MCC’S Place in the Development Community
In 2004, a bipartisan group in Congress created MCC to promote economic growth and eliminate extreme poverty. MCC’s business model spurs growth by making transformational investments in key economic building blocks — only using grants. MCC’s founders designed the agency to embody the aid effectiveness principles of country ownership, focus on results, inclusive partnerships, transparency, and mutual accountability. Over the last 20 years, MCC has evolved from a foreign aid experiment into an example of excellence. The MCC model now exemplifies the international consensus on development cooperation effectiveness and has bolstered U.S. global leadership.
MCC has supported essential building blocks of economic growth in nearly 50 countries by investing more than $16 billion in grant financing, which is expected to benefit almost 400 million people. These large-scale investments have been transformative across a range of sectors including transport, energy, water and sanitation, access to finance, and workforce skills. The work has resulted in over 3,800 kilometers of roads, 113 megawatts of new power generation, 490,000 educated students, and 450,000 trained farmers, among many other accomplishments.
Across administrations of both parties, MCC has played a key role in the U.S. Government’s foreign policy goals, while supporting the development priorities of partner countries. With cost-effective and transparent projects, MCC’s evidence-based approach ensures American tax-payer dollars are well spent in countries that share democratic values.
Purpose
This strategic capstone is the culmination of MCC’s yearlong 20th birthday celebration, MCC@20. It is an opportunity to look back at significant accomplishments over the agency’s first two decades, reflect on the agency’s history, and present a strategic vision for the future. This document assesses the changing global development landscape and builds on lessons learned so that MCC is best equipped to anticipate future challenges and solutions.
Trends in the Global Development Landscape
MCC is designed to meet the moment. The MCC model allows the agency to adapt and evolve in response to partner country needs, and there are clear global trends that MCC anticipates going forward:
- Persistent Global Poverty: After a period of unprecedented progress, lower-income countries are again falling behind. Global poverty reduction had already slowed then reversed during the pandemic. MCC remains committed to expanding opportunities for structurally disadvantaged groups.
- Democratic Backsliding: More than half the global population now lives under authoritarian rule. MCC will continue to incentivize countries to undertake key reforms and partner with well-governed democracies to deliver democratic dividends for their people.
- Environmental Change: Resilient economies sustain growth in the face of shocks and stresses associated with changing weather patterns. MCC will continue to integrate these considerations into program development and implementation.
- Technology and Digitalization: The digital economy is growing at twice the rate of the global economy. In MCC partner countries, digitalization is shaping the nature of economic growth and reinforcing economic divides. In response to growing demand, MCC is investing more in the areas of digital infrastructure, the enabling environment, and digital skills.
- Rapid Urbanization: The UN projects that the world’s population will be more than two-thirds urban by 2050. MCC designs its programs to balance the needs of both urban and rural populations.
- Mounting Debt: High levels of debt and elevated interest rates continue to strain public finances. MCC helps partner countries maintain sustainable debt levels by only providing grants, not loans.
The MCC@20 Vision
MCC’s approach will remain responsive to country needs and trends in the global development landscape. To do so, MCC must reinforce its model, broaden its investment approach, strengthen systems and institutions, and equip itself with the tools to meet the needs of the future.
Priority 1: Reinforce MCC’s Model
The foundational aspects of what makes MCC’s model highly effective will not change. Furthermore, MCC recommits to ensuring analytical rigor, country ownership, and transparency throughout all stages of the program lifecycle.
- Uphold country selectivity. MCC will continue to employ its data-driven and rules-based approach to country selection. MCC also takes seriously the importance of countries demonstrating an ongoing commitment to MCC’s eligibility criteria throughout the duration of its partnerships.
- Elevate country ownership. Country ownership at MCC means that partner country counterparts lead the program development process from start to finish. MCC requires broad-based consultations with a wide range of stakeholders, including women and excluded groups.
- Strengthen transparency and accountability. MCC’s evidence-based approach is built on the principles of accountability, transparency, and learning. MCC will strengthen its analytical tools, rigorously measure results, hold itself accountable, transparently report data and evaluations, and learn from evidence to improve future programs.
Priority 2: Broaden MCC’s Investment Approach
MCC will continue to support country-led growth strategies while testing new approaches that could widen MCC’s scope and deepen its impact.
- Promote regional integration. MCC examines the constraints to regional integration and trade when developing regional compacts. These investments address challenges that constrain the flow of goods and services and generate benefits beyond the partner country’s borders.
- Reform and diversify MCC’s pipeline to extend MCC’s impact. MCC seeks to broaden its range of partner countries but will not change its focus on country selectivity or poverty reduction.
- “Threshold after compact” authority. MCC regained the authority to reengage with prior compact partner countries who experienced democratic backsliding but are now on a trajectory of reform.
Priority 3: Strengthening Systems and Institutions
Over the last 20 years MCC has learned that it must continue work to strengthen partner countries’ systems and institutions.
- Support democracies to deliver. MCC only partners with countries committed to the core principles of democratic governance — including the protection of human rights and fundamental freedoms.
- Focus on policy and institutional reform. Over half of MCC programs include reform activities and nearly three quarters support Sustainable Development Goal 16 on Peace, Justice, and Institutions.
- Systematically integrate resilience. In response to growing demand from partner countries, MCC will continue to integrate resilience into its programs to help partner countries cope with extreme weather events, changing weather patterns, and other environment-related constraints to growth.
- Strengthen inclusion and gender equity. Since its inception, MCC has worked to elevate inclusion and gender issues, target reforms addressing gender-based discrimination, and ensure equal access to economic benefits. MCC remains committed to advancing gender equity with its partner countries.
- Prepare the workforce of the future. MCC is developing innovative education and training programs to meet 21st century workforce needs.
- Catalyze private investments. MCC actively seeks opportunities to leverage its grant financing with entrepreneurs and the business community to catalyze investments by the private sector.
- Leverage partnerships. MCC enters into partnerships with civil society, governments, and businesses to access cutting-edge research, knowledge, data, funding, networks, and expertise.
- Enhance digital skills and the use of technology. MCC is increasingly focused on building out its digital expertise and working to take advantage of digital opportunities with partner countries.
Priority 4. Equip MCC with the Tools to Meet the Needs of the Future
To prepare for the challenges that lie ahead, MCC will advance internal reforms while equipping its workforce for future needs.
- Accelerate compact development. MCC has streamlined the allocation of start-up funding, formed compact development teams quicker, and bolstered in-country recruitment and procurement capacity. These reforms have enabled MCC to move more quickly to develop critical economic infrastructure.
- Develop and evolve innovative tools. MCC constantly adopts new tools and refines its existing tools to improve its operations, including methods to better incorporate gender and social inclusion and environmental impacts. MCC will continue to innovate in response to the latest evidence available.
- Invest in people. MCC has invested in its human capital by making compensation more competitive, ensuring pay equity, increasing staff to balance workloads, and improving work-life balance.
- Improve organizational health. MCC values a work environment where employees can create, innovate, and thrive. MCC has established a senior-level position focused on workplace culture, bolstered equal employment opportunity and anti-harassment capacity, and built a new labor relations function.
Moving Forward
Though it has already reached proof of concept, MCC must push the envelope and continue to evolve. Building on lessons learned, the MCC@20 policy framework is a vision for the agency’s next chapter. As MCC looks ahead, it is setting a path forward for the agency. The global development landscape will continue to change, and MCC will continue to adapt to deliver even greater development impact.