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2 MCCs use of Governance Indicators Consumers of 3 rd 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 JustlyEconomic FreedomInvesting in People Civil LibertiesBusiness Start-UpPublic Expenditure on Health as percentage of GDP Political RightsInflationImmunization rates: DPT3 & Measles Voice & AccountabilityFiscal PolicyPublic Expenditure on Primary Education as percentage of GDP Government EffectivenessTrade PolicyGirls Primary Education Completion Rate Rule of LawRegulatory QualityNatural Resource Management Control of CorruptionLand 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 Africa BeninMali Burkina Faso Malawi Cape VerdeMorocco Ghana Mozambique Lesotho Namibia Madagascar Senegal Tanzania Latin America Eurasia Bolivia Armenia El Salvador East Timor Honduras Georgia Nicaragua Jordan Moldova Moldova Mongolia Mongolia Philippines Ukraine Philippines Ukraine Vanuatu Vanuatu Countries 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

11 Challenges Short term tracking Goal displacement Credibility