A Small Change That Would Make Big Sense for MCC

The Millennium Challenge Corporation (MCC) was designed to provide large-scale grant funding to poor, well-governed countries. It’s become clear, however, that the (legislated) definition of which countries are “poor” is inadequate. In a new paper, Nancy Birdsall, Anna Diofasi and I discuss the limitations of the current definition (based on GNI per capita with a rigid graduation threshold) and propose a complementary measure (median income or consumption) and a more gradual approach to graduation. Such adjustments would create a candidate pool that much better reflects the significant poverty and development need in potential partner countries.  

In some respects, this paper is pushing on an open door. MCC acknowledges that its current definition of candidacy doesn’t fully capture a country’s level of well-being and has expressed interest in working with Congress to review how it defines candidate countries. Congress should be open to such a change. It would represent an improvement – on the margin – in targeting opportunities for poverty reduction. The likely effect would be to expand MCC’s partnership options to include a small handful of middle income countries whose governments are working to remediate years of structural inequalities and/or whose institutions and ability to translate growth into poverty reduction have not developed as rapidly as the economy has grown. It wouldn’t be a big change, but it would go a long way toward creating a more rational set of candidate countries.