Sunday, February 3, 2008

MCC emails Megan

Thanks for having our back. For more MCC wonkery, the CGD folks usually have us mostly right.

The other thing behind our low disbursement rate that people don't understand (and we explain poorly), besides the fact that the partner countries are responsible for actually spending the money, is that early expenses are for relatively cheap things. Not only are we almost never giving out money for humanitarian/consumption projects, but in the first years of these compacts, much of the money goes to really boring things, like revising land registration/financial sector/other regulatory policies, feasibility studies for infrastructure works, etc (not to mention setting up an administrative structure to manage the whole thing). "Soft infrastructure" investments are less expensive, and also less flashy (to non-economists). We get no pictures of kids with distended bellies smiling about their new cadastral maps. Things that burn money and make good photo ops, like building irrigation systems and roads tend to happen in years 3-4 (of 5 year programs), and the first MCC compacts (Honduras, Nicaragua, Madagascar - all signed in 2005) are only barely starting to get there. Alas, none of this lends itself very well to a snappy elevator speech, which is why we can look like an incompetent bureaucracy if people don't understand how our model is different from traditional aid programs.

-Millenium model

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