Creating a Better Candidate Pool for the Millennium Challenge Corporation

The Millennium Challenge Corporation (MCC) was established to provide large-scale grant funding to poor, well-governed countries to support their efforts to reduce poverty and generate economic growth. However, the statutory definition of which countries are “poor” for the purposes of MCC candidacy is inadequate. Based solely on GNI per capita with a rigid graduation threshold, it does not portray a clear picture of broad-based well-being in a country. MCC should explore, with support from Congress, ways to create a candidate pool that better reflects the significant poverty and development need in potential partner countries. One particularly promising measure is median household income or consumption, which better covers typical material well-being. Using a new, comprehensive country-level dataset of median consumption/income, the authors explore the merits and limitations of such a measure and suggest how it might be applied as an additional determinant of MCC candidacy.