Transcript Slide 1
1 2 MCC’s Selection Process: Monitoring Government Performance Thomas Kelly Senior Director, Economic Policy 3 Millennium Challenge Corporation • Fulfillment of Monterrey commitment to “provide greater resources to countries taking greater responsibility for their own development.” • Established in law January 2004. • Mandate is to “reduce poverty through economic growth”. 4 Based on Key Lessons of Aid • Policies • Country Ownership • Results 5 Policy Performance • Aid is most effective when it reinforces good governance, investments in people, and economic freedom • Why MCC was created - Reward and Incentive • Selective Program – one tool in USG toolbox 6 Eligibility for MCC Programs • Quantitative measures of policy performance – Objective third party in indicator institutions – 17 indicators in 3 categories • Ruling Justly • Investing in People • Economic Freedom 7 Country Selection: Policies Critical to Growth & Poverty Reduction Ruling Justly: A country’s commitment to… – – – – – – promote political pluralism, equality and the rule of law; respect for human and civil rights; private property rights; transparency and accountability of government; commitment to combating corruption Investing In People: Investments in – broad based education – public health – sustainable management of natural resources. Encouraging Economic Freedom: economic policies that promote… – – – – – – trade macroeconomic stability private sector growth sustainable management of natural resources market forces respect for workers rights. 8 Indicators: 3 Categories Ruling Justly Economic Freedom Investing in People Civil Liberties Business Start-Up Public Expenditure on Health as percentage of GDP Political Rights Inflation Immunization rates: DPT3 & Measles Voice & Accountability Fiscal Policy Public Expenditure on Primary Education as percentage of GDP Government Effectiveness Trade Policy Girls Primary Education Completion Rate Rule of Law Regulatory Quality Natural Resource Management Control of Corruption Land Rights and Access Transp. in Foreign Aid Administrat. Transparency in Public Procurement Accounting of Public Expenditures TI Corr. Barometer TI Corr. Barometer Gallup World Poll IFAD CPIA Global Integrity FH Crossroads ADB CPIA Policies and Institutions Citizen Perceptions Budget Transparency Info on Services for Disadvantaged Enforcement of Laws/Standards Legal Rights to Public Information Legal/Reg/Judicial, Transparency Whistleblower Protections Media Coverage of Corr. Allegations Investigation of Corr. Allegations Corruption Laws/Standards Effectiveness of Indep. Auditing Ag, Internal Audit Systems in Tax Adm. World Bank CPIA World Comp. Survey Exec. Opin. Survey Firm Experiences Corruption in Higher Education Mechanisms to Report Corruption Environment to Protect Against Corruption Laws to Prevent/Punish Corruption Asia Risk Survey World Markets Business Risk Intel Pol. Risk Services Merchant Int. Econ Intel. Unit BERI Firm Perceptions Conflict of Interest Protections Income and Asset Disclosure Separation of Public/Private Roles Excessive Involvement in Economy Excessive Red Tape/Regulation 9 WBI Control of Corruption Index Citizen Experiences Government Transparency 10 Selection Process Process: • 17 •2 indicators, 3 categories income categories • Indicator Score > median pass • Pass > ½ indicators in each category & control of corruption 11 Indicator Category: Economic Freedom Kenya FY08 12 Indicator Category: Investing in People Kenya FY08 13 Indicator Category: Ruling Justly Kenya FY08 14 FY ’08: Countries in LIC and LMIC Income Categories: 108 15 FY ’08 Candidate Countries: 95 16 FY ’08: Countries that pass all three categories: 34 17 FY ’08: Countries that pass all three categories and Corruption: 25 18 Threshold Program • For countries that didn’t qualify but are close and moving in the right direction • This program focuses on the indicators the country does not fulfill • Ideally, a threshold country will become an eligible country 19 The Incentive Effect • “In a short span of time…[by tracking very simple indicators on investment climate]…you can see that the Millennium Challenge Account has affected two dozen countries… 24 countries in one way or another have come to us and either have asked for ways to reform, have already reformed, or would like to be bench-marked so that they are considered for the Millennium Challenge Account…. That is, in my view, quite a success.” Simeon Djankov Manager of the Monitoring and Analysis Unit, International Finance Corporation June 24, 2005 20 Where Are We? • 25 countries eligible for MCA Compacts. 16 Compacts signed and 9 others in the pipeline. • About $5.5 billion committed to date for Compacts. • 21 countries eligible for Threshold Program that aims to help countries improve policies in areas where they fall short so they might qualify in the future. 18 Threshold programs approved to date for roughly $400 million. 21