April 13, 2004

The Millennium Challenge Account: Property Rights and Entrepreneurship as the Engine of Development

  • Paul Dragos Aligica

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
  • Peter J. Boettke

    Director, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
  • Brian Hooks

Key materials
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The Millennium Challenge Account (MCA) offers much promise for a new direction in international assistance to less developed countries.  With a focus on results, the MCA promises to help those countries that have demonstrated a commitment to Economic Freedom, Ruling Justly, and Investing in People, along the path to prosperity.

The success of this new venture depends on the Millennium Challenge Corporation taking up the charge from the President and Congress to embrace the new way of thinking that motivated the legislation – one that recognizes the importance of locally driven institutional reforms.

For this promise to become reality however, three important changes need to be made to the Criteria and Methodology for Determining the Eligibility of Candidate Countries for Millennium Challenge Account Assistance in FY 2004 submitted to Congress on March 5, 2004.

The indicators by which countries will be evaluated for assistance must include due consideration of a country’s commitment to:

    * A productive Entrepreneurial Environment,
    * Clearly defined and enforced Property Rights, and
    * The Political Capacity to Sustain Reforms.

These concepts are clearly intended by the authorizing legislation and are crucial components for effective implementation of the MCA.  However, they are noticeably absent from the current Criteria and Methodology.

The importance of these changes cannot be overstated given the potential influence of the MCA. Not only will countries deemed eligible this year receive funds, but these standards will profoundly affect the path of domestic reforms in candidate countries that do not qualify, as they prepare to become eligible in the future.

The Millennium Challenge Account: Property Rights and Entrepreneurship as the Engine of Development is a comment submitted by the Mercatus Center at George Mason University’s Global Prosperity Initiative in the public interest, with the hope that the recommendations it contains will improve the outcome of this momentous policy action.