LONG-TERM TRENDS IN U.S. FOREIGN AID GIVING: WHAT IT MEANS FOR THE MILLENNIUM CHALLENGE CORPORATION
LONG-TERM TRENDS IN U.S. FOREIGN AID GIVING: WHAT IT MEANS FOR THE MILLENNIUM CHALLENGE CORPORATION Catherine Goode, B.A. Thesis Advisor: Michael Clemens, PhD. ABSTRACT The Millennium Challenge Account (MCA) is a new vehicle of U.S. foreign aid delivery that ostensibly allocates aid based on explicit national criteria linked to promoting growth and human development. These 16 criteria are divided into three broad categories: ruling justly, economic freedom and investing in people. While the process appears straightforward, MCA administrators have exercised discretionary powers on more than one occasion, either accepting countries which do not meet their explicit qualification requirements, or excluding many who do qualify. This paper tests the hypothesis that implicit strategic criteria that have traditionally guided aid allocation including natural resources, strategic objectives and commercial interests -- continue to influence the U.S. decision to extend MCA eligibility. It employs both quantitative analysis of U.S. aid disbursements covering the time period of 1970-1999 and qualitative analysis of very recent MCA decisions. This study accepts the hypothesis for several variables tested. Findings indicate that the some of the implicit criteria military allies have positively impacted aid; additionally, MCA priorities, including rule of law negatively impacted aid. Unexpectedly, natural resource endowment negatively impacted aid. The findings provide justification for the policy recommendation that, first, for countries that aspire to be MCC-eligible; the MCC does make exceptions and countries should therefore consider eligibility negotiable. Second, for the MCC, careful consideration should be given to adding two new explicit criteria. The first should be a non-negotiable human rights indicator. The second should be a natural resources indicator.
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