The MCC does not replace the U.S. Agency for International Development (USAID) or other U.S. government assistance programs. On the contrary, agencies in countries receiving both MCC and USAID funds will work together to provide a broad portfolio of development assistance. To determine which eligible countries will be selected for MCC funding, each country will be measured using 22 independent policy indicators ranging from civil liberties and anti-corruption to vaccination and inflation rates. A scoreboard is established to rank the candidate`s political performance relative to other countries in his or her peer income group. Successful countries are then invited to submit funding proposals. The MCC offers two types of monetary assistance, compact agreements and threshold agreements. A „compact“ is an important five-year grant that the MCC grants to an eligible country to fund specific poverty reduction and economic growth-boosting programs. A „threshold“ is an agreement between the United States and a developing country, which shows a sound commitment to reform and a high probability of success, but does not yet meet all 22 policy indicators. The thresholds are smaller subsidies that are granted in the hope of helping countries become eligible for compact agreements in the future.
Since 2004, MCC has approved more than $9.8 billion in compact and emerging programs. This gap in foreign aid indicates that a simple increase in aid will not necessarily lead to more development. My conclusion is indeed exactly the opposite: if aid does not carefully avoid reinforcing erroneous policies, supporting poor governance, weakening African institutions and creating dependency, it will actually buy less development. I am not alone in having this conclusion; New York University economics professor William Easterly and former World Bank adviser Dambisa Moyo have also charged foreign aid. (A review of Moyos Dead Aid is available in the 2009 summer issue of Stanford`s Social Innovation Review.) As Rwandan President Paul Kagame said in this year`s Financial Times: „The cycle of aid and poverty is permanent: as long as poor countries focus on aid, they will not work to improve their economies.“ Ghana is implementing a bilateral pact and is part of the group of West African countries working towards a regional pact. However, as has already been mentioned, it is unlikely to be reissued in order to continue to participate in the regional group, due to the government`s decision not to fulfil a condition related to the bilateral pact. The MCC selection process is a data-based, transparent method of determining where the Agency is investing to reduce poverty and stimulate economic growth.