaluates the selection criteria that the Millennium Challenge Corporation (MCC) has set up in an attempt to ensure that aid is given to countries that are more likely to successfully distribute it. Through aid-based partnerships with developing countries, the MCC works to advance the Millennium Development Goals (MDGs) that were defined by the UN in 2000. To select which countries are eligible to enter into such a compact, the MCC uses indicators that measure countries’ performances within three main categories: Economic Freedom, Investing in People, and Ruling Justly. The MCC operates with two “hard hurdles”, a term which refers to the only two criteria that can singularly disqualify a country from being selected to receive aid if they are not fulfilled. These are Control of Corruption and Democratic Rights.

Andridge’s paper evaluates the validity of these hard hurdles by examining five low-income countries and their respective performances on the MCC scorecard, as well as their growth trajectories. Andridge comes out in support of the emphasis on Control of Corruption and Democratic Rights as hard hurdles due to the relationships these indicators have with successful aid distribution and efficient implementation of pro-development policies.

However, in her comparison between the five countries’ MCC scorecard performance and growth, Andridge does not find a correlation. This could be because it might take time for policy reforms registered in the MCC measurements to have a significant effect on growth rates. Andridge further concludes from her research on economic development that a helpful addition to the MCC selection criteria would be a measurement of income distribution or resource allocation, since such factors correlate with the sustainability of economic growth.

Find the full article here!

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