How does the MCA work?
While disagreement remains over the effectiveness of aid, there is general agreement that aid is far less effective in bad policy environments and can prove counterproductive. The Millennium Challenge Corporation (MCC), which runs the MCA, seeks to maximize chances that aid will be used positively by focusing resources on countries with good policies. Under the MCA, nations are eligible to receive assistance only if they adopt policies associated with improved economic growth. To capitalize on this evidence, the Administration identified three policy areas—good governance, investment in health and education, and promoting economic freedom—and 16 performance indicators that measure these areas. (See text box, “MCA Criteria.”) To qualify for the MCA, a country must score above the median[26] for half of the indicators in each policy area—that is, it must be above the median in at least three of the six performance indicators that measure good governance, two of the four that measur
