As with other U.S. foreign aid programs and approaches, country ownership is a core emphasis of MCCs approach. This emphasis is operationalized in MCC through the compact development process, which occurs in four phases: (1) proposal development, (2) due diligence review, (3) compact negotiation, and (4) entry into force (implementation). Proposal development is typically the most complex of these phases, comprising the bulk of MCCs formulation and planning activity. Twenty-six countries have been deemed eligible for compact assistance and of these, 16 have signed compacts; 10 countries are still negotiating the compact development process.
To begin the proposal development process, each eligible country must conduct a constraints analysis to identify any bottlenecks to growth in the local economy. The analysis compels countries to examine their development goals specifically with respect to their potential for stimulating economic growth. Ultimately, it helps a country to sort through two competing agendasnational development strategies and market-oriented reform strategiesto find the appropriate intersection of core priorities that hold the potential to accelerate growth (Wiebe 2008).
Once the constraints analysis is complete, countries begin the project design step of proposal development, moving beyond identification of problem sectors to developing possible solutions and defining investments for MCC to consider. This step actively involves additional stakeholders (for example, NGOs and private companies) and focuses on developing a well-defined logic model intended to demonstrate a chain of results from project inputs, to activities, outputs, outcomes, and long-term impacts.
As part of this process, countries must conduct cost-benefit analyses to develop alternative investment proposals and models. These analyses provide a rationale for each proposed investment strategy and demonstrate how investments will support economic growth and boost household incomes. The cost-benefit analysis is an important factor in the MCC selection process and is utilized both by the candidate country and MCC during review and decision-making. It is also made available to the public in the interests of transparency.
During the due diligence review, MCCs in-house or contracted experts evaluate the proposals. In addition, MCC consults with other donors, NGOs, and private business during the assessment process. The use of the consultative process and the cost-benefit analyses in decision-making points to what is often considered the most innovative aspect about MCCs approach: The systematic application of analytical techniques to virtually every element of every program and the transparency provided by the use of these techniques and MCCs public dissemination of their outputs (Wiebe 2008, p. 2). After due diligence, a compact is negotiated and signed and work begins.