The purpose of development—what’s needed most right now—is creating the conditions where assistance is no longer needed. So we will seek partners who want to build their own capacity to provide for their people. We will seek development that is sustainable. And building in part on the lessons of the Millennium Challenge Corporation… we will invest in the capacity of countries that are proving their commitment to development.
President of the United States
Announcing the Presidential Policy Directive on Global Development
September 22, 2010
MCC and other U.S. Government agencies have joined together to coordinate Partnership for Growth (PFG), a partnership between the United States and a select group of high-performing developing countries to accelerate and sustain broad-based economic growth.
PFG puts into practice the principles of President Obama’s September 2010 Presidential Policy Directive on Global Development. PFG, like MCC, involves rigorous joint analysis of selected countries’ constraints to economic growth and requires high-level mutual accountability for program implementation. Participating countries develop joint country action plans to address identified constraints, concentrating the strength of multiple U.S. Government agencies to support common priorities.
A defining characteristic of PFG is the active participation and coordination of more than a dozen U.S. Government agencies, including MCC, the State Department, and the United States Agency for International Development (USAID). In the context of PFG, these agencies are purposefully identifying opportunities to complement and leverage each other’s work toward achieving common PFG goals.
Selection and Core Principles
In fall 2010, the administration selected El Salvador, Ghana, Philippines, and Tanzania to become the first set of PFG countries. Selection criteria included country performance on MCC’s compact eligibility criteria, track records of partnering with the United States, and potential for continued economic growth.
Core PFG principles are similar to MCC principles, and include:
- Country ownership and partnership
- High-level political leadership and commitment to development progress
- Rigorous, evidence-based joint analysis on constraints to growth
- Joint decision-making on where to focus and prioritize resources
- Use of a broad range of tools, including catalytic policy change, institutional reform, aid, diplomatic engagement, and other ‘non-assistance’ policy tools, and
- Transparency, mutual accountability and fact-based monitoring and evaluation
The PFG process consists of several steps, including:
- Agreement to initiate PFG with select partner countries
- Joint analysis of constraints to growth, followed by broad consultation and dialogue on findings;
- Development of joint country action plans (JCAPs) that outline potential tools, reforms, technical assistance and resources that can be applied over the next five years to address highest-priority constraints to growth
- Implementation of priority initiatives, and
- Rigorous monitoring and evaluation
One of PFG’s signature objectives is to use a broad range of tools to engage governments, the private sector and civil society in a collaborative effort to unlock new sources of investment, including domestic resources and foreign direct investment. By improving coordination, leveraging private investment, and focusing political commitment, Partnership for Growth will enable partners to achieve better development results.
Moving forward, the U.S. Government is working with PFG partner countries to finalize and implement five-year Joint Country Action Plans (JCAPs) to address binding constraints to economic growth. In all four countries, the United States and partner countries will jointly implement the plans.
MCC’s model, its operational approach, and its technical expertise served as building blocks to Partnership for Growth. MCC guided an interagency discussion on evidence-based decision-making that was used to select country partners and plan country programs.
MCC’s independent, transparent eligibility criteria were the starting point for selecting PFG partner countries. Following selection, MCC’s diagnostic tool to identify key constraints to economic growth in its partner countries was used to establish program priorities and develop growth-oriented strategies with PFG partner countries. The tool has provided a common analytic framework for all U.S. Government agencies participating in PFG, resulting in a more focused United States engagement with PFG partner countries. Based on its experience with rigorous monitoring and evaluation (M&E) of development investments, MCC is contributing to development of a PFG M&E approach.
MCC is implementing compact programs in all four PFG countries. MCC’s compacts with Tanzania and the Philippines both targeted specific sectors that have been identified as priorities under the PFG constraints analyses. This targeted approach to sector development, including relevant policy and institutional reforms, provides PFG a basis upon which to build and leverage existing MCC investments, and offers an opportunity for MCC’s experience to directly contribute to PFG success in these countries.
In 2014, El Salvador began implementation of an investment compact, which builds on its previous compact and is aimed at improving the investment climate by streamlining regulations and building capacity to develop and implement public-private partnerships to catalyze private investment and spur economic growth. Ghana is also developing a power compact to support the transformation of Ghana’s power sector and stimulate private investment. . The constraints analyses conducted for PFG are informing the compact development process in both countries. While MCC compacts will still be independent agreements between MCC and partner countries, MCC expects that PFG will give MCC and its partner governments the opportunity to leverage additional USG resources to complement and enhance MCC investments—including support for catalytic policy and institutional reforms, diplomatic engagement, and mobilization of private sector investments.