The Millennium Challenge Corporation in the Trump Era
Don’t Place Unrealistic Responsibilities onto MCC
February 23, 2017
In its 12-year history, the Millennium Challenge Corporation (MCC) has had success, but it has not yet produced the transformative development impact sought by the George W. Bush administration. That has not stopped some from arguing to make MCC the principal tool of U.S. development policy or even the lead development agency. Such arguments represent a fundamental misunderstanding of the original intent behind—and capacity of—MCC. No one intended for it to take over from the U.S. Agency for International Development (USAID), and its strategic purpose is ill suited for that kind of focus.
The U.S. foreign assistance budget covers multiple issue areas, many of which MCC is not structured to handle. USAID works in 100 countries, controls a budget of over $20 billion, and has 5,000 staffers. MCC currently has 11 active country compacts and an annual budget of $900 million. MCC should remain a niche agency that continues to work in a subset of countries that are instituting reforms that set them on the path to success. There are a number of potential changes the Trump administration should pursue at MCC that will help to build on its success and address some of its shortcomings. This includes giving MCC greater flexibility to work in lower-middle-income countries (currently restricted to 25 percent of its total funding each year), allowing it to enter into regional and subnational compacts and improving its ability to work with the private sector.
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