ABSTRACT
Many bilateral and multilateral donors in recent years have imposed discipline on their aid programs by holding developing countries accountable. Some donors 1 now require that developing countries meet standards and attain goals before they become eligible for assistance or to determine whether assistance will be continued. Donors monitor progress in spending by or for developing countries to ensure that goals are met and projects are on track. Once completed, aid projects and programs are evaluated to assess whether they yielded intended impacts. In spite of attempts to hold developing nations accountable, many aid recipients are chronically plagued by war, civil war, revolution, uprisings, natural disasters, pandemics, and much more. Even the most brutal dictatorships—for example, North Korea—receive aid. Neither donors nor recipients can control much of what happens in the third world, although control is a prerequisite for good performance. But bilateral and multilateral donors are increasingly holding aid agencies accountable for performance in the same way that agencies engaged in domestic work are. If donor agencies make bad investment decisions or are poorly managed, they, along with developing countries, may find themselves in trouble—reduced budgets, redefined or circumscribed missions, or increased oversight. Agencies may not have control over developing countries, but they do have control over their own operations, more or less. The Millennium Challenge Act (MCA) of 2003 is an attempt by the federal government to learn from past mistakes in foreign aid allocation and management of aid agencies. This chapter looks closely at the use of performance, capacity assessment, capacity building, and monitoring as the foundations of the MCA program (Part I). Then it goes on to assess MCC’s performance as a government agency (Part II). Because MCC had only been in operation for three years as of this writing, it had yet to develop a track record, but much about performance-based management can be learned.
