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USAID plays an outsize role in advancing global development progress. Working in more than 120 countries, the agency manages the world’s biggest bilateral aid portfolio, totaling around $20 billion a year across a wide range of sectors, including health, education, economic growth, democracy promotion and humanitarian relief. CGD’s rigorous analysis of the agency over the years has made us a go-to source for advice and ideas for how to make US foreign assistance more effective and evidence-based.
Happily, in the last 25 years, the proportion of people living on less than $1.25 a day has dropped by two-thirds. Most of this success is due to major global forces such as trade and cross-border labor mobility. And much of the credit goes to the governments and citizens of developing countries themselves for pursuing the policies that have enabled donor, private sector, and (increasingly) their own resources to translate into development outcomes. But development assistance—including US aid—has made important contributions.
Though the spirit of the proposal—a fundamental desire to make US foreign aid more effective—deserves widespread support, any plan to supersize MCC by drastically cutting or eliminating USAID is impractical and counterproductive for two overarching reasons. First, the characteristics that make MCC so appealing also limit its scalability. Making the agency significantly larger would compromise much of what makes it work as well as it does. Second, scaling back or phasing out USAID would eliminate several important functions of US foreign assistance that MCC is not designed nor well-suited to address.