Compact Development Guidance: Compact Development Guidance | February 2017
Chapter 7: Guidelines for Developing Concept Notes
Following its analysis of root causes, a selected country identifies and selects from among them one or more critical issues that drive or contribute most heavily to the specific binding constraint. These critical issues are core problems. For each core problem that it identifies and wishes to address through a compact program, the selected country’s Compact Development Team will develop and submit a short, written proposal, or Concept Note. Each Concept Note should explain the core problem and its root causes, offer a broad outline or strategic approach designed to resolve or address it, and define the primary objective.
These aspects—problems, approaches and objectives—form concepts, the foundations upon which more detailed projects can later be proposed and developed. When agreement on these concepts is reached, then, both the selected country and MCC can confidently add staff and release other technical resources for the next stage of the compact development process, in which the agreed approaches will be developed into a set of specific activities and investments. The selected country will present these to MCC in detailed Project Proposals (as described in Chapter 9).
Taken together, Concept Notes create an opportunity for dialogue between the Compact Development Team and MCC about the purpose, direction, and scope of the proposed compact program well before substantial amounts of time, funding or other resources are invested. This dialogue should help focus the proposed compact program on the most critical issues or problems among those that the selected country has examined and proposed. It should also build agreement on the specific core problem(s) the most promising or viable approaches to address these problems, and the corresponding objective that these approaches aim to achieve.
The remainder of this chapter describes in more detail the rationale, required content, and process of review for Concept Notes.
A selected country’s Concept Notes serve a range of purposes in the compact development process. Among these purposes, each Concept Note should:
- Pinpoint a core problem that the selected country wants to resolve through a compact program, articulate it in a clear problem statement, explain how it relates to one (or more) of the binding constraints identified in the constraints analysis, and describe its extent and its impact on key populations;
- Explain the underlying root causes of the core problem and provide data and evidence that demonstrate a full understanding of their impact, importance and weight;
- Present a broad outline or strategic approach that the selected country expects to pursue in resolving the core problem;
- Identify the primary objective that selected country expects to achieve by addressing the core problem and articulate it in a clear objective statement;
- Offer a clear theory of change that explains the cause-and-effect process by which the strategic approach, if implemented, will address root causes and resolve the core problem; decrease costs, add value or increase incomes among targeted beneficiaries; and thereby contribute to MCC’s objectives of stimulating long-term sustainable economic growth and reducing poverty;
- Provide additional context on the selected country’s existing strategies, plans and policy and institutional reform goals to address the core problem, as well as the success or failure of any recent activities undertaken by the selected country’s government, international development agencies, or other organizations.
Selection of Concept Notes
A selected country need not develop concepts for each of the binding constraints identified in the constraints analysis. However, for those binding constraints that the selected country wishes to pursue, it should expect to identify a number of problems that contribute to the binding constraint through the analysis of root causes (as described in Chapter 6). MCC encourages the selected country to prioritize the one or two as core problems that contribute most heavily to the binding constraint and demonstrate the greatest potential for being resolved or addressed through a compact program. The selected country’s Compact Development Team should develop each of these high-priority core problems into a separate Concept Note for submission to MCC.
In cases where the constraints analysis identifies cross-cutting issues or where two or more of the binding constraints to economic growth are very closely intertwined, the selected country may also identify core problems that address more than one constraint simultaneously. These may also be developed into Concept Notes for submission to MCC.
Required content and sources of information
In developing Concept Notes, the selected country’s Compact Development Team should draw upon multiple sources of information to present evidence, form strong arguments and build a compelling logic. Sources of information may include detailed findings from the constraints analysis, which should contain a wealth of socioeconomic, microeconomic and macroeconomic data; the results of public consultations with government specialists, trade and business groups, civil society organizations and potential beneficiaries on the impact of binding constraints; the root cause workshops, in which a variety of stakeholders with particular knowledge of the key issues help the Compact Development Team analyze issues that underlie the binding constraints, develop detailed “problem trees” or other logical frameworks to represent those underlying issues, and identify where questions or data and information gaps remain; and other reports or analyses on relevant markets, sectors or industries that may be available.
In addition to these sources, the Compact Development Team is also encouraged to reach out to economic planning and development specialists, academics, researchers, sector specialists, private companies, consultants and international development agencies to collect data, reports, assessments and other information that will help shed light on similar experiences in other countries, lessons learned from prior efforts to address the problem, international best practices, and any other project work that is ongoing or planned for implementation in the near future.
These sources of information should allow the Compact Development Team to define a core problem that drives or contributes heavily to a particular binding constraint to economic growth, and to define a broad strategic approach that will address the root causes and resolve the core problem. The information should also allow the Compact Development Team to articulate a clear primary objective that it expects to achieve by resolving the core problem, including how the objective will stimulate economic growth and reduce poverty.
In drafting its Concept Notes, the Compact Development Team should take care to present the required information in the template for Concept Notes, in form and substance similar to the template attached below. Concept Notes should be written in a concise manner that focuses squarely on the argumentation, information and data that MCC requests without a substantial amount of additional information. To ensure that MCC is able to undertake its own review and assessment efficiently, each Concept Note should be between five (5) to ten (10) standard pages. If absolutely essential, a limited amount of supplemental information may be added to each Concept Note in the form of attachments or appendices.
To supplement this guidance, MCC can provide the selected country with helpful materials, such as a list of guiding questions and an example of a well-written Concept Note.
MCC review and assessment
As soon as a selected country submits its Concept Note(s), MCC will begin a detailed review and assessment to determine which proposed concepts should be further developed into detailed Project Proposals. The MCC country team will remain in close contact with the selected country’s Compact Development Team throughout this process, and MCC may request clarifications or supplemental information to ensure a common understanding and facilitate a full and accurate review.
MCC’s review and assessment will be based on the clarity, depth and coherence of the contents, as well as the likelihood that a project based on the concept will meet MCC’s criteria for investing MCC resources, commonly known as the “MCC Investment Criteria”. The MCC Investment Criteria require that each project:
- Aims to alleviate root causes of a binding constraint. MCC expects the compact programs it supports to reduce the most critical impediments to a selected country’s long-term economic growth, as identified in the constraints analysis. To encourage such a focus at this early stage, MCC will examine each Concept Note to ensure that it reflects a complete understanding of a binding constraint; identifies a core problem that is critical to resolving the binding constraint and specifies its root causes, as supported by data, evidence and economic development experience; outlines an approach that will comprehensively address root causes and thereby resolve the core problem; sets a reasonable primary objective; and presents a clear, logical theory of change that explains how resolving the core problem will achieve the objective and lead to long-term economic growth.
- Generates high economic returns: MCC expects each project it supports to generate economic benefits that significantly exceed its costs. To encourage projects that have a high likelihood of generating positive economic returns, MCC will examine each Concept Note to ensure that it identifies and explains potential benefit streams that are likely to reduce costs, add value or increase incomes; that are likely to be broadly shared; that can be measured; and that economic development experience suggests may outweigh costs. MCC does not expect detailed calculations of the cost-benefit ratio or the economic rate of return at this time.
- Allows full implementation within a five-year compact term: MCC’s compact programs are strictly limited to an implementation period of no more than five years. To prevent further work on concepts that are unlikely to meet this tight timeline, MCC will look closely at this early stage at the nature and complexity of the proposed concepts; the selected country’s implementation experience and management capacity; the quality of the existing institutional framework in the selected country; and lessons learned from international work in similar sectors, among other factors.
- Represents country ownership of both the problem and the solution(s): MCC believes that economic development assistance is most effective when it strengthens the relationship between a selected country’s government and its citizens, reflects the selected country’s own priorities, and augments the impact of other development projects and plans. To reinforce this belief, MCC will review the compact development process and examine each Concept Note to ensure that the proposed concepts reflect a commitment of political and economic resources from the selected country; incorporate timely, participatory and meaningful consultations with civil society and the private sector; link closely to the selected country’s poverty alleviation, economic development and sector investment plans; and take account of the experiences and plans of other international development partners.
- Complies with the MCC Environmental Guidelines and the MCC Gender Policy: MCC recognizes that economic growth and poverty alleviation can only be achieved when the natural environment is protected and the participation of women, the poor and disadvantaged social groups is ensured. In accordance with its Environmental Guidelines and Gender Policy, MCC will examine each Concept Note at this early stage to ensure that gender, social and environmental considerations have been fully taken into account, particularly with public consultations and the root cause analysis.
- Supports the long-term sustainability of results: MCC expects its compact programs to continue providing benefits to selected countries long after a five-year compact program comes to a close. To do so, compact programs must be designed and implemented for long-term sustainability. At this stage, MCC will examine each Concept Note for indications that problems can be addressed and solutions sustained over the long-term, with particular emphasis on the selected country’s willingness to address institutional, regulatory, legal and policy issues that may contribute to inefficiencies or reduce benefits.
In addition to these required criteria, MCC may also provide guidance on other criteria it will use in developing and assessing the proposed compact program in the next phases of compact development. That guidance may include encouragement to explore particular projects or design options that enhance opportunities for poverty alleviation, environmental benefits, private sector participation, or other aspects of the potential compact program in the next phase of the compact development process.
As a general rule, MCC will provide detailed, written feedback to the Compact Development Team within six to eight weeks after it receives a formal submission of the Concept Note(s). In its feedback, MCC will identify the core problems, primary objectives and strategic approaches or frameworks that, in MCC’s assessment, represent the greatest opportunities for further development. MCC is also likely to identify questions and concerns that the Compact Development Team should explore and address as it begins to develop more detailed Project Proposals in the next stage of the compact development process. In some cases, MCC may recommend removing certain elements of a concept or an entire concept from further consideration, if not supported by adequate evidence or sound logic, not likely to meet the MCC investment criteria, or otherwise incompatible with MCC’s model. In other cases, MCC may offer recommendations to strengthen the definition of the core problem, the framing the primary objective, or refine the scope of the broad approach, or concept, based on its experience with the design and implementation of complex economic development projects.