Ideas to Action:

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US Development Policy


On September 28 Freedom House released its 2006 Freedom in the World Survey. For the first time ever, it published the scores of the seven subcategories that are behind the aggregate scores of the Political Rights and Civil Liberties indexes which are used by the MCC as two of its Ruling Justly indicators. Freedom House also employs a new aggregation methodology this year, and the resulting aggregate score is now based on a 0-40 scale for Political Rights and a 0-60 scale for Civil Liberties, instead of the previous 1-7 scale for both. This rescaling is a welcome change, allowing greater differentiation between countries and thus more meaningful comparability. To facilitate better trend observation, Freedom House also publicized the rescaled versions for 2003-2005.

This change, along with other modifications in the FY2007 eligibility criteria and methodology (PDF)-- in particular, the change from self-reported data in primary education and health spending to UNESCO and WHO respectively--and other improved data--notably, the IFC's Cost and Time to Start a Business (PDF)--may well be a case of the "MCA effect." What some perceive as a rather blunt instrument, the MCC's use of an indicator for eligibility decision-making appears to be creating an incentive not only for countries to adopt targeted reforms, but also for source agencies to improve; this is an important contribution by the MCC to measuring development impact well beyond its own programs.

Says the IFC in its 2007 Doing Business Report:
"In 2004 the United States' Millennium Challenge Account also introduced conditions for grant eligibility based on performance in the time and cost of business start-up. Since then 13 countries have started reforms aimed at meeting the criteria. Burkina Faso, El Salvador, Georgia and Madagascar have already met them. The lesson: what gets measured gets done."

Jennifer Windsor, Executive Director of Freedom House, remarked for the press release:
"In recent years, we have seen increased attention to the ratings process for Freedom in the World, particularly as a result of the U.S. government's decision to use the publication's ratings as part of the allocation process for the Millennium Challenge Account. We hope that the release of this data will spark greater discussion within countries about the areas that need further reform and facilitate better understanding about our ratings process."

Perhaps we'll see the "MCA Effect" in future improvements in measures of commitment to health, and improved coverage under the soon-to-be-introduced natural resources indicators (PDF).


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.