It was far from his most expensive initiative, but it may end up being one of his most significant: The Millennium Challenge Corp., which President George W. Bush set up to push foreign countries to better govern themselves, has set a new standard for foreign aid.
As Mr. Bush dedicated his presidential center in Dallas on Thursday, polls show Americans are increasingly positive about his legacy — but for many in the international aid and development community, the former president’s imprint never needed rehabilitation.
His efforts to bolster AIDS-fighting programs in Africa have won strong reviews, and a 2009 report calculated that his efforts saved 1.1 million lives in Africa.
The Millennium Challenge Corp. is not as flashy, but it has gone a long way toward rewriting how foreign aid is conducted and evaluated.
Along the way, it has helped remove the dirty-word connotation foreign aid held for many Americans — particularly some in the Republican Party — who felt the money went to enrich corrupt leaders rather than aid the needy.
“People that have had a dim view of foreign assistance now look at it and say, ‘Well here’s something that works,’” said former Rep. Jim Kolbe, who used to run the spending subcommittee that funded the program. “We’re providing assistance to countries where there is the structure in place, the political structure, the government structure in place, the commitment to development that will make the dollars go to the purpose that’s intended.”
Mr. Bush announced his goal of changing foreign aid in a 2002 speech at the Inter-American Development Bank, where he called for “a new compact” between the rich countries that fund development aid and the poor nations that receive the money.
“Greater contributions from developed nations must be linked to greater responsibility from developing nations,” the president said.
Two years later, the Millennium Challenge Corp. began. It required countries seeking aid to meet goals for good governance and economic policy, and in exchange it guaranteed the U.S. money upfront and pledged that projects would be judged based on their merits, rather than influenced by U.S. foreign policy objectives.
Countries that won grants were required to set up compacts to carry out the projects, and those compacts drew on local expertise.
The Millennium Challenge Corp. publishes a scorecard listing which countries meet the good-governance and economic policy goals. Nine countries were deemed eligible for grants in fiscal 2013.
“The MCC was really one of the pioneers in embracing this model of selectivity,” said Bradley C. Parks, who helped set up the program. “The presumption is fewer aid dollars are going to be wasted if the money is going to well-governed countries, and we’re going to get more development bang for our buck in these countries.”
Some countries have expressed concern about the way the money is divided between low-income and lower-middle-income tranches, which ends up limiting the amount of money that can go to the poorest nations. Early on, some countries complained that the process was unfair and money wasn’t being distributed quickly enough.
The Millennium Challenge Corp. has never been funded to the full level of $5 billion a year that Mr. Bush had hoped, and Mr. Kolbe warned that if funding drops much below its current level, it will be tough to justify keeping it fully staffed. He said he would like to see funding boosted.
“It has brought about a significant change in the way we look at how and where we give our development assistance,” said the former congressman and current fellow at the German Marshall Fund.
The program, and Mr. Bush’s broader development strategy, win praise across party lines and from major aid advocates such as Bono, lead signer of rock band U2, who on a trip to a school in Ghana funded by the program last year bragged about being part of its genesis.
Ghana has been a major Millennium Challenge success story all-around. When President Obama, who has been a backer of the program, visited last year, Ghanaian President John Atta Mills gushed about a road built with Millennium Challenge money.
“You should have seen the joy on the faces of the Ghanaians because there had been a radical transformation in their lives,” he said. “I mean, that is what governance is all about — to see people happy because they now have what they did not have.”
Mr. Parks said the program has helped even in countries that haven’t been awarded money, an impact he dubbed the “MCC effect.”
This year, he released a report for the Institute for the Theory and Practice of International Relations at the College of William & Mary that found countries strive to meet goals for protecting property rights and decreasing corruption — though it hasn’t been as successful in pushing democratic reforms.
“The thing that’s very striking about the MCC effect is the United States government is effectively incentivizing governments in the developing world to adopt policy reforms without ever spending a single taxpayer dollar,” Mr. Parks said.
He said the Millennium Challenge Corp. doesn’t fund flashy programs such as child immunizations or aiding refugees, but it is “funding the hardware of economic development, which is one of the key ways that developed countries got developed.”