Guide to the MCC Indicators for Fiscal Year 2021

Introduction

Each year, the MCC Board of Directors (Board) selects countries as eligible for MCC assistance.  The selection process begins with the Board identifying candidate countries to consider; which, by law, are all countries with per capita incomes below the World Bank’s threshold between lower middle income countries and upper middle income countries that are not prohibited from receiving assistance by federal law. For a candidate country to then be selected as eligible to receive assistance, it must demonstrate a commitment to just and democratic governance, investing in its people, and economic freedom as measured by independent policy indicators. These indicators inform the Board of candidate countries’ broad policy framework for encouraging poverty reduction through economic growth.

These indicators are compiled into country scorecards. This is a guide to understanding and interpreting the indicators used on the country scorecards by MCC in Fiscal Year 2021. It provides an overview of the policies measured by the indicators, the relationship that these policies have to economic growth and poverty reduction, the methodologies used by the various indicator institutions to measure policy performance, descriptions of the underlying source(s) of data, and the contact information of the indicator institutions. This document also provides the specific information for how MCC constructs the final indicators from these sources. The scorecards produced using these indicators are available at: https://www.mcc.gov/who-we-fund/scorecards.

For general questions about the application of these indicators, please contact MCC’s Selection, Eligibility, and Policy Performance Division at DevelopmentPolicy@mcc.gov.

Indicators—What They Measure

MCC favors indicators that:

1. are developed by an independent third party,
2. use an analytically-rigorous methodology and objective, high-quality data,
3. are publicly available,
4. have broad country-coverage among MCC candidate countries,
5. are comparable across countries,
6. have a clear theoretical or empirical link to economic growth and poverty reduction,
7. are policy-linked, i.e. measure factors that governments can influence, and
8. have appropriate consistency in results from year to year.

Ruling Justly

• Political Rights – Independent experts rate countries on: the prevalence of free and fair elections of officials with real power; the ability of citizens to form political parties that may compete fairly in elections; freedom from domination by the military, foreign powers, totalitarian parties, religious hierarchies and economic oligarchies; and the political rights of minority groups, among other things. Source: Freedom House
• Civil Liberties – Independent experts rate countries on: freedom of expression; association and organizational rights; rule of law and human rights; and personal autonomy and economic rights, among other things. Source: Freedom House
• Control of Corruption – An index of surveys and expert assessments that rate countries on: “grand corruption” in the political arena; the frequency of petty corruption; the effects of corruption on the business environment; and the tendency of elites to engage in “state capture,” among other things. Source: World Bank/Brookings Institution’s Worldwide Governance Indicators
• Government Effectiveness – An index of surveys and expert assessments that rate countries on: the quality of public service provision; civil servants’ competency and independence from political pressures; and the government’s ability to plan and implement sound policies, among other things. Source: World Bank/Brookings Institution’s Worldwide Governance Indicators
• Rule of Law – An index of surveys and expert assessments that rate countries on: the extent to which the public has confidence in and abides by the rules of society; the incidence and impact of violent and nonviolent crime; the effectiveness, independence, and predictability of the judiciary; the protection of property rights; and the enforceability of contracts, among other things. Source: World Bank/Brookings Institution’s Worldwide Governance Indicators
• Freedom of Information – Measures the legal and practical steps taken by a government to enable or allow information to move freely through society; this includes measures of press freedom, national freedom of information laws, and the extent to which a country is shutting down the internet or social media. Source: Access Now / Centre for Law and Democracy / Reporters Without Borders

Investing in People

• Immunization Rates – The average of DPT3 and measles immunization coverage rates for the most recent year available. Source: WHO and the United Nations Children’s Fund (UNICEF)
• Public Expenditure on Health – Total expenditures on health by government at all levels divided by gross domestic product (GDP). Source: The World Health Organization (WHO)
• Public Expenditure on Primary Education – Total expenditures on primary education by government at all levels divided by GDP. Source: The United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute of Statistics and National Governments
• Girls' Primary Education Completion Rate – The number of female students enrolled in the last grade of primary education minus repeaters divided by the population in the relevant age cohort (gross intake ratio in the last grade of primary). Source: UNESCO Institute of Statistics and National Governments
• Girls’ Secondary Education Enrollment Rate – The number of female pupils enrolled in lower secondary school, regardless of age, expressed as a percentage of the population of females in the theoretical age group for lower secondary education. Countries with a GNI per capita between $1,946 and $4,045 will be assessed on this indicator instead of Girls Primary Completion Rates.  Source: UNESCO Institute of Statistics and National Governments
• Child Health – An index made up of three indicators: access to improved water, access to improved sanitation, and child (ages 1-4) mortality. Source: The Center for International Earth Science Information Network and the Yale Center for Environmental Law and Policy
• Natural Resource Protection – Assesses whether countries are protecting up to 17 percent of all their biomes (e.g., deserts, tropical rainforests, grasslands, savannas and tundra). Source: The Center for International Earth Science Information Network  and the Yale Center for Environmental Law and Policy 

Encouraging Economic Freedom

• Regulatory Quality – An index of surveys and expert assessments that rate countries on: the burden of regulations on business; price controls; the government’s role in the economy; and foreign investment regulation, among other areas. Source: World Bank/Brookings Institution’s Worldwide Governance Indicators
• Land Rights and Access – An index that rates countries on the extent to which the institutional, legal, and market frameworks provide secure land tenure and equitable access to land in rural areas, and the time and cost of property registration in urban and peri-urban areas. Source: International Fund for Agricultural Development and International Finance Corporation
• Access to Credit – An index that rates countries on rules and practices affecting the coverage, scope and accessibility of credit information available through either a public credit registry or a private credit bureau; as well as legal rights in collateral laws and bankruptcy laws. Source: International Finance Corporation
• Business Start-Up – An index that rates countries on the time and cost of complying with all procedures officially required for an entrepreneur to start up and formally operate an industrial or commercial business. Source: International Finance Corporation
• Trade Policy – A measure of a country’s openness to international trade based on weighted average tariff rates and non-tariff barriers to trade. Source: The Heritage Foundation’s Index of Economic Freedom
• Inflation – The most recent average annual change in consumer prices. Source: The International Monetary Fund’s (IMF) World Economic Outlook Database
• Fiscal Policy – General government net lending/borrowing as a percent of GDP, averaged over a three-year period. Net lending/borrowing is calculated as revenue minus total expenditure.   Source: The IMF’s World Economic Outlook Database
• Gender in the Economy – An index that measures the extent to which laws provide women equal capacity to participate in the economy, as well as equality in getting a job, owning property, going to court, and being protected from violence. Source: World Bank

Determining MCC Candidacy

Setting the Scorecard Income Groups

Indicator Performance

1. Inflation, on which a country’s inflation rate must be under a fixed ceiling of 15 percent;
2. Immunization Rates, on which a country must have immunization coverage above 90% or the median, whichever is lower;
3. Political Rights, on which countries must score above 17; and
4. Civil Liberties, on which countries must score above 25.

Example Scorecard

Ruling Justly Category

Political Rights Indicator

Countries are rated on the following factors:

• free and fair executive and legislative elections; fair polling; honest tabulation of ballots;
• fair electoral laws; equal campaigning opportunities;
• the right to organize in different political parties and political groupings; the openness of the political system to the rise and fall of competing political parties and groupings;
• the existence of a significant opposition vote; the existence of a de facto opposition power, and a realistic possibility for the opposition to increase its support or gain power through elections;
• the participation of cultural, ethnic, religious, or other minority groups in political life;
• freedom from domination by the military, foreign powers, totalitarian parties, religious hierarchies, economic oligarchies, or any other powerful group in making personal political choices; and
• the openness, transparency, and accountability of the government to its constituents between elections; freedom from pervasive government corruption; government policies that reflect the will of the people.

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

In consultation with Freedom House, MCC considers countries with scores above 17 to be passing this indicator.

MCC Methodology

Civil Liberties Indicator

Countries are rated on the following factors:

• freedom of cultural expression, religious institutions and expression, and academia;
• freedom of assembly and demonstration, of political organization and professional organization, and collective bargaining;
• independence of the media and the judiciary;
• freedom from economic exploitation;
• protection from police terror, unjustified imprisonment, exile, and torture;
• the existence of rule of law, personal property rights, and equal treatment under the law;
• freedom from indoctrination and excessive dependency on the state;
• equality of opportunity;
• freedom to choose where to travel, reside, and work;
• freedom to select a marriage partner and determine whether or how many children to have; and
• the existence of a legal framework to grant asylum or refugee status in accordance with international and regional conventions and system for refugee protection.

Relationship to Growth and Poverty Reduction:

Source

Indicator Institution Methodology

In consultation with Freedom House, MCC considers countries with scores above 25 to be passing this indicator.

MCC Methodology

Control of Corruption Indicator

Countries are evaluated on the following factors:

• The prevalence of grand corruption and petty corruption at all levels of government;
• The effect of corruption on the “attractiveness” of a country as a place to do business;
• The frequency of “irregular payments” associated with import and export permits, public contracts, public utilities, tax assessments, and judicial decisions;
• Nepotism, cronyism and patronage in the civil service;
• The estimated cost of bribery as a share of a company’s annual sales;
• The perceived involvement of elected officials, border officials, tax officials, judges, and magistrates in corruption;
• The strength and effectiveness of a government’s anti-corruption laws, policies, and institutions;
• Public trust in the financial honesty of politicians;
• The extent to which:
  • processes are put in place for accountability and transparency in decision-making and disclosure of information at the local level;
  • government authorities monitor the prevalence of corruption and implement sanctions transparently;
  • conflict of interest and ethics rules for public servants are observed and enforced;
  • the income and asset declarations of public officials are subject to verification and open to public and media scrutiny;
  • senior government officials are immune from prosecution under the law for malfeasance;
  • the government provides victims of corruption with adequate mechanisms to pursue their rights;
  • the tax administrator implements effective internal audit systems to ensure the accountability of tax collection;
  • the executive budget-making process is comprehensive and transparent and subject to meaningful legislative review and scrutiny;
  • the government ensures transparency, open-bidding, and effective competition in the awarding of government contracts;
  • there are legal and functional protections for whistleblowers, anti-corruption activists, and investigators;
  • allegations of corruption at the national and local level are thoroughly investigated and prosecuted without prejudice;
  • government is free from excessive bureaucratic regulations, registration requirements, and/or other controls that increase opportunities for corruption;
  • citizens have a legal right to information about government operations and can obtain government documents at a nominal cost.

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

MCC Methodology

For ease of interpretation, MCC has adjusted the median for each of the two scorecard income pools to zero for all of the Worldwide Governance Indicators. Country scores are calculated by taking the difference between actual scores and the median. For example, in FY20 the unadjusted median for the scorecard category of countries with a Gross National Income (GNI) per capita between $1,926 and $3,995 on Control of Corruption was -0.52 (note, in FY21, the GNI per capita range for this scorecard category is $1,946 to $4,045). In order to set the median at zero, we simply add 0.52 to each country’s score (the same thing as subtracting a negative 0.52). Therefore, as an example, Angola’s FY20 Control of Corruption score, which was originally -1.14, was adjusted to -0.63.

The FY21 scores come from the 2020 update of the Worldwide Governance Indicators dataset and largely reflect performance in calendar year 2019. Since the release of the 2006 update of the Worldwide Governance Indicators, the indicators are updated annually. Each year, the World Bank and Brookings Institution also make minor backward revisions to the historical data. Prior to 2006, the World Bank released data every two years (1996, 1998, 2000, 2002 and 2004). With the 2006 release, the World Bank moved to an annual reporting cycle and provided additional historical data for 2003 and 2005.

Government Effectiveness Indicator

Countries are evaluated on the following factors:

• competence of civil service; effective implementation of government decisions; and public service vulnerability to political pressure;
• ability to manage political alternations without drastic policy changes or interruptions in government services;
• flexibility, learning, and innovation within the political leadership; ability to coordinate conflicting objectives into coherent policies;
• the efficiency of revenue mobilization and budget management;
• the quality of transportation infrastructure, telecommunications, electricity supply, public health care provision, and public schools; the availability of online government services;
• policy consistency; the extent to which government commitments are honored by new governments;
• prevalence of red tape; the degree to which bureaucratic delays hinder business activity;
• existence of a taxpayer service and information program, and an efficient and effective appeals mechanism;
• the extent to which:
  • effective coordination mechanisms ensure policy consistency across departmental boundaries, and administrative structures are organized along functional lines with little duplication;
  • the business processes of government agencies are regularly reviewed to ensure efficiency of decision making and implementation;
  • political leadership sets and maintains strategic priorities and the government effectively implements reforms;
  • hiring and promotion within the government is based on merit and performance, and ethical standards prevail;
  • the government wage bill is sustainable and does not crowd out spending required for public services; pay and benefit levels do not deter talented people from entering the public sector; flexibility (that is not abused) exists to pay more attractive wages in hard-to-fill positions;
  • government revenues are generated by low-distortion taxes; import tariffs are low and relatively uniform, export rebate or duty drawbacks are functional; the tax base is broad and free of arbitrary exemptions; tax administration is effective and rule-based; and tax administration and compliance costs are low;
  • policies and priorities are linked to the budget; multi-year expenditure projections are integrated into the budget formulation process, and reflect explicit costing of the implications of new policy initiatives; the budget is formulated through systematic consultations with spending ministries and the legislature, adhering to a fixed budget calendar; the budget classification system is comprehensive and consistent with international standards; and off-budget expenditures are kept to a minimum and handled transparently;
  • the budget is implemented as planned, and actual expenditures deviate only slightly from planned levels;
  • budget monitoring occurs throughout the year based on well-functioning management information systems; reconciliation of banking and fiscal records is practiced comprehensively, properly, and in a timely way;
  • in-year fiscal reports and public accounts are prepared promptly and regularly and provide full and accurate data; the extent to which accounts are audited in a timely, professional and comprehensive manner, and appropriate action is taken on budget reports and audit findings.

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

MCC Methodology

For ease of interpretation, MCC has adjusted the median for each of the two scorecard income pools to zero for all of the Worldwide Governance Indicators. Country scores are calculated by taking the difference between actual scores and the median. For example, in FY20 the unadjusted median for the scorecard category of countries with a Gross National Income (GNI) per capita between $1,926 and $3,995 on Control of Corruption was -0.52 (note, in FY21, the GNI per capita range for this scorecard category is $1,946 to $4,045). In order to set the median at zero, we simply add 0.52 to each country’s score (the same thing as subtracting a negative 0.52). Therefore, as an example, Angola’s FY20 Control of Corruption score, which was originally -1.14, was adjusted to -0.63.

The FY21 scores come from the 2020 update of the Worldwide Governance Indicators dataset and largely reflect performance in calendar year 2019. Since the release of the 2006 update of the Worldwide Governance Indicators, the indicators are updated annually. Each year, the World Bank and Brookings Institution also make minor backward revisions to the historical data.  Prior to 2006, the World Bank released data every two years (1996, 1998, 2000, 2002 and 2004). With the 2006 release, the World Bank moved to an annual reporting cycle and provided additional historical data for 2003 and 2005.

Rule of Law Indicator

Countries are evaluated on the following factors:

• public confidence in the police force and judicial system; popular observance of the law; a tradition of law and order; strength and impartiality of the legal system;
• prevalence of petty crime, violent crime, and organized crime; foreign kidnappings; economic impact of crime on local businesses; prevalence of human trafficking; government commitment to combating human trafficking;
• the extent to which a well-functioning and accountable police force protects citizens and their property from crime and violence; when serious crimes do occur, the extent to which they are reported to the police and investigated;
• security of private property rights; protection of intellectual property; the accuracy and integrity of the property registry; whether citizens are protected from arbitrary and/or unjust deprivation of property;
• the enforceability of private contracts and government contracts;
• the existence of an institutional, legal, and market framework for secure land tenure; equal access to land among men and women; effective management of common property resources; equitable user-rights over water resources for agriculture and local participation in the management of water resources;
• the prevalence of tax evasion and insider trading; size of the informal economy;
• independence, effectiveness, predictability, and integrity of the judiciary; compliance with court rulings; legal recourse for challenging government actions; ability to sue the government through independent and impartial courts; willingness of citizens to accept legal adjudication over physical and illegal measures; government compliance with judicial decisions, which are not subject to change except through established procedures for judicial review;
• the independence of prosecutors from political direction and control;
• the existence of effective and democratic civilian state control of the police, military, and internal security forces through the judicial, legislative, and executive branches; the police, military, and internal security services respect human rights and are held accountable for any abuses of power;
• impartiality and nondiscrimination in the administration of justice; citizens are given a fair, public, and timely hearing by a competent, independent, and impartial tribunal; citizens have the right to independent counsel and those charged with serious felonies are provided access to independent counsel when it is beyond their means; low-cost means are available for pursuing small claims; citizens can pursue claims against the state without fear of retaliation;
• protection of judges and magistrates from interference by the executive and legislative branches; judges are appointed, promoted, and dismissed in a fair and unbiased manner; judges are appropriately trained to carry out justice in a fair and unbiased manner; members of the national-level judiciary must give reasons for their decisions; existence of a judicial ombudsman (or equivalent agency or mechanism) that can initiate investigations and impose penalties on offenders;
• law enforcement agencies are protected from political interference and have sufficient budgets to carry out their mandates; appointments to law enforcement agencies are made according to professional criteria; law enforcement officials are not immune from criminal proceedings;
• the existence of an independent reporting mechanism for citizens to complain about police actions; timeliness of government response to citizen complaints about police actions.

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

MCC Methodology

For ease of interpretation, MCC has adjusted the median for each of the two scorecard income pools to zero for all of the Worldwide Governance Indicators. Country scores are calculated by taking the difference between actual scores and the median. For example, in FY20 the unadjusted median for the scorecard category of countries with a Gross National Income (GNI) per capita between $1,926 and $3,995 on Control of Corruption was -0.52 (note, in FY21, the GNI per capita range for this scorecard category is $1,946 to $4,045). In order to set the median at zero, we simply add 0.52 to each country’s score (the same thing as subtracting a negative 0.52). Therefore, as an example, Angola’s FY20 Control of Corruption score, which was originally -1.14, was adjusted to -0.63.

The FY21 scores come from the 2020 update of the Worldwide Governance Indicators dataset and largely reflect performance in calendar year 2019. Since the release of the 2006 update of the Worldwide Governance Indicators, the indicators are updated annually. Each year, the World Bank and Brookings Institution also make minor backward revisions to the historical data.  Prior to 2006, the World Bank released data every two years (1996, 1998, 2000, 2002 and 2004). With the 2006 release, the World Bank moved to an annual reporting cycle and provided additional historical data for 2003 and 2005.

Freedom of Information Indicator

Relationship to Growth and Poverty Reduction

Sources and Indicator Institution Methodologies

1. Reports without Borders’ (RSF) World Press Freedom Index, https://rsf.org/en/ranking/2020. Questions regarding this indicator may be directed to index@rsf.org or +33 1 44 83 84 65 

2. Centre for Law and Democracy and Access Info’s Right to Information Index, http://www.rti-rating.org/. Questions regarding this indicator may be directed to Toby Mendel at toby@law-democracy.org or +1 (902) 431-3688.

3. Access Now’s #KeepItOn Shutdown Tracker Optimization Project, https://www.accessnow.org/keepiton/. Questions regarding this indicator may be directed to Berhan Taye at berhan@accessnow.org or +1 (888) 414-0100.

MCC Methodology

This indicator uses a country’s score on RSF’s World Press Freedom Index (Press) as the base. In FY21, MCC uses RSF’s 2020 World Press Freedom Index, which covers events in 2019. A country’s base score may improve based on data from the Global Right to Information Rating. In FY21, MCC uses Centre for Law and Democracy / Access Info Europe’s Global Right to Information Rating (RTI) from 2020. A country’s score is improved by 4 points if they have a Freedom of Information law enacted. Data from Access Now is used to penalize some countries’ base scores. A country’s score is penalized 1 point for each day in the last calendar year (2019) of internet or social media shutdown/throttling, for a total penalty of up to 9 points. For FY21, MCC uses Access Now data from the 2019 #KeepItOn Shutdown Tracker Optimization Project report. On this index, lower is better.

Note regarding construction of missing data: Prior to FY20, MCC utilized Freedom House’s Freedom of the Press scores for its Press component. In 2018, however, Freedom House stopped publishing Freedom of the Press, and MCC selected RSF’s World Press Freedom Index as a replacement. Both indices measure similar concepts on an identical scale (0-100, with lower scores being better). However, because MCC is using a different indicator for Press in FY21, current year data on MCC’s scorecard is not comparable to data found on prior year MCC scorecards.

In addition, the RSF index does not report data for all countries that had data reported by Freedom House, As such, MCC is using the most recent Freedom House “Freedom of the Press 2017” data for the five countries that had Freedom House data, but that are missing RSF data. Although RSF uses the same 0-100 scale for its data, the distribution of RSF country scores sits systematically lower on the scale than does Freedom House’s. To account for this mismatch, MCC normalizes Freedom House scores for the five countries in the following manner:

• MCC identifies each missing country’s percentile rank in the Freedom House global dataset, and then finds the score that would be at the corresponding percentile in the global RSF dataset (using the method of linear interpolation equivalent to the method used by Microsoft Excel in the function Percentile.Inc), and assigns that score to the country.
• Once this matching has been completed for each of the missing countries, and these normalized scores are added to the global RSF dataset, MCC then uses these scores as “Press” in the above equation to calculate the Freedom of Information scores and then percentile ranks for each income group.
• For example, Solomon Islands has a Freedom House score of 27 in 2017, which puts in at the 76^th percentile in the global Freedom House dataset. The score at the 76^th percentile of the global RSF dataset used in FY20 was 24.09. Therefore Solomon Island’s normalized Press score was 24.09 for FY20.

Investing in People Category

Immunization Rates Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

To estimate national immunization coverage, WHO and UNICEF draw on two sources of empirical data: reports of vaccinations performed by service providers (administrative data) and surveys containing items on children’s vaccination history (coverage surveys). Surveys are frequently used in conjunction with administrative data; in some instances—where administrative data differ substantially from survey results—surveys constitute the sole source of information on immunization coverage levels. There are a number of reasons survey data may be used over administrative data; for instance, in some cases, lack of precise information on the size of the target population (the denominator) can make immunization coverage difficult to estimate from administrative data alone. Estimates of the most likely true level of immunization coverage are based on the data available, consideration of potential biases, and contributions of local experts.

In consultation with the WHO, MCC considers countries which have immunization coverage above the median for their scorecard income pool to be passing this indicator. If the median is above 90% for an income pool in a year, countries in that income pool will be considered passing if they have immunization coverage above 90% (even if they score below the median).[[MCC uses the World Bank’s historical ceiling for IDA eligibility to divide countries into two assessment categories. Countries that fall below the ceiling (GNI per capita of $0-$1,945 for FY21) and countries above the ceiling but below the World Bank’s LMIC cut-off (GNI per capita of $1,946-$4,045 in FY21).]]

MCC Methodology

MCC relies on official WHO/United Nations Children’s Fund (UNICEF) estimates for all immunization data. MCC uses the simple average of the 2019 DPT3 coverage rate and the 2019 measles (MCV) coverage rate to calculate FY21 country scores. If a country is missing data for either DPT3 or Measles, it does not receive an index value. The same rule is applied to historical data. As better data become available, WHO/UNICEF make backward revisions to the historical data. In FY21, countries must have immunization rates (as defined above) greater than 90% or the median for their scorecard pool, whichever is lower, to pass this indicator.

Health Expenditures Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

MCC Methodology

Prior to FY19, MCC utilized a slightly different indicator, which was discontinued by the WHO.  Because MCC started using a different indicator from the WHO in FY19, data from FY19 onward on MCC’s scorecard are not comparable to data found on MCC scorecards prior to FY19.

The FY21 scores come from the 2020 update of the Global health expenditure database and largely reflect performance in calendar year 2017.

Primary Education Expenditures Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

Government outlays on primary education include expenditures on services provided to individual pupils and students and expenditures on services provided on a collective basis. Primary education includes the administration, inspection, operation, or support of schools and other institutions providing primary education at ISCED-97 level 1. It also includes literacy programs for students too old for primary school. For FY21, MCC will use the most recent UNESCO data from 2014 or later.

MCC Methodology

This indicator measures public expenditure on primary education as a percent of GDP. MCC relies on the United Nations Educational, Scientific and Cultural Organization (UNESCO) Institute of Statistics as its source. Specifically, MCC uses the indicator named “Government expenditure on primary education as a percentage of GDP (%).” For FY21, MCC first determines if a country has a value reported by UNESCO in  2014 or later. If so, the most recent data available within those years are used. If a country does not have UNESCO data at any point since 2014, it does not receive an FY21 score.

For UNESCO data, the GDP estimates used in the denominator are provided to UNESCO by the World Bank. As better data become available, UNESCO makes backward revisions to historical data.

Girls’ Primary Education Completion Rate Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

This indicator was selected since data limitations preclude adjusting the girls’ primary education completion rate for students who drop out during the final year of primary school. Therefore, UNESCO’s estimates should be taken as an upper-bound estimate of the actual female primary completion rate. Because the numerator may include late entrants and over-age children who have repeated one or more grades of primary school but are now graduating, as well as children who entered school early, it is possible for the primary completion rate to exceed 100 percent.

MCC Methodology

MCC draws upon data from UNESCO’s Institute of Statistics as its exclusive source of data for this indicator. Specifically, MCC uses the indicator named “Gross intake ratio to the last grade of primary education, female (%).” To receive an FY21 score, countries must have a UNESCO value in 2014 or later. MCC uses the most recent year available, that is, MCC uses the most recent data from the past six years. If a country does not have UNESCO data at any point from 2014 or later, it does not receive an FY21 score. As better data become available, UNESCO makes backward revisions to its historical data.

Girls’ Secondary Education Enrollment Ratio Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

MCC Methodology

MCC draws upon data from UNESCO’s Institute of Statistics as its exclusive source of data. Specifically, MCC uses the indicator named “Gross enrolment ratio, lower secondary, female (%).” To receive an FY21 score, countries must have a UNESCO value on “gross enrolment ratio, lower secondary (female)” from 2014 or later. MCC uses the most recent year available that is, MCC uses the most recent data from the past six years. If a country does not have UNESCO data at any point from 2014 or later, it does not receive an FY21 score. As better data become available, UNESCO makes backward revisions to its historical data.

The Girls’ Secondary Education Enrollment Ratio indicator measures the number of female pupils enrolled in lower secondary school (regardless of age), expressed as a percentage of the total female population of the standard age of enrolment for lower secondary education. Lower secondary school is defined as a program typically designed to complete the development of basic skills and knowledge which began at the primary level. Because the numerator may include late entrants and over-age children, as well as children who entered school early, it is possible for the secondary enrollment rate to exceed 100 percent.

Child Health Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

• Access to Improved Sanitation: Produced by the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF), this indicator measures the percentage of the population with access to facilities that hygienically separate human excreta from human, animal, and insect contact. Facilities such as sewers or septic tanks, pour-flush latrines and simple pit or ventilated improved pit latrines are assumed to be adequate, provided that they are not public and not shared with other households.
• Access to Improved Water: Produced by WHO and UNICEF, this indicator measures the percentage of the population with access to at least 20 liters of water per person per day from an “improved” source (household connections, public standpipes, boreholes, protected dug wells, protected springs, and rainwater collection) within one kilometer of the user's dwelling and with collection times of no more than 30 minutes.
• Child Mortality (Ages 1-4): Produced by the United Nations Inter-agency Group for Child Mortality Estimation (IGME), this indicator measures the probability of dying between ages 1 and 4.

MCC Methodology

In creating the index used for the FY21 data, Columbia University’s Center for International Earth Science Information Network (CIESIN) and the Yale Center for Environmental Law and Policy (YCELP) relied on the most recent child mortality data ages 1-4 (4q1), water access data, and sanitation access data. If no updates from the most recent year were available, previous data were applied. Each of the three components (child mortality, access to water, and access to sanitation) is equally weighted (33.3%) in the overall index. Country scores are reported as 2019 data on the FY21 MCC Country Scorecards. As better data become available, CIESIN and YCELP make backward revisions to historical data. In FY20, CIESIN changed its source of Child Mortality data from the UN Population Division’s World Population Prospects (WPP data) to the United Nations Inter-agency Group for Child Mortality Estimation (IGME data) since IGME updates its data more frequently than WPP. As such, some variation in Child Health data before FY20 could be attributed to the new underlying data source.

Natural Resource Protection

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

MCC Methodology

Encouraging Economic Freedom Category

Regulatory Quality Indicator

Countries are evaluated on the following factors:

• prevalence of regulations and administrative requirements that impose a burden on business; ease of starting and closing a new business; ease of registering property;
• government intervention in the economy; the extent to which government subsidies keep uncompetitive industries alive;
• labor market policies; employment law provides for flexibility in hiring and firing; wage and price controls;
• the complexity and efficiency of the tax system; pro-investment tax policies;
• trade policy; the height of tariffs barriers; the number of tariff bands; the stability of tariff rates; the extent to which non-tariff barriers are used; the transparency and predictability of the trade regime;
• investment attractiveness; prevalence of bans or investment licensing requirements; financial regulations on foreign investment and capital; legal restrictions on ownership of business and equity by non-residents; foreign currency regulations; general uncertainty about regulation costs; legal regulation of financial institutions; the extent to which exchange rate policy hinders firm competitiveness;
• extensiveness of legal rules and effectiveness of legal regulations in the banking and securities sectors; costs of uncertain rules, laws, or government policies;
• the strength of the banking system; existence of barriers to entry in the banking sector; ease of access to capital markets; protection of domestic banks from foreign competition; whether interest rates are heavily-regulated; transfer costs associated with exporting capital;
• participation of the private sector in infrastructure projects; dominance of state-owned enterprises; openness of public sector contracts to foreign investors; the extent of market competition; effectiveness of competition and anti-trust policies and legislation;
• the existence of a policy, legal, and institutional framework that supports the development of a commercially-based, market-driven rural finance sector that is efficient, equitable, and accessible to low-income populations in rural areas;
• the adoption of an appropriate policy, legal, and regulatory framework to support the emergence and development of an efficient private rural business sector; the establishment of simple, fast and transparent procedures for establishing private agri-businesses;
• the existence of a policy, legal, and institutional framework that supports the development and liberalization of commercially-based agricultural markets (for inputs and produce) that operate in a liberalized and private sector-led, functionally efficient and equitable manner, and that are accessible to small farmers; and
• the extent to which:
  • corporate governance laws encourage ownership and financial disclosure and protect shareholder rights, and are generally enforced;
  • state intervention in the goods and land market is generally limited to regulation and/or legislation to smooth out market imperfections;
  • the customs service is free of corruption, operates transparently, relies on risk management, processes duty collections, and refunds promptly; and
  • trade laws, regulations, and guidelines are published, simplified, and rationalized.

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

MCC Methodology

For ease of interpretation, MCC has adjusted the median for each of the two scorecard income pools to zero for all of the Worldwide Governance Indicators. Country scores are calculated by taking the difference between actual scores and the median. For example, in FY20 the unadjusted median for the scorecard category of countries with a Gross National Income (GNI) per capita between $1,926 and $3,995 on Control of Corruption was -0.52 (note, in FY21, the GNI per capita range for this scorecard category is $1,946 to $4,045). In order to set the median at zero, we simply add 0.52 to each country’s score (the same thing as subtracting a negative 0.52). Therefore, as an example, Angola’s FY20 Control of Corruption score, which was originally -1.14, was adjusted to -0.63.

The FY21 scores come from the 2020 update of the Worldwide Governance Indicators dataset and largely reflect performance in calendar year 2019. Since the release of the 2006 update of the Worldwide Governance Indicators, the indicators are updated annually. Each year, the World Bank and Brookings Institution also make minor backward revisions to the historical data. Prior to 2006, the World Bank released data every two years (1996, 1998, 2000, 2002 and 2004). With the 2006 release, the World Bank moved to an annual reporting cycle and provided additional historical data for 2003 and 2005.

Land Rights and Access Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

• Access to Land: Produced by IFAD, this indicator assesses the extent to which the institutional, legal, and market framework provides secure land tenure and equitable access to land in rural areas. It is made up of five subcomponents:  (1) the extent to which the law guarantees secure tenure for land rights of the poor; (2) the extent to which the law guarantees secure land rights for women and other vulnerable groups; (3) the extent to which land is titled and registered; (4) the functioning of land markets; and (5) the extent to which government policies contribute to the sustainable management of common property resources. IFAD’s operational staff base their assessments on a questionnaire and guideposts identifying the basis of each scoring level, available at  https://webapps.ifad.org/members/gc/42/docs/GC-42-L-6.pdf or https://webapps.ifad.org/members/eb/125/docs/EB-2018-125-R-4-Add-1.pdf.  Past datasets can be found in the documents of IFAD’s governing council https://webapps.ifad.org/members/gc.
• Days to Register Property: Produced by the IFC, this indicator measures how long it takes to register property in a periurban zone. The IFC records the full amount of time necessary when a business purchases land and a building to transfer the property title from the seller to the buyer so that the buyer can use the title for expanding business, as collateral in taking new loans, or, if necessary, to sell to another business.
• Cost of Registering Property: Produced by the IFC, this indicator measures the cost to register property in a periurban zone as a percentage of the value of the property. The IFC records all of the costs that are incurred when a business purchases land and a building to transfer the property title from the seller to the buyer, so that the buyer can use it for expanding his business, as collateral in taking new loans, or, if necessary, to sell it to another business.

The parties (buyer and seller):

• Are limited liability companies.
• Are located in the periurban area of the country’s most populous city.
• Are 100% domestically and privately owned.
• Have 50 employees each, all of whom are nationals.
• Perform general commercial activities.

• Has a value of 50 times income per capita. The sale price equals the value.
• Is fully owned by the seller.
• Has no mortgages attached and has been under the same ownership for the past 10 years.
• Is registered in the land registry or cadastre, or both, and is free of title disputes.
• Is located in a periurban commercial zone, and no rezoning is required.
• Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A 2-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition and complies with all safety standards, building codes and other legal requirements. The property of land and building will be transferred in its entirety.
• Will not be subject to renovations or additional building following the purchase.
• Has no trees, natural water sources, natural reserves or historical monuments of any kind.
• Will not be used for special purposes, and no special permits, such as for residential use, industrial plants, waste storage or certain types of agricultural activities, are required.
• Has no occupants (legal or illegal), and no other party holds a legal interest in it.

MCC Aggregation Methodology

This index draws on 2018 “Access to Land” data from the International Fund for Agricultural Development (IFAD) and 2021 data from the World Bank on the time and cost of property registration. Country scores are reported on the Scorecards as 2021 data.  When IFAD data from the current year is missing, data from the most recent year is used going back until 2014.  If a country does not have IFAD data for any year from 2014-2018, the indicator is considered missing.

Countries that received a “no practice” score on the World Bank’s Time to Register Property indicator were assigned the maximum observed value (i.e. the worst possible score) plus one additional day. Countries that received a “no practice” score on the Cost of Registering Property indicator were assigned the maximum observed value (i.e. the worst possible score) plus one additional percentage point of the property value.[[As described in the Doing Business in 2007 report, “[w]hen an economy has no laws or regulations covering a specific area — for example bankruptcy — it receives a ‘no practice’ mark. Similarly, if regulation exists but is never used in practice, or if a competing regulation prohibits such practice, the economy receives a ‘no practice’ mark. This puts it at the bottom of the ranking” (World Bank 2006: 74).]]

Since each of the three sub-components of this index have different scales, MCC created a common scale for each of the indicators by normalizing them. Please see equations below. Due to the fact that high scores on the World Bank indicators represent low levels of performance and high scores on the IFAD indicator represents high levels of performance, it was also necessary to invert either the IFAD normalized scale or the World Bank normalized scales. MCC chose to invert the IFAD scale by subtracting each country’s normalized value from 1.

MCC Methodology to Normalize IFAD and World Bank Data:

• Normalized IFAD = 1 - (Maximum observed value - Country X’s raw score) ÷ (Maximum observed value -Minimum observed value)
• Normalized Days (or Cost) to Register a Property = (Maximum observed value - Country X’s raw score) ÷ (Maximum observed value -Minimum observed value)

MCC’s Land Rights and Access Score = [ 0.5 x Normalized IFAD ] + [ 0.25 x (Normalized World Bank Time) ] + [ 0.25 x (Normalized World Bank Cost) ]  

As an example, for FY20 in Moldova’s case, its normalized 2018 IFAD score (1) is given a 50% weight, its 2020 World Bank Time to Register Property score is given a 25% weight (0.9912), and its 2020 World Bank Cost of Registering Property score (0.9643) is given a 25% weight. This yields a Land Rights and Access index value of 0.989.

FY21 data on the time and cost of registering property are drawn from the 2020 data in the World Bank’s Doing Business 2020 Report. FY21 index values also rely upon the most recent year available from IFAD’s “Access to Land” data. To match these two datasets, two procedures are performed. First, if IFAD data for a given year is missing, the most recent year of available data is used. Then each year of IFAD data is matched to a World Bank Data labeled as being one year in the future. So, if a country has IFAD data for 2015 but not 2016, the 2015 IFAD data is matched with the 2016 World Bank data and listed on the scorecard as 2015 data.  The 2015 IFAD data is used in place of the missing 2016 data and then matched with the 2017 World Bank data and listed on the scorecard as 2016 data. As better data become available, the World Bank makes backward revisions to its historical data. No value is assigned if data from one source exists for a given year, but data from the other source exists only for years after the year of interest.

In 2015, The World Bank’s Doing Business Report added a second city of analysis for Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, Russia, and the United States. As a result, these countries scores for 2014 and 2015 (displayed as 2013 and 2014 on the MCC scorecard) are an average across two cities. Due to this change, these countries data for 2014 and 2015 are not comparable to previous year’s data.

On August 27, 2020, the World Bank announced it had discovered irregularities in previously reported Doing Business data that are inconsistent with the Doing Business methodology.  Initial reports indicate that the irregularities center on countries not in MCC’s candidate pool and that do not receive an MCC scorecard.  Visit MCC’s website at www.mcc.gov/db-fy21 to learn more about how MCC uses the Doing Business data and considerations for this year.

Access to Credit Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

• Depth of Information: The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through either a public credit registry or a private credit bureau. A score of 1 is assigned for each of the following 8 features of the public credit registry or private credit bureau (or both):
  • Both positive credit information (for example, outstanding loan amounts and pattern of on-time repayments) and negative information (for example, late payments, number and amount of defaults and bankruptcies) are distributed.
  • Data on both firms and individuals are distributed.
  • Data from retailers and utility companies as well as financial institutions are distributed.
  • More than 2 years of historical data are distributed. Credit registries and bureaus that erase data on defaults as soon as they are repaid obtain a score of 0 for this indicator.
  • Data on loan amounts below 1% of income per capita are distributed. Note that a credit registry or bureau must have a minimum coverage of 1% of the adult population to score a 1 on this indicator.
  • By law, borrowers have the right to access their data in the largest credit registry or bureau in the economy.
  • Can banks and financial institutions access the credit information online?
  • Does the credit information system provide credit score and make it available to all service subscribers?

• Strength of Legal Rights: This component measures the extent to which bankruptcy and collateral laws protect the rights of borrowers and lenders to facilitate lending. It contains 12 aspects related to legal rights in collateral law or bankruptcy law. A score of 1 is assigned for each of the following features of the laws:
  • Any business may use movable assets as collateral while keeping possession of the assets, and any financial institution may accept such assets as collateral.
  • The law allows a business to grant a nonpossessory security right in a single category of movable assets (such as accounts receivable or inventory), without requiring a specific description of the collateral.
  • The law allows a business to grant a nonpossessory security right in substantially all its movable assets, without requiring a specific description of the collateral.
  • A security right may extend to future or after-acquired assets and may extend automatically to the products, proceeds or replacements of the original assets.
  • A general description of debts and obligations is permitted in the collateral agreements and in registration documents: all types of debts and obligations can be secured between the parties, and the collateral agreement can include a maximum amount for which the assets are encumbered.
  • A collateral registry or registration institution is in operation, unified geographically and by asset type, with an electronic database indexed by debtors’ names.
  • Secured creditors are paid first (for example, before general tax claims and employee claims) when a debtor defaults outside an insolvency procedure.
  • Secured creditors are paid first (for example, before general tax claims and employee claims) when a business is liquidated.
  • Secured creditors are not subject to an automatic stay or moratorium on enforcement procedures when a debtor enters a court-supervised reorganization procedure.
  • The law allows parties to agree in a collateral agreement that the lender may enforce its security right out of court.
  • Does the economy have an integrated/unified legal framework for secured transactions?
  • Is the collateral registry a notice based registry? Does the collateral registry count with modern features (such as an online search?)

MCC Methodology

In order to give equal weight to each index, MCC multiplies the Depth of Credit Information score by 12 and the Strength of Legal Rights score by 8 and then takes the average.

FY21 data refer to the 2020 values reported in the World Bank’s Doing Business 2020 report and are labeled as 2019 on the scorecard as the data were collected in 2019.

In the 2015 Doing Business Report, the World Bank made a number of methodological changes to the Access to Credit sub-indicators, including adding new and more challenging standards for a number of the sub-indicators. The World Bank therefore revised a number of countries’ scores in accordance to the new standards. These revised scores were applied to the 2015 and 2014 data (reflected on MCC’s scorecard as 2014 and 2013 data) but not to previous years. As a result, data from prior to 2014 is not comparable to data after 2014.

On August 27, 2020, the World Bank announced it had discovered irregularities in previously reported Doing Business data that are inconsistent with the Doing Business methodology.  Initial reports indicate that the irregularities center on countries not in MCC’s candidate pool and that do not receive an MCC scorecard.  Visit MCC’s website at www.mcc.gov/db-fy21 to learn more about how MCC uses the Doing Business data and considerations for this year.

Business Start-Up Indicator

Relationship to Growth and Poverty Reduction

Source

Indicator Institution Methodology

• Days to Start a Business: This component measures the number of calendar days it takes to comply with all procedures that are officially required for an entrepreneur to start up and formally operate an industrial or commercial business. These include obtaining all necessary licenses and permits and completing any required notifications, verifications or inscriptions for the company and employees with relevant authorities.
• Cost of Starting a Business: This component measures the cost of starting a business as a percentage of country’s per capita income. The IFC records all procedures that are officially required for an entrepreneur to start up and formally operate an industrial or commercial business. These include obtaining all necessary licenses and permits and completing any required notifications, verifications or inscriptions for the company and employees with relevant authorities.

Two types of businesses are considered under the methodology. They are identical in all aspects, except that one company is owned by five married women and other by five married men. To make the data comparable across countries, several assumptions about the businesses and the procedures are used. The business:

• is a limited liability company; if there is more than one type of limited liability company in the country, the most popular limited liability form among domestic firms is chosen. Information on the most popular form is obtained from incorporation lawyers or the statistical office;
• operates in the economy’s largest business city. For 11 economies, the data are also collected for the second largest business city. In these instances, MCC utilizes the simple average of the two cities, as computed by IFC;
• is 100% domestically owned and has five owners, none of whom is a legal entity;
• has start-up capital of 10 times income per capita, paid in cash;
• performs general industrial or commercial activities, such as the production or sale of products or services to the public; it does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco; the business is not using heavily polluting production processes;
• leases the commercial plant and offices and is not a proprietor of real estate;
• does not qualify for investment incentives or any special benefits;
• has at least 10 and up to 50 employees one month after the commencement of operations, all of them nationals;
• has a turnover at least 100 times income per capita; and
• has a company deed 10 pages long.

It is assumed that the minimum time required per procedure is one calendar day. Time captures the median duration that incorporation lawyers indicate is necessary to complete a procedure. Although procedures may take place simultane­ously, they cannot start on the same day (that is, simultane­ous procedures start on consecutive days). A procedure is considered completed once the company has received the final document, such as the company registration certificate or tax number. If a procedure can be accelerated for an additional cost, the fastest procedure is chosen. It is assumed that the entrepreneur does not waste time and commits to completing each remaining procedure without delay. The time that the entrepreneur spends on gathering information is ignored. It is assumed that the entrepreneur is aware of all entry regulations and their sequence from the beginning.

The text of the company law, the commercial code and specific regulations and fee schedules are used as sources for calculating the cost of start-up. If there are conflicting sources and the laws are not clear, the most authoritative source is used. The constitution supersedes the company law, and the law prevails over regulations and decrees. If conflicting sources are of the same rank, the source indicating the most costly procedure is used, since an entrepreneur never second-guesses a government official. In the absence of fee schedules, a government officer’s estimate is taken as an official source. In the absence of a government officer’s estimate, estimates of incorporation lawyers are used. If several incorporation lawyers provide different estimates, the median reported value is applied. In all cases the cost excludes bribes.

MCC Methodology

The Business Start-Up index is calculated as the average of two indicators from the World Bank’s Doing Business survey: Days to Start a Business and Cost to Start a Business.  Since the two sub-components of the Business Start-Up index have different scales, MCC normalizes the indicators to create a common scale for each of them.

• Normalized Days (or Cost) to Start a Business = (Maximum observed value - Country X’s raw score) ÷ (Maximum observed value -Minimum observed value)

• Business Start-Up = 0.5(World Bank Days to Start a Business) + 0.5(World Bank Cost of Starting a Business)

FY21 data refer to the 2020 values reported in the World Bank’s Doing Business 2020 report and are labeled as 2019 on the scorecard. As better data become available, the World Bank makes backward revisions to its historical data.

In 2015, the World Bank’s Doing Business Report added a second city of analysis for Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, Russia, and the United States. As a result, these countries scores from 2014 to 2020 (displayed as 2013 to 2019 on the MCC scorecard) are an average across two cities. Due to this change, these countries’ data from 2014 to 2020 are not comparable to previous year’s data.

In 2017, the World Bank’s Doing Business Report disaggregated data for both Cost and Days to Start a Business by gender. MCC utilizes the simple average of the disaggregated data to represent scores for every country covered in the report. Because the World Bank historically revised its dataset with gender dis-aggregations, current year data is comparable to previous year’s data.

On August 27, 2020, the World Bank announced it had discovered irregularities in previously reported Doing Business data that are inconsistent with the Doing Business methodology.  Initial reports indicate that the irregularities center on countries not in MCC’s candidate pool and that do not receive an MCC scorecard.  Visit MCC’s website at www.mcc.gov/db-fy21 to learn more about how MCC uses the Doing Business data and considerations for this year.

Trade Policy Indicator

• Trade-weighted average tariff rate;
• Non-tariff barriers (NTBs) including, but not limited to: import licenses; trade quotas; production subsidies; anti-dumping, countervailing, and safeguard measures; government procurement procedures; local content requirements; excessive marking and labeling requirements; export assistance; export taxes and tax concessions; and corruption in the customs service.

Relationship to Growth and Poverty Reduction

Source

Methodology

Trade Policy_i = (Tariff_max-Tariff_i)/(Tariff_max-Tariff_min) - NTB_i

Trade Policy_i represents the trade freedom in country i, Tariff_max and Tariff_min represent the upper and lower bounds (50 and zero percent respectively), and Tariff_i represents the weighted average tariff rate in country i. The result is multiplied by 100 to convert it to a percentage. If applicable to country i, an NTB penalty of 5, 10, 15, or 20 percentage points is then subtracted from the base score, depending on the pervasiveness of NTBs.

In general, the Heritage Foundation uses the most recent data from the World Trade Organization (WTO) on the Most Favored Nation (MFN) trade weighted average duty tariff (weighted by imports from the country’s trading partners) from 2013 or later as the tariff score. In the absence of MFN trade weighted average duty tariff data from 2013 or later in the WTO database, a country’s most recent MFN simple average duty tariff from the WTO from 2013 or later is used. In the absence of MFN simple average duty tariff from the WTO from 2013 or later, the most recent World Bank applied weighted Tariff rate, is used. In the very few cases where data on duties and customs revenues are not available, the authors rely on measures of international trade taxes. Data on tariffs and NTBs are obtained from the following sources: the World Bank’s World Development Indicators and Data on Trade and Import Barriers: Trends in Average Tariff Rates for Developing and Industrial Countries; the World Trade Organization’s Trade Policy Reviews; the Office of the U.S. Trade Representative’s National Trade Estimate Report on Foreign Trade Barriers, the World Bank’s Doing Business report, the U.S. Department of Commerce’s Country Commercial Guide, the Economist Intelligence Unit’s Country Reports, Country Profiles, and Country Commerce data, and “official government publications of each country.”

Inflation Indicator

Relationship to Growth and Poverty Reduction

Source

Methodology

In keeping with economic research findings, MCC considers countries with inflation below 15% to be passing this indicator.

MCC relies exclusively on the IMF’s WEO database for inflation data. WEO inflation data reflect annual percentage change averages for the year, not end-of-period data. FY21 data refer to the 2019 inflation rate. As better data become available, the IMF makes backward revisions to its historical data.

Fiscal Policy Indicator

Relationship to Growth and Poverty Reduction

Source

Methodology

MCC’s Fiscal Policy Score = (2017 + 2018 + 2019) / 3

MCC relies exclusively on the International Monetary Fund’s (IMF) World Economic Outlook (WEO) database for Fiscal Policy data. The fiscal policy indicator measures general government net lending/borrowing as a percent of GDP, averaged over a three year period. Net lending / borrowing is calculated as revenue minus total expenditure. The FY21 score averages the annual data of 2017, 2018 and 2019. As better data become available, the IMF makes backward revisions to its historical data.

The IMF published the net lending/borrowing series for the first time in the 2010 WEO database.

Gender in the Economy Indicator

Relationship to Growth and Poverty Reduction

• Mobility: These questions explore women’s legal access to physical mobility within a country. Studies show that legally sanctioned gender inequality has a significant negative impact on a country’s economic growth, because it prevents a large portion the population from fully participating in the economy, thus lowering the average ability of the workforce.[[Sarah Iqbal, Asif Islam, Rita Ramalho, Alena Sakhonchik. 2018. Unequal before the law: Measuring legal gender disparities across the world. Women's Studies International Forum 71, pages 29-45. Esteve-Volart, Berta. 2004 Gender Discrimination and Growth: Theory and Evidence from India. London School of Economics and Political Science.  Klasen, Stephan. 1999. Does gender inequality reduce growth and development? Evidence from cross-country regressions. Working Paper No. 7, Policy Research Report on Gender and Development. Washington, D.C.: The World Bank.  Dollar, David, and Roberta Gatti. 1999. Gender inequality, income, and growth: Are good times good for women? Working Paper No. 1, Policy Research Report on Gender and Development. Washington, D.C.: The World Bank.  Morrisson, Christian and Johannes Jütting. 2004. The impacts of social institutions on the economic role of women in developing countries. Working Paper No. 234. Paris: OECD Development Centre.  Morrison, Andrew, Dhushyanth Raju, and Nistha Sinha. 2007. Gender equality, poverty, and economic growth. Policy Research Working Paper No. 4349. Washington, D.C.: The World Bank   Doepke, Matthias, Michele Tertilt, and Alessandra Voena. 2011. The economics and politics of women’s rights. Working Paper.]]

• Workplace: These questions explore specific barriers to women’s opportunities in the workplace. Sexual harassment and violence in the workplace can undermine women’s economic empowerment by preventing employment and blocking access to other financial resources.[[World Bank. 2016. Women, Business, and the Law 2016: Getting to Equal. Washington, D.C.: World Bank.]] Research shows that when women have access to employment, investment in children’s health, nutrition, and education often increases, promoting higher levels of human capital.[[Kennedy, E. and P. Peters. 1992. Household food security and child nutrition: the interaction of income and gender of household head. World Development, Vol. 20, Issue 8, August 1992: 1077-1085.  Hoddinott, John, and Lawrence Haddad. 1995. “Does Female Income Share Influence Household Expenditures? Evidence From Cote D’Ivoire.” Oxford Bulletin of Economics & Statistics 57 (1): 77 – 96.  World Bank. 2001. Engendering Development through Gender Equality in Rights, Resources, and Voice. ISBN 0-19-521596-6.  Ranis, Gustav, Frances Stewart and Alejandro Ramirez. 2000. Economic growth and human development. World Development, 28(2): 197-219. Thomas, Duncan. 1990. Intra-household resource allocation: An inferential approach. The Journal of Human Resources, 25(4): 635-664.]]

• Pay: These questions look at barriers to women’s pay equality. Restrictions on working hours, sectors, and occupations limit the range of jobs that women can hold and this lead to occupational segregation and confinement of women to low-paying sectors and activities.[[World Bank. 2016. Women, Business, and the Law 2016: Getting to Equal. Washington, D.C.: World Bank.]] Many jobs prohibited for women are in highly paid industries, which can have implications for their earning potential. Further, when women are excluded from “male” jobs in the formal sector, an overcrowding can occur in the “female” informal job sector. This leads to a depression of wages for an otherwise productive group of workers.[[Blau, Francine. 1996. Where are We in the Economics of Gender? The Gender Pay Gap. NBER Working Paper 5664.  Ali, Khadija. 2000. Structural adjustment policies and women in the labour market: Urban working women in Pakistan. Third World Planning Review, 22(10).  Fontana, Marzia and Cristina Paciello. 2007. Labour Regulations and Anti-Discrimination Legislation: How Do They Influence Gender Equality in Employment and Pay? Sussex: Institute of Development Studies.]] Increasing women’s participation in the workforce alone is insufficient for increased economic growth.[[Klasen, S. 2018. The Impact of Gender Inequality on Economic Performance in Developing Countries.  Annual Review of Resource Economics. 10, 279-298.  Verick, S. 2018. Female labor force participation and development. IZA World of Labor. Mukherjee, P. and Mukhopadhyay, I. 2013. Impact of Gender Inequality on Economic Growth: A Study of Developing Countries. IOSR Journal Of Humanities and Social Science. 13(2) 61-69.]] Women need access to the same job and pay opportunities in order to have an impact on economic growth.[[Verick, S. 2018. Female labor force participation and development. IZA World of Labor. Wodon, Q. and De La Briere, B. 2018. Unrealized Potential: The High Cost of Gender Inequality in Earnings. The World Bank Group. Ferrant, G. and A., Kolev. 2016. Does gender discrimination in social institutions matter for longterm growth?: Cross-country evidence. OECD Development Centre Working Paper n°330.]]

• Marriage: These questions look at women’s equality in marriage including questions on domestic violence, and child marriage. Research shows the earnings of women in formal wage work who are exposed to severe partner violence are significantly lower than women who do not experience such violence.[[Klugman, J., Hanmer, L., Twigg, S., Hasan, T., McCleary-Sills, J., and Santamaria, J. 2014. Voice and Agency: Empowering Women and Girls for Shared Prosperity. Washington, D.C.: World Bank. World Bank. 2016. Women, Business, and the Law 2016: Getting to Equal. Washington, D.C.: World Bank.]] Similarly, due to the typically large age differences between girls younger than 18 and their husbands, child brides lack bargaining power in the marriage and have less say over their activities and choices, including education and economic activity.[[UNICEF. 2005. Early Marriage: A Harmful Traditional Practice a Statistical Exploration. New York, N.Y.: UNICEF. World Bank. 2016. Women, Business, and the Law 2016: Getting to Equal. Washington, D.C.: World Bank.]] Child marriage--through reduced decision-making power, greater likelihood of school dropout and illiteracy, lower labor force participation and earnings, and less control over productive household assets—severely impedes the economic opportunities of young women.[[Parsons, E., Kes A., Petroni, S., Sexton M., and Wodon Q. 2015. Economic Impacts of Child Marriage: A Review of the Literature. International Bank for Reconstruction and Development: Taylor & Francis. Duflo, E. 2011. Women’s Empowerment and Economic Development. Cambridge: National Bureau of Economic Research. Wodon, Q., Nguyen, M.C., and Tsimpo, C. 2016. Child Marriage, Education, and Agency in Uganda. Feminist Economics 22:1, 54-79]]

• Entrepreneurship: This area explores barriers to women’s ability to start businesses. When one gender receives fewer legal rights, both the country’s potential labor force and potential pool of entrepreneurs decreases. Women’s ability to start businesses and create jobs is essential to increase economic growth and alleviate poverty.[[Brush, C. Cooper, S. 2012. Female Entrepreneurship and Economic Development: An International Perspective. Entrepreneurship & Regional Development. 24(1-2) 1-6.  Bahmani-Oskooee M., Galindo MÁ., Méndez M.T. 2012. Women’s Entrepreneurship and Economic Policies. In: Galindo MA., Ribeiro D. (eds) Women’s Entrepreneurship and Economics. International Studies in Entrepreneurship, vol 1000. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-1293-9_3]]

• Assets: This area analyzes women’s ability to own, control, and inherit property. Owning and having an equal say in their use of property not only increases women’s financial security; it is also associated with their increased bargaining power within the household.[[World Bank. 2016. Women, Business, and the Law 2016: Getting to Equal. Washington, D.C.: World Bank.]]

• Legal: This area deals with women’s constitutional rights, rights to pass on citizenship, and rights in court. Women’s testimonial parity increases equality before the law and protects them in case of legal challenges to contracts and other matters of economic importance where they must give testimony to prove their case.[[Klerman, D. 2006. Legal Infrastructure, Judicial Independence, and Economic Development. Center in Law, Economics and Organization Research Paper Series and Legal Studies Research Paper Series, Research Paper No. C06-1, at 1, 4. Univ. S. Cal. Ctr. In Law Econ. & Org. World Bank. 2016. Women, Business, and the Law 2016: Getting to Equal. Washington, D.C.: World Bank.]] For many women in rural areas, customary and religious law can override constitutional protections for equality and legal rights.[[UN Women. 2013. Realizing Women’s Rights to Land and Other Productive Resources. United Nations Human Rights Office of the High Commissioner.  Daley, E., Flower, C., Miggiano, L., and Pallas, S. 2013. Women’s Land Rights and Gender Justice in Land Goverance.  International Land Coalition.  Yao, P. 2014 The right to inherit in customary law: an obstacle to women’s emancipation in Ivory Coast.  In Take Back the Land! The Social Function of Land and Housing, Resistance and Alternatives Mathivet, C. (ed.) Habitat International Coalition. Claassens, A. 2009. Who told them we want this Bill? The Traditional Courts Bill and rural women. Agenda: Empowering Women for Gender Equity 82 9-22. Claassens, A. 2005 Womene Customary Law and Discrimination: The Impact of the Communal Land Rights Act. Acta Juridica 42.]] Where these laws can override constitutional protections, all of the other benefits to economic growth and poverty reduction provided by other concepts covered in this indicator are nullified.[[UN Women. 2013. Realizing Women’s Rights to Land and Other Productive Resources. United Nations Human Rights Office of the High Commissioner.  Daley, E., Flower, C., Miggiano, L., and Pallas, S. 2013. Women’s Land Rights and Gender Justice in Land Goverance.  International Land Coalition.  Yao, P. 2014 The right to inherit in customary law: an obstacle to women’s emancipation in Ivory Coast.  In Take Back the Land! The Social Function of Land and Housing, Resistance and Alternatives Mathivet, C. (ed.) Habitat International Coalition. Claassens, A. 2009. Who told them we want this Bill? The Traditional Courts Bill and rural women. Agenda: Empowering Women for Gender Equity 82 9-22. Claassens, A. 2005 Womene Customary Law and Discrimination: The Impact of the Communal Land Rights Act. Acta Juridica 42.]]

Source

Indicator Institution Methodology

MCC Methodology

In 2020, WBL changed the wording, layout, and disaggregation of their data slightly. While MCC’s Gender in the Economy indicator and its underlying questions have not changed for FY21, there have been minor changes to the construction of the indicator to accommodate WBL’s changes. The exact construction of the Gender in the Economy indicator for FY21 is described below.

For FY21, MCC uses questions featured in both WBL’s main index and WBL’s additional data files, drawing from the most recent year for each data source (2019 for the additional data; 2020 for the main index.) Sub-indicators pulled from the additional data file are marked with a + below.

Sub-indicators marked with a * below were previously disaggregated between married and unmarried women. In FY21, WBL aggregated most of these data, and noted that restrictions on these sub-indicators usually apply only to married women (the additional data remains disaggregated). WBL published notes in the About tab on this reporting change, as well as two cases in the main data where the restrictions apply to both married and unmarried women. Countries receive ½ point for each of these if they apply only to married or unmarried women; 1 point if they apply to both married and unmarried women.

For other indicators, countries receive 1 point for each question that receives a “no” or “..” as the answer (unless otherwise noted below). Countries do not receive a point for “yes” or “N/A” answers (unless otherwise noted below).

Mobility:

1. Can a woman choose where to live in the same way as a man?*
2. Can a woman travel outside her home in the same way as a man?*
3. Can a woman travel outside the country in the same way as a man?*
4. Can a woman obtain a national identity card in the same way as a man?⁺*

5. Can a woman get a job in the same way as a man?*
6. Are there criminal penalties for sexual harassment in employment? (Note: MCC uses the disaggregated question focused only on criminal penalties, which can be found in the Workplace tab of the main data under “Criminal Penalties”)
7. Is there legislation that specifically addresses sexual harassment?⁺ (Note: MCC uses the sub-indicator from the additional data, not the similar question in the main data)

8. Can women work the same night hours as men?
9. Can women do the same jobs as men? (This question is a combination of two questions: Can women work in jobs deemed dangerous in the same way as men? and Are women able to work in the same industries as men? If a country has a restriction on either, this question is counted as a restriction.)

10. Can a woman be "head of household" or "head of family" in the same way as a man?*
11. Is there legislation specifically addressing domestic violence?
12. Does the legislation establish clear criminal penalties for domestic violence?⁺
13. Is there a specialized court or procedure for cases of domestic violence?⁺
14. What is the legal age of marriage for girls?⁺ (1 point for ages < 18 or no data)
15. Are there any exceptions to the legal age of marriage?⁺ (1 point for “yes”)
16. Is marriage under the legal age void or explicitly prohibited?⁺
17. Are there penalties in the law for authorizing or entering into child or early marriage?⁺
18. Do married couples jointly share legal responsibility for financially maintaining the family’s expenses?⁺

19. Can a woman sign a contract in the same way as a man?*
20. Can a woman register a business in the same way as a man?*
21. Can a woman open a bank account in the same way as a man?*

22. Do men and women have equal ownership rights to immovable property?*
23. Do sons and daughters have equal rights to inherit assets from their parents?
24. Do female and male surviving spouses have equal rights to inherit assets?
25. Does the law grant spouses equal administrative authority over assets during marriage?
26. Does the law provide for the valuation of nonmonetary contributions?*

27. Can a woman legally confer citizenship to her children in the same way as a man?⁺
28. Does a woman’s testimony carry the same evidentiary weight in court as a man's in all types of cases?⁺
29. If customary law is recognized as a valid source of law under the constitution, is it invalid if it violates constitutional provisions on nondiscrimination or equality?⁺

In FY19, MCC implemented a revised and expanded Gender in the Economy indicator. Due to the change in methodology, FY19 scores are not comparable to previous year’s scores.

Notes

Note on Calculating Medians

Open Data