1

2

MCC’s use of Governance Indicators

• Consumers of 3rd party indicators• Aid allocation for 2 programs

– Compact– Threshold

• Competition: rule-driven, publicly available data• Process:

– 2 income categories– 17 indicators, 3 categories– Indicator Ccore > median pass– Pass > ½ indicators in each category + corruption

3

Indicators: 3 Categories

Ruling Justly Economic Freedom Investing in People

Civil Liberties Business Start-Up Public Expenditure on Health as percentage of GDP

Political Rights Inflation Immunization rates: DPT3 & Measles

Voice & Accountability Fiscal Policy Public Expenditure on Primary Education as percentage of GDP

Government Effectiveness Trade Policy Girls Primary Education Completion Rate

Rule of Law Regulatory Quality Natural Resource Management

Control of Corruption Land Rights and Access

4

Scorecard

5

Indicator Category: Ruling Justly

Kenya FY08

6

Where Does MCC work?

• 25 countries eligible for Compacts. 16 Compacts signed; 9 in the pipeline.

• About $5.5 billion committed to date for Compacts.

• 21 countries eligible for Threshold Program 18 Threshold programs approved to date for

roughly $400 million.

7

MCA Compact Countries

AfricaAfrica

BeninBenin MaliMali

Burkina Faso Burkina Faso MalawiMalawi

Cape VerdeCape Verde MoroccoMorocco

Ghana Ghana MozambiqueMozambique

LesothoLesotho NamibiaNamibia

MadagascarMadagascar SenegalSenegal

TanzaniaTanzania

Latin AmericaLatin America EurasiaEurasia

BoliviaBolivia ArmeniaArmeniaEl SalvadorEl Salvador East Timor East TimorHondurasHonduras GeorgiaGeorgiaNicaraguaNicaragua Jordan Jordan

MoldovaMoldova MongoliaMongolia

PhilippinesPhilippines Ukraine Ukraine VanuatuVanuatu

Countries in blue have signed or MCC Board-approved CompactsCountries in blue have signed or MCC Board-approved Compacts

8

Strengths

• Transparent system

• Distinguish top/bottom performers

• Attention to policy performance…Governance matters

– Policy dialogue

– Incentives

9

Challenges

• Lags

• New data sources

• Rank change vs. performance change

• Fine distinctions

10

LIC Corruption Rankings

PR

Y

ZM

BID

N

UG

AP

HL

GU

YM

RT

YE

M

ST

P

RW

A

KE

NN

ER

TM

P

BE

NH

ND

NIC

MW

I

MD

A

BO

L

MO

ZM

LI

MN

G

BF

AS

EN

TZ

AG

EO

MD

G

LS

O

VU

T

SO

MP

RK

MM

RA

FGH

TIZA

RIR

QZW

EB

GD

NG

ATK

MS

LEK

HM

TCD

CIV

PN

GS

DN

KG

ZB

DI

LAO

UZB

TGO

GN

B

GIN

CM

RP

AK

TJK

LBR

NP

L

DJI

VN

MS

YR

GM

B

CO

M

ETH

EG

Y

LKA

SLB

CU

B

KIR

BTN

GH

AIND

ER

I

CA

FC

OG

-1.5

-1

-0.5

0

0.5

1

1.5

2

0 10 20 30 40 50 60 70 80

BLUE -- Compact Eligible GREEN -- Threshold

11

Challenges

• Short term tracking

• Goal displacement

• Credibility