Millennium Challenge Act

The Millenium Challenge Act of 2003 established the U.S. Millenium Challenge Corporation, as a stimulus to effective foreign assistance, judged for effectiveness in improving governance, economic freedom and human capital development. "MCC’s mission is to reduce global poverty through the promotion of sustainable economic growth." It has the intention of putting money where it is most likely to be used successfully.

Role in democracy promotion

MCC is often seen as one of the democracy promotion activities of the United States, based on the assumption that strengthening governance and economic institutions is a prerequisite for democracy.

While it was an innovative method to overcome the limitations of some of the lending policies of organizations such as the World Bank, putting the responsibility on the recipient country rather than the aid agency to define and execute the programs being funded, it has had problems with execution, as a unilateral U.S. program, and even conflicting with other U.S. programs.

Eligibility

(1) IN GENERAL.—In addition to countries described in subsection (a), a country shall be a candidate country for purposes of eligibility for assistance for fiscal year 2006 or a subsequent fiscal year if the country— (A) is classified as a lower middle income country in the then most recent edition of the World Development Report for Reconstruction and Development published by the International Bank for Reconstruction and Development and has an income greater than the historical ceiling for International Development Association eligibility for the fiscal year involved; and (B) meets the requirements of subsection (a)(1)(B).

—A candidate country should be considered to be an eligible country for purposes of this section if the Board determines that the country has demonstrated a commitment to—

• just and democratic governance, including a demonstrated commitment to—
  • promote political pluralism, equality, and the rule of law;
  • respect human and civil rights, including the rights of people with disabilities;
  • protect private property rights;
  • encourage transparency and accountability of government; and
  • combat corruption;
• economic freedom, including a demonstrated commitment to economic policies that—
  • encourage citizens and firms to participate in global trade and international capital markets;
  • promote private sector growth and the sustainable management of natural resources; strengthen market forces in the economy; and
  • respect worker rights, including the right to form labor unions; and
• investments in the people of such country, particularly women and children, including programs that—
  • promote broad-based primary education; and
  • strengthen and build capacity to provide quality public health and reduce child mortality.

Needs it does not cover

MCA became a flagship of the Center for Global Development's operations. Yet because the MCA was focused on the “good performers,” weak states were understandably left out of the conversation—and in this case, their absence underscored the dearth of strategic thinking on the challenges they posed.