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Marcella Sanchez of the Washington Post writes an interesting article suggesting the Millennium Challenge Account missed an opportunity in its just-signed compact with El Salvador to leverage the $2.8 billion sent home last year by El Salvadorans living in the U.S. who want their remittances invested in development not just consumed.
Interesting notion, but how exactly would the MCA do this? The only concrete proposal in the article is from Manual Orosco of the Inter-American Dialogue who says the MCA program could have created investment portfolios for small-scale projects back home to which immigrants could contribute. But do we know these are effective? Sustained? And, as CGD's Michael Clemens pointed out in an earlier blog post, most consumption is necessary and investment only works if there are returns.
I find it interesting that the Government of El Salvador and the MCC consulted with immigrants in the preparation of their compact. A novelty, really. Were the consultations purely political and, as the WP article suggests, ignored in terms of ideas to leverage remittances? Or were there no concrete, viable proposals to support? What do you think? How can the MCA leverage remittances in future compacts?
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.