The Millennium Challenge Corporation ( MCC ) is a bilateral United States foreign aid agency established by the U.S. Congress in 2004. It is an independent agency separate from the State Department and USAID . It provides grants to countries that have been determined to have good economic policies and potential for economic growth. The country qualification process is objective, involving scores provided by third parties in 20 different areas. An eligible country must apply for a grant with a specific project in mind.
121-606: According to the OECD , the United States’ total official development assistance (ODA) (USD 55.3 billion, preliminary data) increased in 2022, mainly due to support to Ukraine, as well as increased costs for in-donor refugees from Afghanistan. ODA represented 0.22% of gross national income (GNI). At the Inter-American Development Bank meeting on March 14, 2002, President George W. Bush called for
242-408: A "large step backward" causing too little aid to make an impact on recipient countries. Senator Richard Lugar , the author of the amendment, responded that more "realistic" funding levels allowed for more compacts, thus spreading the "MCC effect". The amendment did not make it into the final bill. President Bush's FY 2008 budget requested $ 2.225 billion, the first time since the program's inception that
363-548: A Chinese government disinformation campaign against MCC was the origin of these concerns. A similar disinformation effort attributed to the Chinese government was attempted against MCC's program in Nepal, but was ultimately unsuccessful and the compact moved forward. OECD The Organisation for Economic Co-operation and Development ( OECD ; French : Organisation de coopération et de développement économiques, OCDE )
484-681: A condition known as the Malthusian trap . The rapid economic growth that occurred during the Industrial Revolution was remarkable because it was in excess of population growth, providing an escape from the Malthusian trap. Countries that industrialized eventually saw their population growth slow down, a phenomenon known as the demographic transition . Increases in productivity are the major factor responsible for per capita economic growth—this has been especially evident since
605-470: A connection between MCC's eligibility criteria and development outcomes for a country such as lower poverty. Some find that these relationships are independent of growth, with lower poverty rates in countries that have passed the MCC scorecard than those that fail it, even holding GDP constant. Some critics have charged that the program uses indicators by conservative groups, such as The Heritage Foundation , and
726-725: A country . The OECD also created agencies such as the OECD Development Centre (1961), International Energy Agency (IEA, 1974), and Financial Action Task Force on Money Laundering . The aims of the OECD are stated in Article 1 of the Convention as: Unlike the United Nations' "Organizations," OECD uses the spelling "Organisation" with an "s" in its name, together with a hyphenated "Co-operation". Following
847-650: A cumbersome task. Following several (occasionally unruly) meetings at the Hotel Majestic in Paris, which began in January 1960, a resolution was reached to create a body that would not only solve European and Atlantic economic issues, but also devise policies that could assist less developed countries. This reconstituted organisation would bring the US and Canada, who were already OEEC observers, on board as full members, and
968-465: A democratic election and various economic reforms, the MCC made Yemen eligible again for a threshold agreement. On December 12, 2007, the MCC Board selected Malawi for a compact and Mauritania for a threshold agreement, as well as allowing Albania , Paraguay , and Zambia to submit a first ever second stage threshold agreement. In 2007 the U.S. Ambassador to Swaziland highlighted the progress on
1089-654: A discussion on a broad spectrum of thematic issues relevant to the OECD charter, member countries, and non-member countries. Noteworthy meetings include: Exchanges between OECD governments benefit from the information, analysis, and preparation of the OECD Secretariat. The secretariat collects data, monitors trends, and analyses and forecasts economic developments. Under the direction and guidance of member governments, it also researches social changes or evolving patterns in trade, environment, education, agriculture, technology, taxation and other areas. The secretariat
1210-427: A famous estimate, MIT Professor Robert Solow concluded that technological progress has accounted for 80 percent of the long-term rise in U.S. per capita income, with increased investment in capital explaining only the remaining 20 percent. Increases in productivity lower the real cost of goods. Over the 20th century, the real price of many goods fell by over 90%. Economic growth has traditionally been attributed to
1331-501: A framework for negotiations aimed at setting up a European Free Trade Area , to bring the EEC's Inner Six and other OEEC members together on a multilateral basis. In 1958, a European Nuclear Energy Agency was set up in response to Euratom. By this time, some leading countries felt that the OEEC had outlived its purpose but could be adapted to fulfil a more global mission, which proved to be
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#17327688847131452-421: A grant with a specific project in mind. MCC signs either a compact or a threshold agreement with a partner country. A compact is awarded if the country scores highly on the selection criteria indicators. If the country scores poorly but has a positive, upward trend on the selection criteria, it can still be eligible for a smaller grant, called a threshold program. MCC requires that each partner government creates
1573-400: A major role to a country's level of human capital , defined as the skills of the population or the work force. Human capital has been included in both neoclassical and endogenous growth models. A country's level of human capital is difficult to measure since it is created at home, at school, and on the job. Economists have attempted to measure human capital using numerous proxies, including
1694-665: A member of the Organisation through the letter addressed by Romanian Prime Minister Victor Ponta to OECD Secretary-General José Ángel Gurría . In September 2012, the government of Bulgaria confirmed it would apply for membership before the OECD Secretariat. The OECD established a working group headed by ambassador Seiichiro Noboru to work out a plan for the enlargement with non-members. The working group defined four criteria that must be fulfilled: "like-mindedness", "significant player", "mutual benefit" and "global considerations." The working group's recommendations were presented at
1815-461: A member on 28 April 2020. On 15 May 2020, the OECD decided to extend a formal invitation for Costa Rica to join the OECD, which joined as a member on 25 May 2021. Other countries that have expressed interest in OECD membership are Argentina , Brazil , Croatia , Malaysia and Peru . In January 2022, the OECD reported that membership talks were underway with Argentina , Brazil , Bulgaria , Croatia , Peru and Romania . In March 2022,
1936-536: A membership option for these countries. As a result of this, Poland , Hungary , the Czech Republic and Slovakia , as well as South Korea and Mexico , became members of the OECD between 1996 and 2000. East Germany joined on 3 October 1990 through reunification with West Germany. In the 1990s, several European countries, now members of the European Union, expressed their willingness to join
2057-408: A million farmers, creating over 7,000 kilometers of electrical lines and building thousands of roads. MCC has published over 190 studies on the effectiveness of its assistance in partner countries. Reviews of multiple studies on particular sectors have found some programs have had an impact on growth and poverty reduction, while others have had less impact than initially expected. Immediate outputs from
2178-458: A new compact for development with accountability for both rich and poor countries. He pledged to increase development assistance by 50% by fiscal year 2006 (which, by the end of 2004, doubled and was to double again by 2010). Other development programs like USAID have been thought to suffer from many different and sometimes conflicting goals, which often are a result of political pressures, and for not delivering long-term economic improvements. MCC
2299-438: A new part of the program called Threshold Program Assistance, which are smaller compacts used to assist a country close to meeting account eligibility to become eligible for a full program. Jordan received a Threshold program aimed at democracy and trade totaling $ 25 million. Yemen was previously eligible for a threshold agreement, but was suspended after their indicators fell too low to qualify. But having successfully completed
2420-558: A point increases in the amount of capital per worker are an important cause of economic output growth. Capital is subject to diminishing returns because of the amount that can be effectively invested and because of the growing burden of depreciation. In the development of economic theory, the distribution of income was considered to be between labor and the owners of land and capital. In recent decades there have been several Asian countries with high rates of economic growth driven by capital investment. The work week declined considerably over
2541-404: A result instituting an economic-demographic transition. The relationship between health and economic growth is further nuanced by distinguishing the influence of specific diseases on GDP per capita from that of aggregate measures of health , such as life expectancy Thus, investing in health is warranted both from the growth and equity perspectives, given the important role played by health in
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#17327688847132662-562: A series of inquiries undertaken by the parliamentary Business, Energy and Industrial Strategy Committee , which argues that the UK Government "has a big job to do in helping businesses survive, stimulating economic growth and encouraging the creation of well-paid meaningful jobs". Policymakers and scholars frequently emphasize the importance of entrepreneurship for economic growth. However, surprisingly few research empirically examine and quantify entrepreneurship's impact on growth. This
2783-414: A special purpose legal entity that will be accountable for implementing the compact program. In the first year (2004), 17 countries were made eligible for an MCC grant: Armenia , Benin , Bolivia , Cape Verde , El Salvador , Georgia , Ghana , Honduras , Lesotho , Madagascar , Mali , Mongolia , Morocco , Mozambique , Nicaragua , Senegal , Sri Lanka , and Vanuatu . Madagascar and Honduras were
2904-421: A successor has been confirmed, for a maximum of one year. The Secretary of State serves as the chairperson of the board. A majority of the members of the board constitutes a quorum, which must include at least one of the four appointed members. The current board members as of September 25, 2024: President Biden has nominated the following to fill seats on the board. They await Senate confirmation. A country
3025-406: A very high Human Development Index . As of 2024 their collective population is 1.38 billion people with an average life expectancy of 80 years and a median age of 40, against a global average of 30. As of 2017 , OECD Member countries collectively comprised 62.2% of global nominal GDP ( USD 49.6 trillion) and 42.8% of global GDP ( Int$ 54.2 trillion) at purchasing power parity . The OECD
3146-470: Is actually due to the relationship in countries with less than eight years of schooling. He shows that economic growth is not correlated with average scores in more educated countries. Hanushek and Wößmann further investigate whether the relationship of knowledge capital to economic growth is causal. They show that the level of students' cognitive skills can explain the slow growth in Latin America and
3267-421: Is ample empirical evidence. "As institutions influence behavior and incentives in real life, they forge the success or failure of nations." In economics and economic history, the transition from earlier economic systems to capitalism was facilitated by the adoption of government policies which fostered commerce and gave individuals more personal and economic freedom. These included new laws favorable to
3388-536: Is an intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and world trade . It is a forum whose member countries describe themselves as committed to democracy and the market economy , providing a platform to compare policy experiences, seek answers to common problems, identify good practices, and coordinate domestic and international policies of its members. The majority of OECD members are generally regarded as developed countries , with high-income economies , and
3509-588: Is an official United Nations observer . OECD nations have strong social security systems ; their average social welfare spending stood at roughly 21% of GDP. The OECD's headquarters are at the Château de la Muette in Paris , France, which housed its predecessor organization, the Organization for European Economic Co-operation. The OECD is funded by contributions from member countries at varying rates and
3630-457: Is approached as a functioning from Amartya Sen and Martha Nussbaum 's capability approach that an individual has to realise the achievements like economic success. Thus health in a broader sense is not the absence of illness, but the opportunity for people to biologically develop to their full potential their entire lives It is established that human capital is an important asset for economic growth, however, it can only be so if that population
3751-778: Is composed of nine members, four appointed by the president of the United States with the consent of the United States Senate and five ex officio members. The five ex officio members are the U.S. Secretary of State , the U.S. Secretary of the Treasury , the Administrator of the United States Agency for International Development , the CEO of the MCC, and the U.S. Trade Representative . Of
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3872-462: Is considered eligible for a compact (aid grant) if selected as eligible by the Board of Directors. The Board of Directors chooses countries based on three factors: policy performance as measured by the selection indicators on MCC's scorecard, the opportunity to reduce poverty in a country, and the availability of funds. In order to pass the scorecard a country must pass 10 of the 20 indicators, pass either
3993-465: Is due to endogeneity—forces that drive economic growth also drive entrepreneurship. In other words, the empirical analysis of the impact of entrepreneurship on growth is difficult because of the joint determination of entrepreneurship and economic growth. A few papers use quasi-experimental designs, and have found that entrepreneurship and the density of small businesses indeed have a causal impact on regional growth. Another major cause of economic growth
4114-517: Is healthy and well-nourished. One of the most important aspects of health is the mortality rate and how the rise or decline can affect the labour supply predominant in a developing economy. Mortality decline triggers greater investments in individual human capital and an increase in economic growth. Matteo Cervellati and Uwe Sunde and Rodrigo.R Soares consider frameworks in which mortality decline has an influence on parents to have fewer children and to provide quality education for those children, as
4235-779: Is not so easily replicable elsewhere as a change in the Constitution—and the type of institutions created by that change—does not necessarily create a change in political power if the economic powers of that society are not aligned with the new set of rule of law institutions. In England, a dramatic increase in the state's fiscal capacity followed the creation of constraints on the crown, but elsewhere in Europe increases in state capacity happened before major rule of law reforms. There are many different ways through which states achieved state (fiscal) capacity and this different capacity accelerated or hindered their economic development. Thanks to
4356-691: Is organised in directorates: The head of the OECD Secretariat and chair of the OECD Council is the Secretary-General. Secretary-General selections are made by consensus , meaning all member states must agree on a candidate. Representatives of member and observer countries meet in specialised committees on specific policy areas, such as economics, trade, science, employment, education, development assistance or financial markets. There are about 200 committees, working groups and expert groups. Committees discuss policies and review progress in
4477-423: Is perhaps the most innovative aspect of MCC, as previous foreign aid missions were plagued by political considerations. The focus of the MCC is to promote economic growth in the recipient countries. The program emphasizes good economic policies in recipient countries, such as free markets and low corruption . The indicators are: Centre for Law and Democracy Access Now An eligible country must apply for
4598-556: Is recognised as a highly influential publisher of mostly economic data through publications as well as annual evaluations and rankings of member countries. The OECD is the successor organization to the Organisation for European Economic Co-operation (OEEC) , established in April 1948 among the European recipients of Marshall Plan aid for the reconstruction of Europe after World War II . Only Western European states were members of
4719-416: Is the introduction of new products and services and the improvement of existing products. New products create demand, which is necessary to offset the decline in employment that occurs through labor-saving technology (and to a lesser extent employment declines due to savings in energy and materials). In the U.S. by 2013 about 60% of consumer spending was for goods and services that did not exist in 1869. Also,
4840-624: Is therefore biased toward free market economics and reimposing American imperialism on the Global South . The program is said to have resulted in countries receiving less funding from other U.S. government development organizations and not more. Some development agencies have felt frozen out of the process since the compact programs are designed primarily by the country involved. Implementation has been difficult in Armenia , and concern about its effectiveness has been expressed. In February 2020,
4961-420: Is widely used because Barro and Lee provide data for numerous countries in five-year intervals for a long period of time. One problem with the schooling attainment measure is that the amount of human capital acquired in a year of schooling is not the same at all levels of schooling and is not the same in all countries. This measure also presumes that human capital is only developed in formal schooling, contrary to
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5082-522: The Cabinet of Sri Lanka said it would not sign the proposed MCC agreement in its present form. A committee of experts had determined that it contained clauses incompatible with the Constitution of Sri Lanka and was "detrimental" to the country's sovereignty. After a board meeting on 15 December 2020, the MCC announced the cancelation of the proposed compact with Sri Lanka. Several sources have cited
5203-621: The Great Depression , economic growth resumed, aided in part by increased demand for existing goods and services, such as automobiles, telephones, radios, electricity and household appliances. New goods and services included television, air conditioning and commercial aviation (after 1950), creating enough new demand to stabilize the work week. The building of highway infrastructures also contributed to post-World War II growth, as did capital investments in manufacturing and chemical industries. The post-World War II economy also benefited from
5324-538: The Green Revolution . Interchangeable parts made with machine tools powered by electric motors evolved into mass production , which is universally used today. Great sources of productivity improvement in the late 19th century were railroads, steam ships, horse-pulled reapers and combine harvesters , and steam -powered factories. The invention of processes for making cheap steel were important for many forms of mechanization and transportation. By
5445-788: The Index of Economic Freedom . In April 2005, the United States Government Accountability Office issued a favorable report about the work of the MCC and its work thus far. The Program Assessment Rating Tool (PART), which reviews the efficiency and results produced by U.S. government programs, was scheduled to be reviewed in 2007. A study in 2006 looking at the "MCC effect" estimated that potential recipient countries improved 25% more on MCA's criteria than other countries, after controlling for time-trends. The World Policy Council , headed by Ambassador Horace Dawson and Senator Edward Brooke , recognizes
5566-498: The Indian subcontinent and Asia Pacific . In 1957 South Korea had a lower per capita GDP than Ghana , and by 2008 it was 17 times as high as Ghana's. The Japanese economic growth has slackened considerably since the late 1980s. Productivity in the United States grew at an increasing rate throughout the 19th century and was most rapid in the early to middle decades of the 20th century. U.S. productivity growth spiked towards
5687-580: The Mincer model . Eric Hanushek and Dennis Kimko introduced measures of students' mathematics and science skills from international assessments into growth analysis. They found that this measure of human capital was very significantly related to economic growth. Eric Hanushek and Ludger Wößmann have extended this analysis. Theodore Breton shows that the correlation between economic growth and students' average test scores in Hanushek and Wößmann's analyses
5808-683: The Revolutions of 1989 , the OECD began assisting countries in and Eastern Europe (especially the Visegrád Group ) to prepare market economy reforms. In 1990, the Centre for Co-operation with European Economies in Transition (now succeeded by the Centre for Cooperation with Non-Members) was established, and in 1991, the programme, "Partners in Transition", was launched to offer a partnership to Czechoslovakia , Hungary and Poland, including
5929-621: The United Nations also consider that cultural property protection, high-quality education, cultural diversity and social cohesion in armed conflicts are particularly necessary for qualitative growth. According to Daron Acemoglu , Simon Johnson and James Robinson , the positive correlation between high income and cold climate is a by-product of history. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where these colonizers faced high mortality rates (e.g., due to
6050-540: The geometric annual rate of growth in GDP between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over the period, and ignores any fluctuations in the GDP around this trend. Economists refer to economic growth caused by more efficient use of inputs (increased productivity of labor , of physical capital , of energy or of materials ) as intensive growth . In contrast, GDP growth caused only by increases in
6171-716: The 1960s to the end of the 1990s was also described in the memoirs titled “the Bank of Japan and the OECD: Recollections and Reflections”, written in Japanese by Kumiharu Shigehara and published in December 2019. In his letter of 5 February 2019, Donald Johnston, OECD Secretary-General (1996-2006), noted that Shigehara's "book is very important for the OECD where there is little living institutional memory". The English edition of Shigehara's memoirs titled The Bank of Japan,
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#17327688847136292-530: The 19th century. By the 1920s the average work week in the U.S. was 49 hours, but the work week was reduced to 40 hours (after which overtime premium was applied) as part of the National Industrial Recovery Act of 1933. Demographic factors may influence growth by changing the employment to population ratio and the labor force participation rate. Industrialization creates a demographic transition in which birth rates decline and
6413-617: The Declaration. The OECD publishes books, reports, statistics, working papers, and reference materials. All titles and databases published since 1998 can be accessed via OECD iLibrary . The OECD Library & Archives collection dates from 1947, including records from the Committee for European Economic Co-operation (CEEC) and the Organisation for European Economic Co-operation (OEEC), predecessors of today's OECD. External researchers can consult OECD publications and archival material on
6534-621: The English in North America started by trying to repeat the success of the Spanish Conquistadors in extracting wealth (especially gold and silver) from the countries they had conquered. This system repeatedly failed for the English. Their successes rested on giving land and a voice in the government to every male settler to incentivize productive labor. In Virginia it took twelve years and many deaths from starvation before
6655-507: The G20. It is not certain when the proposals will be implemented. All the major economies agreed to pass national laws that would require corporations to pay at least 15% income tax in the countries they operate. This new policy would end the practice of locating world headquarters in small countries with very low taxation rates. Governments hope to recoup some of the lost revenue, estimated at $ 100 billion to $ 240 billion each year. The new system
6776-634: The MCC as the most recent and most promising program in its area, and recommended that the Bush administration and the Congressional Black Caucus focus on full funding and an accelerated pace of spending. Doing Business 2007 cited the Millennium Challenge Accounts as a catalyst for reforms underway in 13 countries. Also, Freedom House released subcategories for the first time since it was being used as part of
6897-443: The MCC indicators over the last few years and encouraged the country to work toward eligibility. A full listing of MCC partner countries can be found at https://web.archive.org/web/20130101234121/http://www.mcc.gov/pages/countries . MCC's portfolio focuses mostly on African nations. Congress has consistently provided less funding for the program than the president has requested. In fiscal year 2004, $ 650 million were provided for
7018-465: The MCC's measurements to allow for more granular distinctions. Also, the number of days it takes to start a business in low and low-middle income countries has decreased significantly since 2002, which is one of the factors the accounts measure since rapid business registration is thought to increase economic activity. Since its inception, MCC has invested over $ 16 billion dollars in projects benefiting over 380 million people, including training nearly half
7139-466: The OECD Convention after September 1961, but are nevertheless considered founding members. The official founding members are the following: Japan became a member in 1964, and over the following decade, Finland , Australia , and New Zealand also joined the organisation. Yugoslavia had observer status in the organisation, starting with the establishment of the OECD, until its dissolution as
7260-584: The OECD Ministerial Council Meeting on 13 May 2004, and on 16 May 2007, the OECD Ministerial Council decided to open accession discussions with Chile , Estonia , Israel , Russia , and Slovenia , and to strengthen cooperation with Brazil , China , India , Indonesia , and South Africa through a process of enhanced engagement. Chile, Slovenia, Israel, and Estonia all became members in 2010. In March 2014,
7381-549: The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, a Model Tax Convention and country-by-country reporting rules. The OECD publishes and updates a model tax convention that serves as a template for allocating taxation rights between countries. This model is accompanied by a set of commentaries that reflect OECD-level interpretation of the content of the model convention provisions. In general, this model allocates
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#17327688847137502-476: The OECD announced that it "has transitioned to [an] open-access information model" and that Creative Commons CC‑BY‑4.0 attribution licenses will be used on all data and publications. There are 15 working papers series published by the various directorates of the OECD Secretariat. They are available on iLibrary, as well as on many specialised portals. The OECD is responsible for the OECD Guidelines for
7623-415: The OECD halted membership talks with Russia in response to its role in the 2014 Annexation of Crimea . In 2013, the OECD decided to open membership talks with Colombia and Latvia . In 2015, the Organisation opened talks with Costa Rica and Lithuania . Latvia became a member on 1 July 2016, and Lithuania soon followed on 5 July 2018. Colombia signed the accession agreement on 30 May 2018 and became
7744-418: The OECD premises by appointment. The OECD releases about 600 books and over 400 papers yearly on topics spanning public policy. The publications are updated to the OECD iLibrary. Most books are published in English and French. The OECD flagship titles include: All OECD books are available on the OECD iLibrary, the online bookshop or OECD Library & Archives. OECD Observer , an award-winning magazine,
7865-514: The OECD suspended the participation of Russia and Belarus due to the ongoing 2022 Russian invasion of Ukraine . In June 2022, during the annual OECD Ministerial Council Meeting, the Roadmaps for the Accession to the OECD Convention for Brazil , Bulgaria , Croatia , Peru and Romania were adopted. The OECD sets the rules governing international taxation for multinationals through
7986-579: The OECD, and Beyond was published by Palgrave Macmillan in September 2024. The OECD is known as a statistical agency , as it publishes comparable statistics on numerous subjects. In July 2014, the OECD publicly released its main statistical databases through the OECD Data Portal, an online platform that allows visitors to create custom charts based on official OECD indicators. OECD statistics are available in several forms: In July 2024,
8107-532: The OECD: Economic growth Heterodox Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of increase in the real and nominal gross domestic product (GDP). Growth is usually calculated in real terms – i.e., inflation-adjusted terms – to eliminate
8228-457: The OEEC would set to work straight away on convincing Japan to join the organisation. The Convention on the Organisation for Economic Co-operation and Development was signed on 14 December 1960, and the OECD officially superseded the OEEC in September 1961, consisting of the European founder countries of the OEEC, with the additions of the United States and Canada. Three countries, (Netherlands, Luxembourg, and Italy)—all OEEC members—ratified
8349-624: The OEEC, whose primary function was the allocation of American aid. Its Secretaries-General were the Frenchmen Robert Marjolin (1948–1955) and René Sergent (1955–1960). It was headquartered in the Château de la Muette in Paris. Following the end of Marshall aid in 1952, the OEEC focused on economic issues. Its coordinating role was challenged after the 1957 Rome Treaties establishing the European Economic Community and Euratom . The OEEC provided
8470-541: The Organisation. In 1995, Cyprus applied for membership, but according to the Cypriot government, it was vetoed by Turkey . In 1996, Estonia , Latvia , and Lithuania signed a Joint Declaration expressing willingness to become members of the OECD, and Slovenia also applied for membership that same year. In 2005, Malta applied to join the Organisation. The EU is lobbying for the admission of all EU member states . Romania reaffirmed in 2012 its intention to become
8591-651: The Political Rights or Civil Liberties Indicators, and pass the Control of Corruption indicator. For 16 of the 20 indicators, a country passes if its score exceeds the median score of its peer group. The remaining 4 indicators (Political Rights, Civil Liberties, Immunization Rates (if the median is above 90%, otherwise it is median based), and Inflation) are scored based on a static threshold. All 20 indicators are compiled by third parties with no connection to MCC. MCC grants are made without considering politics. This
8712-628: The Testing of Chemicals , a continuously updated document that is a de facto standard (i.e., soft law). It published the OECD Environmental Outlook to 2030 in March 2008, which argues that tackling key environmental problems—including climate change , biodiversity loss , water scarcity , and the health impacts of pollution —is both achievable and affordable. In 2020, the inaugural University Press Redux Sustainability Award
8833-431: The accumulation of human and physical capital and the increase in productivity and creation of new goods arising from technological innovation. Further division of labour (specialization) is also fundamental to rising productivity. Before industrialization technological progress resulted in an increase in the population, which was kept in check by food supply and other resources, which acted to limit per capita income,
8954-539: The amount of inputs available for use (increased population, for example, or new territory) counts as extensive growth . Development of new goods and services also generates economic growth. As it so happens, in the U.S. about 60% of consumer spending in 2013 went on goods and services that did not exist in 1869. The economic growth rate is typically calculated as real GDP growth rate , real GDP per capita growth rate or GNI per capita growth . Living standards vary widely from country to country, and furthermore,
9075-457: The amount was not $ 3 billion, and enough money for five compacts, several threshold agreements and administrative funding. Studies by groups such as The Heritage Foundation in the United States have shown that many developing countries that have received foreign aid have seen their per capita income fall or stagnate over the last 40 years. The Heritage Foundation has consistently supported the MCC's approach, which has used their trade measure from
9196-470: The areas of health in near future uncover how the world will be performing living with the SARS-CoV-2 , especially looking at the economic impacts it already has in a space of two years. Ultimately, when people live longer on average, human capital expenditures are more likely to pay off, and all of these mechanisms center around the complementarity of longevity, health , and education , for which there
9317-506: The average age of the population increases. Women with fewer children and better access to market employment tend to join the labor force in higher percentages. There is a reduced demand for child labor and children spend more years in school. The increase in the percentage of women in the labor force in the U.S. contributed to economic growth, as did the entrance of the baby boomers into the workforce. See: Spending wave Many theoretical and empirical analyses of economic growth attribute
9438-399: The change in living standards over time varies widely from country to country. Below is a table which shows GDP per person and annualized per person GDP growth for a selection of countries over a period of about 100 years. The GDP per person data are adjusted for inflation, hence they are " real ". GDP per person (more commonly called "per capita" GDP) is the GDP of the entire country divided by
9559-435: The cost borne by the member countries, such as sending their officials to OECD meetings and maintaining permanent delegations, is equivalent to the cost of running the secretariat. This ratio is unique among inter-governmental organisations. In other words, the OECD is more a persistent forum or network of officials and experts than an administration. The OECD regularly holds minister-level meetings and forums as platforms for
9680-609: The discovery of vast amounts of oil around the world, particularly in the Middle East . By John W. Kendrick's estimate, three-quarters of increase in U.S. per capita GDP from 1889 to 1957 was due to increased productivity. Economic growth in the United States slowed down after 1973. In contrast, growth in Asia has been strong since then, starting with Japan and spreading to Four Asian Tigers , China , Southeast Asia ,
9801-512: The distorting effect of inflation on the prices of goods produced. Measurement of economic growth uses national income accounting . Since economic growth is measured as the annual percent change of gross domestic product (GDP), it has all the advantages and drawbacks of that measure. The economic growth-rates of countries are commonly compared using the ratio of the GDP to population or per-capita income . The "rate of economic growth" refers to
9922-533: The economical production of metal parts possible, so that parts could be interchangeable. (See: Interchangeable parts .) During the Second Industrial Revolution , a major factor of productivity growth was the substitution of inanimate power for human and animal labor. Also there was a great increase in power as steam-powered electricity generation and internal combustion supplanted limited wind and water power . Since that replacement,
10043-483: The economy. Protecting health assets from the impact of systemic transitional costs on economic reforms, pandemics, economic crises and natural disasters is also crucial. Protection from the shocks produced by illness and death, are usually taken care of within a country’s social insurance system. In areas such as Sub-Saharan Africa, where the prevalence of HIV and AIDS , has a comparative negative impact on economical development. It will be interesting to see how research in
10164-504: The end of the century in 1996–2004, due to an acceleration in the rate of technological innovation known as Moore's law . After 2004 U.S. productivity growth returned to the low levels of 1972–96. Capital in economics ordinarily refers to physical capital, which consists of structures (largest component of physical capital) and equipment used in business (machinery, factory equipment, computers and office equipment, construction equipment, business vehicles, medical equipment, etc.). Up to
10285-607: The establishment of business, including contract law , laws providing for the protection of private property , and the abolishment of anti-usury laws. Much of the literature on economic growth refers to the success story of the British state after the Glorious Revolution of 1688, in which high fiscal capacity combined with constraints on the power of the king generated some respect for the rule of law. However, others have questioned that this institutional formula
10406-469: The extensive evidence that families, neighborhoods, peers, and health also contribute to the development of human capital. Despite these potential limitations, Theodore Breton has shown that this measure can represent human capital in log-linear growth models because across countries GDP/adult has a log-linear relationship to average years of schooling, which is consistent with the log-linear relationship between workers' personal incomes and years of schooling in
10527-420: The extremum could be extended by technological and policy innovations and some countries move into innovative growth domain with higher limiting values. In national income accounting, per capita output can be calculated using the following factors: output per unit of labor input (labor productivity), hours worked (intensity), the percentage of the working-age population actually working (participation rate) and
10648-650: The first countries to receive actual funding from the MCA. On June 16, 2006, the Gambia was suspended, citing deterioration in 8 of the 16 criteria categories. Mali was approved in October 2006 for a $ 461 million program to develop modern irrigation systems and an industrial park. Jordan was granted full compact eligibility, despite objections from Freedom House for its lack of full political and civil rights. MPs in Uganda from
10769-562: The first time in Kumiharu Shigehara, “Multilateral Surveillance: What the OECD can offer?” (the 1996 Global Finance Lecture, the University of Birmingham, 1996; OECD publication, Paris, 1996) at a time when Shigehara was OECD Chief Economist and Head of Economics Department (1992–1997); he was subsequently OECD Deputy Secretary-General (1997–1999). It was also discussed in: The history of OECD multilateral surveillance from
10890-788: The foundations of modern rule of law states. In many poor and developing countries much land and housing are held outside the formal or legal property ownership registration system. In many urban areas the poor "invade" private or government land to build their houses, so they do not hold title to these properties. Much unregistered property is held in informal form through various property associations and other arrangements. Reasons for extra-legal ownership include excessive bureaucratic red tape in buying property and building. In some countries, it can take over 200 steps and up to 14 years to build on government land. Other causes of extra-legal property are failures to notarize transaction documents or having documents notarized but failing to have them recorded with
11011-476: The four appointed members, one each shall be appointed from lists of individuals with relevant international experience submitted by the minority and majority leaders of the House of Representatives and Senate, respectively. These four each serve initial terms of three years, and may be reappointed to one additional term of two years. They may continue to serve after the expiration of each of their terms of office until
11132-429: The given policy area. OECD has a number of specialised bodies: OECD decisions are made through voting, which requires unanimity among all of those voting. Each member country has one vote. However, dissenting members which do not wish to block a decision but merely to signal their disapproval can abstain from voting. 22 of the OECD member countries are also EU member states. As of May 2021 there are 38 members of
11253-482: The governor decided to try democracy. Economic growth, its sustainability and its distribution remain central aspects of government policy. For example, the UK Government recognises that "Government can play an important role in supporting economic growth by helping to level the playing field through the way it buys public goods, works and services ", and "Post- Pandemic Economic Growth" has been featured in
11374-519: The great expansion of total power was driven by continuous improvements in energy conversion efficiency . Other major historical sources of productivity were automation , transportation infrastructures (canals, railroads, and highways), new materials (steel) and power, which includes steam and internal combustion engines and electricity . Other productivity improvements included mechanized agriculture and scientific agriculture including chemical fertilizers and livestock and poultry management, and
11495-489: The growth is persistent over a generation. This and other observations have led some economists to view GDP growth as the most important part of the field of macroeconomics : ...if we can learn about government policy options that have even small effects on long-term growth rates, we can contribute much more to improvements in standards of living than has been provided by the entire history of macroeconomic analysis of countercyclical policy and fine-tuning. Economic growth [is]
11616-717: The identity or type of legal system of the colonizers to explain institutions, these authors look at the environmental conditions in the colonies to explain institutions. For instance, former colonies have inherited corrupt governments and geopolitical boundaries (set by the colonizers) that are not properly placed regarding the geographical locations of different ethnic groups, creating internal disputes and conflicts that hinder development. In another example, societies that emerged in colonies without solid native populations established better property rights and incentives for long-term investment than those where native populations were large. In Why Nations Fail , Acemoglu and Robinson said that
11737-479: The late 19th century both prices and weekly work hours fell because less labor, materials, and energy were required to produce and transport goods. However, real wages rose, allowing workers to improve their diet, buy consumer goods and afford better housing. Mass production of the 1920s created overproduction , which was arguably one of several causes of the Great Depression of the 1930s. Following
11858-591: The mid-19th century. Most of the economic growth in the 20th century was due to increased output per unit of labor, materials, energy, and land (less input per widget). The balance of the growth in output has come from using more inputs. Both of these changes increase output. The increased output included more of the same goods produced previously and new goods and services. During the Industrial Revolution , mechanization began to replace hand methods in manufacturing, and new processes streamlined production of chemicals, iron, steel, and other products. Machine tools made
11979-536: The number of people in the country; GDP per person is conceptually analogous to " average income ". Seemingly small differences in yearly GDP growth lead to large changes in GDP when compounded over time. For instance, in the above table, GDP per person in the United Kingdom in the year 1870 was $ 4,808. At the same time in the United States, GDP per person was $ 4,007, lower than the UK by about 20%. However, in 2008
12100-800: The official agency. Not having clear legal title to property limits its potential to be used as collateral to secure loans, depriving many poor countries of one of their most important potential sources of capital. Unregistered businesses and lack of accepted accounting methods are other factors that limit potential capital. Businesses and individuals participating in unreported business activity and owners of unregistered property face costs such as bribes and pay-offs that offset much of any taxes avoided. "Democracy Does Cause Growth", according to Acemoglu et al. Specifically, they state that "democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public goods provision, and reducing social unrest". UNESCO and
12221-527: The opposition party hailed their country's rejection from full compact status, demanding instead a stronger effort in stopping the corruption that disqualified their country. In June 2007, MCA-eligible countries in Africa held a meeting in Accra , Ghana, to discuss their experiences. Malawi qualified for a full compact in 2007, while Mauritania became threshold eligible. Several countries were chosen in 2004 for
12342-562: The other (such as between OECD and non-OECD pairings). Additionally, the OECD has published and updated the Transfer Pricing Guidelines since 1995. The Transfer Pricing Guidelines serve as a template for the profit allocation of inter-company transactions to countries. The latest version, of July 2017, incorporates the approved Actions developed under the Base Erosion and Profit Shifting (BEPS) project initiated by
12463-526: The part of macroeconomics that really matters. It has been observed that GDP growth is influenced by the size of the economy. The relation between GDP growth and GDP across the countries at a particular point of time is convex. Growth increases as GDP reaches its maximum and then begins to decline. There exists some extremum value. This is not exactly middle-income trap. It is observed for both developed and developing economies. Actually, countries having this property belong to conventional growth domain . However,
12584-441: The population's level of literacy, its level of numeracy, its level of book production/capita, its average level of formal schooling, its average test score on international tests, and its cumulative depreciated investment in formal schooling. The most commonly-used measure of human capital is the level (average years) of school attainment in a country, building upon the data development of Robert Barro and Jong-Wha Lee. This measure
12705-491: The positions were reversed: GDP per person was $ 36,130 in the United Kingdom and $ 46,970 in the United States, i.e. GDP per person in the US was 30% more than it was in the UK. As the above table shows, this means that GDP per person grew, on average, by 1.80% per year in the US and by 1.47% in the UK. Thus, a difference in GDP growth by only a few tenths of a percent per year results in large differences in outcomes when
12826-505: The presence of tropical diseases), they could not settle permanently, and they were thus more likely to establish extractive institutions, which persisted after independence; in places where they could settle permanently (e.g. those with temperate climates), they established institutions with this objective in mind and modeled them after those in their European homelands. In these 'neo-Europes' better institutions in turn produced better development outcomes. Thus, although other economists focus on
12947-423: The primary right to tax to the country from which capital investment originates (i.e., the home, or resident country) rather than the country in which the investment is made (the host, or source country). As a result, it is most effective between two countries with reciprocal investment flows (such as among the OECD member countries), but can be unbalanced when one of the signatory countries is economically weaker than
13068-535: The program, which technically was not needed since the program had been authorized already, but also since there was argument over the authorization language. In discussions of the FY 2009 budget, the United States Senate proposed that only half of the money needed for a compact be provided up front, as opposed to full funding for each one provident in advance, which officials at the corporation insist would be
13189-411: The program, with an increase up to $ 1.5 billion the next year. For fiscal year 2007, $ 2 billion were provided, a 14% increase over the previous year but still under the $ 3 billion target. Again for fiscal year 2008, less funding will be provided than was hoped for, and only $ 1.2 billion was budgeted; the CEO of the MCC commented that it would undercut the program's efforts. Congress declined to re-authorize
13310-459: The programs are more frequently attributed to MCC's assistance, while longer term impacts are often more difficult to connect directly MCC's programs. More recent research has also been done into the "MCC Effect" and the relationship between MCC's Country Scorecards economic growth, and poverty reduction. Some studies have found evidence that countries do engage in policy reform in order to improve on MCC's scorecards. While others have demonstrated
13431-424: The proportion of the working-age population to the total population (demographics). "The rate of change of GDP/population is the sum of the rates of change of these four variables plus their cross products." Economists distinguish between long-run economic growth and short-run economic changes in production . Short-run variation in economic growth is termed the business cycle . Generally, according to economists,
13552-575: The rapid growth in East Asia. Joerg Baten and Jan Luiten van Zanden employ book production per capita as a proxy for sophisticated literacy capabilities and find that "Countries with high levels of human capital formation in the 18th century initiated or participated in the industrialization process of the 19th century, whereas countries with low levels of human capital formation were unable to do so, among them many of today's Less Developed Countries such as India, Indonesia, and China." Here, health
13673-700: The seventeenth century. Furthermore, Prussia and the Habsburg empire—much more heterogeneous states than England—were able to increase state capacity during the eighteenth century without constraining the powers of the executive. Nevertheless, it is unlikely that a country will generate institutions that respect property rights and the rule of law without having had first intermediate fiscal and political institutions that create incentives for elites to support them. Many of these intermediate level institutions relied on informal private-order arrangements that combined with public-order institutions associated with states, to lay
13794-631: The underlying homogeneity of its land and people, England was able to achieve a unified legal and fiscal system since the Middle Ages that enabled it to substantially increase the taxes it raised after 1689. On the other hand, the French experience of state building faced much stronger resistance from local feudal powers keeping it legally and fiscally fragmented until the French Revolution despite significant increases in state capacity during
13915-434: The ups and downs in the business cycle can be attributed to fluctuations in aggregate demand . In contrast, economic growth is concerned with the long-run trend in production due to structural causes such as technological growth and factor accumulation. Increases in labor productivity (the ratio of the value of output to labor input) have historically been the most important source of real per capita economic growth. In
14036-567: Was authorized in 2004 with bipartisan support. Its guiding principles are: The first CEO of the Millennium Challenge Corporation was Paul V. Applegarth , a finance manager with experience in emerging markets . Applegarth was followed by John Danilovich , a business executive who had served as the U.S. Ambassador to Costa Rica from 2001 to 2004 and then U.S. Ambassador to Brazil . On November 20, 2009, Daniel W. Yohannes , an Ethiopian-born American business person,
14157-645: Was confirmed by the Senate as the CEO. He was appointed in May 2014 as US Ambassador to the OECD and succeeded by Dana Hyde who was CEO through January 2017. Sean Cairncross was confirmed as CEO under the Trump administration in June 2019 after four acting CEOs. In January 2021 Mahmoud Bah became Millennium Challenge Corporation Acting CEO. On February 16, 2022, Alice P. Albright was sworn in as CEO. The board of directors
14278-745: Was given to OECD by the Association of Learned and Professional Society Publishers (ALPSP) and Cambridge University Press . The award recognized the development of the SDG Pathfinder, an open-access digital discovery tool for finding content and data relating to the Sustainable Development Goals (SDGs). The OECD's structure consists of three main elements: Delegates from the member countries attend committee and other meetings. Former Deputy Secretary-General Pierre Vinde [ sv ] estimated in 1997 that
14399-457: Was introduced in Q2 2013. The OECD Observer was last issued in the fourth quarter of 2019, with a double edition looking ahead at artificial intelligence, and a cover leading on why statistical offices should hire a comedian. The OECD Observer website closed in the first quarter of 2021; the archive can be consulted at www.oecd.org. The OECD's multilateral surveillance was systematically reviewed for
14520-478: Was launched in 1962. The magazine appeared six times a year until 2010, and became quarterly in 2011 with the introduction of the OECD Yearbook , launched for the 50th anniversary of the organisation. The online and mobile editions contained news, analysis, reviews, commentaries and data on global economic, social and environmental challenges and listings of the latest OECD books. An OECD Observer Crossword
14641-752: Was promoted by the Biden Administration in the United States and the OECD. Secretary-General Mathias Cormann of the OECD said, "This historic package will ensure that large multinational companies pay their fair share of tax everywhere." The OECD Guidelines for Multinational Enterprises are a set of legally non-binding guidelines attached as an annex to the OECD Declaration on International Investment and Multinational Enterprises. They are recommendations providing principles and standards for responsible business conduct for multinational corporations operating in or from countries adhering to
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