October 17, 2006

Bolivia's Scorecard: The Millennium Challenge

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The Millennium Challenge Corporation (MCC) is an initiative from the Bush administration to provide "development assistance to those poor countries that rule justly, invest in their people, and encourage economic freedom." Since 2004, "the Millennium Challenge Corporation was established on January 23, 2004 to administer the MCA. Congress provided nearly $1 billion in initial funding for FY04 and $1.5 billion for FY05. The President requested $3 billion for FY06 and pledged to increase annual funding for the MCA to $5 billion in the future".

Each country has a Millennium Challenge Account to which it can reach if it qualifies to be evaluated and if it meets the "challenge" or, in other words, has the right scores. Bolivia has been participating in this programm since its inception. The graph below is the scorecard for Bolivia to be considered for the FY 2007. It comes from the performance scorecards report that the MCC released on their website.

Basically, each square box has to be read from top to bottom and the most important thing is the colored band. If the band is red, it means that the country has a failing score. And, if the band is green, it means the country has a passing score. Bolivia's scores don't look that bad, eventhough it has four failing scores in as many areas: Inmunization rates, costs of starting a business, days to start a business, and fiscal policy. In each criteria, Bolivia, fails to be above the median line (the black horizontal line). However, the trends in the four areas (the red dots) look encouraging. They all look like they are improving towards 2006 and the future.

The picture looks even more encouraging if we compare the above graph with that of Paraguay, the other Latin American country (along with Honduras and Nicaragua) sharing the honors in the low income country category.

The way it looks, Paraguay has still a long way to go. According to the scorecard, it has six failing scores in the areas of control of corruption, rule of law, primary education expenditure, regulatory quality, costs of starting a business, and days to start a business.

To me it is interesting to note that Bolivia has good scores in government effectiveness and rule of law. In these two categories, it just moves beyond the median. Moreover, it seems that the most gains have been in education, specially in girl's education.

You can find more information in the program and Bolivia's participation in the program on the Bolivia section of the MCC website and on the MCC Bolivia website.