A Brookings Institution Press and the Center for Global Development publication The plight of the poorest around the world has been pushed to the forefront of America's international agenda for the first time in many years by the war on terrorism and the formidable challenges presented by the HIV/AIDS pandemic. In March 2002, President Bush announced the creation of the Millennium Challenge Account (MCA). This bilateral development fund represents an increase of $5 billion per year over current assistance levels and establishes of a new agency to promote growth in reform-oriented developing countries. Amounting to a doubling of U.S. bilateral development aid—the largest increase in decades—the MCA offers a critical chance to deliberately shape the face that the United States presents to people in poor nations around the world. This book makes concrete recommendations on crafting a new blueprint for distributing and delivering aid to make the MCA an effective tool, not only in its own right, but also in transforming U.S. foreign aid and strengthening international aid cooperation more generally. The book tackles head on the tension between foreign policy and development goals that chronically afflicts U.S. foreign assistance; the danger of being dismissed as one more instance of the United States going it alone instead of buttressing international cooperation; and the risk of exacerbating confusion among the myriad overlapping U.S. policies, agencies, and programs targeted at developing nations, particularly USAID. In doing so, The Other War draws important lessons from new international development initiatives, such as the Global Fund to Fight AIDS, TB, and Malaria, the mixed record of previous U.S. aid efforts, trends in the U.S. budget for foreign assistance, the agencies currently involved in administering U.S. development policy, and the importance of the relationship between Congress and the executive branch in determining aid outcomes. The MCA holds the promise of substantially increasing U.S. development assistance and piolicy, and the importance of the relationship between Congress and the executive branch in determining aid outcomes. The MCA holds the promise of substantially increasing U.S. development assistance and pioneering a new era in aid, but the authors caution against creating yet another example of wasted aid that could undermine political support for foreign assistance for decades to come.

The Millennium Challenge Corporation (MCC), created a decade ago, was intended to take a unique approach to the development and foreign aid. As designed, the MCC provides development assistance for clearly defined economic objectives in full partnership with a developing country. MCC compacts are earned, not given. With a set of clear indicators that emphasize democratic governance and economic freedoms that determine selectivity, the MCC works with successful countries committed to establishing appropriate enabling environments in which entrepreneurship and economic growth can thrive. Further, MCC is unique in that this process is strongly driven by data and transparency. The MCC is working to reduce poverty in three ways: first, by incentivizing countries to make meaningful reforms, second, by funding projects with tangible outcomes and real impact, and third, by focusing on systemic change that will outlive MCC's engagement.

A Brookings Institution Press and the Center for Global Development publication The plight of the poorest around the world has been pushed to the forefront of America's international agenda for the first time in many years by the war on terrorism and the formidable challenges presented by the HIV/AIDS pandemic. In March 2002, President Bush announced the creation of the Millennium Challenge Account (MCA). This bilateral development fund represents an increase of $5 billion per year over current assistance levels and establishes of a new agency to promote growth in reform-oriented developing countries. Amounting to a doubling of U.S. bilateral development aid—the largest increase in decades—the MCA offers a critical chance to deliberately shape the face that the United States presents to people in poor nations around the world. This book makes concrete recommendations on crafting a new blueprint for distributing and delivering aid to make the MCA an effective tool, not only in its own right, but also in transforming U.S. foreign aid and strengthening international aid cooperation more generally. The book tackles head on the tension between foreign policy and development goals that chronically afflicts U.S. foreign assistance; the danger of being dismissed as one more instance of the United States going it alone instead of buttressing international cooperation; and the risk of exacerbating confusion among the myriad overlapping U.S. policies, agencies, and programs targeted at developing nations, particularly USAID. In doing so, The Other War draws important lessons from new international development initiatives, such as the Global Fund to Fight AIDS, TB, and Malaria, the mixed record of previous U.S. aid efforts, trends in the U.S. budget for foreign assistance, the agencies currently involved in administering U.S. development policy, and the importance of the relationship between Congress and the executive branch in determining aid outcomes. The MCA holds the promise of substantially increasing U.S. development assistance and piolicy, and the importance of the relationship between Congress and the executive branch in determining aid outcomes. The MCA holds the promise of substantially increasing U.S. development assistance and pioneering a new era in aid, but the authors caution against creating yet another example of wasted aid that could undermine political support for foreign assistance for decades to come.

On March 14, 2002, Pres. Bush outlined a proposal for a major new U.S. foreign aid initiative. The Millennium Challenge Corp. (MCC) provides assistance through a competitive selection process to developing nations that are pursuing political and economic reforms in three areas: ruling justly, investing in people, and fostering economic freedom. The initial plan had been to fund the MCC annually at $5 billion by FY 2006, but this figure has never been reached. Contents of this report: (1) Most Recent Developments; (2) Overview; (3) Background; (4) Implementation; (5) Select Issues: Funding; Authorizing Legislation and Reform; Compact Size; Speed of Implementation; Sectors; Impact; Changing Costs; Role of USAID.

Reviews key issues in the debate about the effectiveness of development assistance, including the objectives of foreign aid, the process for selecting countries to receive aid, and how it should be delivered. It applies these lessons to President Bush's proposed Millennium Challenge Account.