Nina Easton describes in the latest Fortune magazine a program that appears better than most, the Millennium Challenge Corporation:
Since its founding in 2004 the agency, which enjoys bipartisan support, has committed some $8 billion to projects in developing countries such as the Philippines, Georgia, and El Salvador.
Some of you are surely rolling your eyes at the thought of more American dollars flowing into foreign lands — taxpayers already provide some $34 billion a year in economic aid through agencies such as USAID. But the MCC program is international aid that capitalists can embrace: The agency’s founding principle is that economic growth is the best antidote to poverty, and so while some money is funneled to schools and hospitals, MCC’s biggest grants, or “compacts,” are aimed at kick-starting private enterprise. In Ghana, for example, the MCC money has been used to train 65,000 farmers, build storage facilities, and pave gutted dirt roads so that they can get fresh produce to markets.
MCC itself takes a businesslike approach to its disbursements. Countries that apply for funds must meet a rigorous checklist. An MCC grant isn’t a blank check — and unlike other foreign aid it is designed to end. “My goal is to replace our money with private sector money,” says Daniel Yohannes, an Ethiopian-born banker from Colorado who was tapped by President Obama in 2009 to run the agency. When I visited Ghana, a digital clock in the local agency office was counting down the days till the end of its five-year compact. After that, it’s pencils down. If Ghana wants more money, it must compete against other countries with a new proposal addressing a new industrial sector. No country has yet received a second compact, though a handful — including Ghana — are in the running.
In contrast to most other foreign-aid programs, MCC grants come with tough strings attached: Only democratic countries with a commitment to economic freedom can compete for the money. Fall down on that and you’re booted — as Nicaragua learned in 2008, when suppressing political opposition in local elections cost the country a $62 million grant. When the Malawi government used violence to quell demonstrators, MCC threatened to halt its $350 million grant.
