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...Challenge Account (MCA) to promote growth in reform-oriented developing countries. Nations receiving the aid would have to meet eligibility criteria involving good government, economic freedom, and investment in health and education.
The MCA presents an enticing opportunity to transform U.S. development policy toward the world's poorest countries. With allocations based solely on economic performance and governance, the MCA would be the closest to a development purist's blueprint for aid that the United States has ever attempted. Its clear criteria and substantial sums of money offered on enticing terms could create incentives for governments to improve economic policies and governance while helping strong performers sustain growth and improve investment climates. It could also force greater clarity of roles and missions among the many U.S. programs for developing nations. But the proposal is not without risk. The administration must take care not to add to the confusion of overlapping U.S. foreign assistance agencies. It must offer a clear-eyed vision of how the MCA fits alongside existing U.S. programs for developing nations, especially the Agency for International Development (AID), the 7,000-strong agency established in 1961 to promote "sustainable development." It must also squarely address the tension between foreign policy and development goals that chronically afflicts U.S. foreign assistance.
Serving Two Masters
The tension between development and foreign policy is particularly acute because the MCA is being crafted at a time when national security has returned to the nation's consciousness to an extent not seen since the Cold War. Indeed, the MCA was announced in the context of the war against terrorism, just months after the tragedy of September 11. President Bush explicitly cited the antiterrorism rationale in announcing the MCA: "We fight against poverty because hope is an answer to terror."
More often than not, U.S. foreign assistance programs have failed because development and foreign policy objectives have pulled in different directions. It makes little sense to expect aid dollars that are allocated according to geopolitical criteria to promote growth and development. Aid allocated according to the logic...
NOTE: All illustrations and photos
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More articles from Brookings Review
Information technology & development: beyond "either/or"., March 22, 2003
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