Tuesday, January 29, 2008

On Aid Effectiveness

Megan McArdle on MCC;

But the general approach of measuring aid by the amount of cash you managed to pump out, rather than the results generated thereby, was a very bad idea that the MCC was designed to challenge. It makes little sense to declare the project a failure on the ground that it's not spraying dollars over Africa like a firehose.

One effect of the MCC that is hardly discussed is the increasing role of lobbyists advising developing countries on how to get a compact. Believe me it makes a difference when you have a good lobbyist in Washington DC and increases your chance of getting a compact many fold.

MCC CEO's Letter;

To the Editor:

While your Dec. 7 front-page article about United States foreign assistance and the work of the Millennium Challenge Corporation covered important aspects of the organization’s efforts to help the people of the world’s poorest countries through economic growth, it didn’t mention essential elements of this topic.

From the Marshall Plan to the modern-day battle to fight AIDS, America’s efforts to help its friends escape poverty and suffering are founded on the principle that economic progress and democratic governments are the bedrock for building long-term stability and prosperity.

M.C.C.’s unique approach to poverty reduction builds on this idea, and proclaims that foreign aid is most effective when the recipient countries are held accountable for their actions. This is not too much to ask of countries receiving American tax dollars.

With more than $5 billion worth of projects ramping up that will bring new roads, irrigation systems and other large-scale infrastructure closer to completion, 2008 will be a pivotal year for M.C.C. These innovative projects have been developed and designed by the host countries from the bottom up, through an unprecedented process of citizen involvement. While M.C.C. is focused on investing this money as expeditiously as possible, it will not allow for reckless assignment of funds. By delivering assistance in tranches based on measurable progress, the M.C.C. process builds capacity within a country and raises the local standard for how a government should manage projects of this kind.

As any person with significant overseas experience will agree, doing business on such a scale in the world’s poorest countries is not always easy, and should never be hasty. M.C.C.’s work should therefore be measured not only by dollars disbursed, but also by expanding the ability of the recipient country to take ownership of the project, commit to its sustainability, and involve its people in the process.

This is what sets M.C.C. apart, and why I am proud to see the progress that we’ve achieved in such a short time.

John J. Danilovich
Chief Executive Officer, Millennium Challenge Corporation
Washington, Dec. 10, 2007

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