A Detailed Review of the FY26 Changes to MCC's Scorecard

This year, the Millennium Challenge Corporation (MCC) released its annual scorecards with substantial changes to the indicators and methodology. It has been a tumultuous year for the development assistance sector, and MCC is no exception, facing questions about its continued existence, and broad cuts to its portfolio. However this small agency appears to be coming out of 2025 not merely alive, but with selections of new programs for development. Selections that were made possible by the publication of MCC's newly revised scorecards.

What is MCC?

Taking a step back, MCC is a US government bilateral development agency. Since its creation in 2004, MCC has produced annual scorecards which assess countries around the world on measures of good governance. Countries that pass the scorecard may be selected as eligible to develop a compact program (large infrastructure projects that seek to address the binding constraints to economic growth in a country). MCC's founding statute outlines three broad categories that the scorecard should evaluate countries on: ruling justly, investing in people, and economic freedom. While there are specifics within each of these categories, the actual indicators that the agency uses are set by policy and change regularly as new data becomes available. Many governments focus closely on these indicators given that improvement on them can lead to large grants. This year (perhaps predictably given the upheaval in the sector) the scorecard underwent more substantial changes than it has in at least a dozen years.

MCC's scorecard currently has 22 indicators measuring different components of good governance. The scorecard is unique in that it gives countries a "pass" or a "fail" on any given indicator depending on whether they perform above the median (for most indicators) for their income group. This may be useful for readers that want a clear go-or-no-go decision rule. However scorecards are only produced for countries with a GNI per cpaita under $7,855, so it will be less useful for anyone that is interested in assessing higher income countries.

What Changed?

While others have given a high level overview of the changes to the scorecard, speculation about the process, or provided a critique of the methods, this blog post serves instead to do what we do best, to dig into the details of all the changes and provide you with a look at exactly what data sources MCC is using, and help you to understand whether these indicators would be useful for your purposes. MCC does not produce any data themselves, they instead aggregate it from other producers. However given the connection between these indicators and growth and the incentive for countries to improve on these indicators, MCC's indicators may be a useful source for your analysis. But before you use the data, here's an explanation of what has changed on the scorecard.

For a complete explanation of these indicators and why MCC uses them, check out their methodology documents. If you want a breakdown of every single indicator, MCC's website will be a more useful resource. This blog will focus more on the changes to the indicators (what is different this year vs last year). While others have focused mostly on the changes to the passage rules, there are many more changes to the indicators. We will look at everything here. To provide some structure we will break the changes up by indicator grouping: ruling justly, investing in people, and economic freedom.

At a high level, MCC changed 14 indicators and passage rules this year:

1. Personal Freedom replaced Civil Liberties.

2. Government Accountability replaced Political Rights

3. The rules for overall passage were changed.

4. Workforce Development replaced Education Expenditures

5. Chronic Disease replaced Immunization Rates

6. The aggregation process for Child Health underwent minor changes

7. Fiscal Policy was dropped

8. Business Start-Up was brought back

9. International Market Access was introduced

10. Market Competitiveness was introduced

11. Property and Land Rights Replaced Land Rights and Access

12. Employment Opportunity underwent substantial revisions

13. Women in the Economy underwent minor revisions

14. The aggregation process for Access to Credit changed.

Ruling Justly

The changes to the scorecard that have drawn the most attention are the changes to the Ruling Justly group as these changes are what drove the changes to the rules for passage. Overall the Ruling Justly indicator group conceptually includes indicators traditionally associated with good governance: rule of law, political rights, freedom of information, etc. The changes to this group of indicators can be divided into: the new Personal Freedom indicator (replacing Civil Liberties), the new Government Accountability indicator (replacing Political Rights), and the changes to the overall scorecard passage rules.

1.Personal Freedom

MCC introduced a new indicator with the FY26 scorecards entitled Personal Freedom. It appears to be a replacement for the discontinued Civil Liberties indicator, and captures many of the same concepts. Specifically it uses the Voice and Accountability indicator from the World Bank's Worldwide Governance Indicators. Voice and Accountability captures "perceptions of the extent to which citizens can participate in selecting their government including electoral integrity, and of accountability mechanisms for citizens—reflected in the ability to access information, governmental oversight bodies, and a robust traditional/digital media landscape." Conceptually this appears to capture both the components of the former Civil Liberties indicator as well as the Political Rights indicator.

Unlike the other four indicators from the Worldwide Governance Indicators dataset that are used on the scorecard, MCC uses a curious process to adjust the data to return them to the scale of the Civil Liberties indicator. First MCC runs a linear regression between Voice and Accountability and Freedom House's Civil Liberties data (the former source). Then they use that equation to predict where a country's Voice and Accountability score would place that country on the Civil Liberties scale. This is an unnecessary process used to try to preserve MCC's historic threshold for passage. We would recommend anyone that is interested in using this indicator simply use the Voice and Accountability indicator directly.

2.Government Accountability

The other new indicator in the ruling justly group is Government Accountability. This indicator appears to be a replacement for Freedom House's Political Rights indicator, covering both corruption and electoral processes (as the old Political Rights indicator did). Conceptually corruption makes up a larger part of this indicator (around half) than it did for Political Rights (less than one third), but it still includes a focus on electoral democracy. Specifically the indicator is a combination of two sources: the Political Transformation component of the Bertelsmann Transformation Index and the TRACE Bribery Risk Matrix.

Bertelsmann includes some components of fair elections, but also elements on state identity, monopoly on the use of force, and rule of law. Bertelsmann uses a similar methodology to Freedom House involving a small group of experts for each country drafting a report answering specific questions corresponding to the components of the index (as opposed to a broader survey of many experts whose responses are then numerically aggregated together as the Varieties of Democracy dataset does.

The TRACE Bribery Risk Matrix uses a unique method for measuring corruption in a country, focusing on more than just perceptions that are captured by measures like MCC's Control of Corruption indicator (drawn from the World Bank). TRACE uses factual elements like the number of interactions between the public and government, the leverage that government officials have to exact bribes, cultural expectations around giving and receiving bribes and more. Unfortunately TRACE has discontinued its production of these data as of 2025, so MCC will need to find a new source for this part of the indicator in the future.

The calculation for the two components indicator follows a similar process to Personal Freedom above. MCC runs a linear regress between each of the components and Freedom House's Political Rights index, then uses that regression to predict where the country would score on Freedom House's index. These final scores are the averaged together. Unless you are looking for this specific combination of measuring corruption and electoral rights, using the underlying indexes is likely preferable for most users.

3.Passage Rules Changes

MCC has previously required countries to do three things to pass the scorecards: pass half of the indicators overall, pass either Political Rights or Civil Liberties, and pass Control of Corruption. With the dropping of Civil Liberties and Political Rights, these three requirements have changed. Now a country must still pass half of the indicators (though the total number of indicators is now 22 not 20, more on that below), but they must also pass either Control of Corruption or Government Accountability and pass Personal Freedom. This amounts to focusing more on issues of democracy and human rights and less on issues of corruption.

Investing in People

MCC's investing in people indicator group covers issues of education, health, and the environment. The changes to this group can be divided into three areas: the new workforce development indicator (replacing education expenditures), the new chronic disease indicator (replacing immunization rates), and other source changes.

4.Workforce Development

MCC introduced a new indicator on the FY26 scorecards entitled Workforce Development. This indicator measures the percentage of youth and adults from 15-64 years old participating in training, non-formal education, or formal education in the last 12 months. It corresponds to SDG 4.3.1. It replaces an indicator on Education Expenditures as a share of GDP. While this is a valid education indicator that some countries might pursue, it is unclear how this corresponds to MCC statute that says the scorecard should focus directly on broad-based primary education. While MCC claims to gather the data for this indicator from the World Bank, the underlying data are produced by UNESCO (more on this in the section on source changes below).

5.Chronic Disease

MCC replaced the Immunization Rates indicator with an indicator on Chronic Disease. It is unclear whether this was due to the administration's hostility towards vaccines overall (and greater focus on chronic diseases), or the increase in prevalence of chronic diseases in developing countries (and are projected to overtake infectious diseases in Sub-Saharan Africa in the next five years). The specific indicator used corresponds to SDG 3.4.1: "the probability of dying between the exact ages 30 and 70 from cardiovascular disease, cancer, diabetes, or chronic respiratory disease." As with workforce development, while this is a perfectly fine indicator on its own, one could raise questions as to whether it fulfills the statutory requirements to measure health indicators that focus on women and children, and prevent child mortality, given that this indicator is explicitly focused on adult mortality. Also, as above MCC claims to be sourcing the data from the World Bank, although the underlying data are produced by the WHO (more below).

6.Child Health & Other Source Changes

The remaining changes to this category can be divided into those related to Child Health, and those related to the World Bank's Databank. We'll look at Child Health first. In the past MCC used the Child Health indicator produced by the Center for Integrated Earth System Information (CIESIN). This indicator aggregated data on child mortality, water and sanitation using a min-max normalization process. MCC appears to be using the same three underlying sub-indicators that CIESIN did, but using a percentile rank aggregation method instead. This may be due to data availability concerns as CIESIN does not appear to be producing the Child Health indicator any more. If you were previously using the CIESIN indicator, MCC's newly produced indicator could serve as a solid replacement.

The other source change has to do with where exactly MCC is pulling these data from. Their methodology claims that the data for Chronic Disease, Girls' Primary Education Completion Rates, Girls' Lower Secondary Education Completion Rates, Girls' Upper Secondary Completion Rates, Workforce Development, Health Expenditures, Employment Opportunity, and Child Health are all being drawn from the World Bank's Databank. While the Databank does post these indicators, the underlying data are produced by UN agencies (WHO, UNESCO, UNICEF, etc.). Additionally as evidenced by a footnote in MCC's methodology ("if there are lags in the posting of these data or refreshing of the API, MCC uses the most updated version of this dataset available online from the original data source at the time of scorecard printing.") and a review of the actual data, the scorecards appear to use the underlying data from the UN sources when the World Bank's data has a lag.

This means that if you are interested in using data for these indicators, MCC's scorecards do have the most up-to-date data as of their publication. This is better than the outdated data produced by the World Bank's Databank, but may be out of date compared to the underlying sources.

Economic Freedom

MCC made substantial changes to the economic freedom category of the scorecard. One indicator was dropped (Fiscal Policy), three indicators were added (Business Start-Up, International Market Access, and Market Competitiveness), two indicators underwent substantial changes (Land Rights and Access and Employment Opportunity) and two indicators underwent more minor changes (Women in the Economy and Access to Credit). The net addition of two indicators brought the total up to 22, and means that countries will be required to pass at least 11 instead of at least 10 indicators to pass the scorecard overall.

One notable development that may have driven some of these changes was the World Bank's publication of the first round of the Business Ready report last year. MCC had previously used the predecessor of this report (the Doing Business report) for three indicators on the scorecard before it was cancelled amid a scandal regarding data manipulation. The new report now informs five of the indicators on the scorecard, including the two completely new indicators to the scorecard, International Market Access and market Competitiveness. Those who are interested in using these data should be warned that the country coverage for these indicators is very low, but it is expected to increase as the World Bank publishes additional rounds of these data in the coming years (one third of countries are expected to be published each year on a rolling basis, starting with 2024). MCC addresses this issue by pairing the World Bank data with another sub-indicator that has broader country coverage. Note that the scorecards came out prior to the release of the 2025 Business Ready Report and so do not include data from that report on them, only the 2024 report.

7.Fiscal Policy

MCC dropped the Fiscal Policy indicator completely from the scorecards. This indicator had been on the scorecards since MCC's inception and measured the three-year rolling average of a country's fiscal deficit as a percent of GDP. It is unclear why this indicator was dropped or if anything is planned to replace it.

8.Business Start-Up

MCC reintroduced the Business Start-Up indicator, which was discontinued following the Doing Business cancellation. This indicator includes data from the Business Ready report on the cost and time to start up foreign and domestic businesses (very similarly to the former indicator) as well as data from the Heritage Foundation on business freedom. The components used in Heritage's index are largely duplicative of other components used on MCC's scorecard in the Gender in the Economy indicator, the Regulatory Quality indicator and elsewhere. As noted above the inclusion of Heritage allows MCC to pad the low country coverage from the Business Ready report. This indicator may be useful to readers that are interested in the business environment as measured by Business Ready, but need greater country coverage than it currently offers.

9.International Market Access

MCC added a new indicator on International Market Access. This indicator measures the time and cost to import and export goods from a country as measured by the Business Ready report. It also captures the number of capital controls present in a country as measured by the IMF's Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER) report. Specifically it looks at how many of the following capital controls that are in place: Repatriation requirements, Controls on capital and money market instruments, Controls on derivatives and other instruments, Controls on credit operations, Controls on direct investments, Controls on liquidation of direct investment, Controls on real estate transactions and Controls on personal capital transactions. If you are looking for a consolidated measure of capital controls and import and export barriers, this may be a useful indicator.

10.Market Competitiveness

The other completely new indicator that MCC added to the scorecards was the Market Competitiveness indicator. This is a combination of the quality of regulations for promoting competition and the Implementation of Key Services Promoting Market Competition as measured by Business Ready as well as the Bertelsmann Transformation Index's data on the organization of the market and competition. This indicator serves as a solid measure of innovation, monopoly controls, the quality of regulations around mergers and acquisitions, and the competitiveness of bidding for public contracts. This can be a useful indicator for the competitive environment in a country, especially until Business Ready has full country coverage.

11.Land Rights and Access/Property and Land Rights

MCC replaced the Land Rights and Access indicator with an indicator on Property and Land Rights. The old indicator used two sources, Varieties of Democracy (V-Dem) and the International Fund for Agricultural Development (IFAD). In the new indicator IFAD's component (specifically the Access to Land part of the Rural Sector Performance Assessment) is retained, while the V-Dem component is dropped. Instead of V-Dem MCC uses two new sources: data from Business Ready on the cost and time to transfer property (similar to the Doing Business component of this indicator that V-Dem replaced when Doing Business was discontinued) and the Heritage Foundation's data on Property Rights. The new indicator addresses concerns that IFAD failed to cover upper middle income countries (which started receiving MCC scorecards in 2025), and adds in issues of intellectual property rights which had not previously been covered. It may be a useful indicator for you, as long as you understand that the kinds of property rights that are measured for lower income countries (land), are very different than those measured for upper middle income countries (intellectual property rights).

12.Employment Opportunity

MCC's Employment Opportunity indicator underwent substantial revisions this year. Previously this indicator had four sources covering issues of employment discrimination, forced labor, disability rights, and civil society organization start up and shutdown. All of those sources have been dropped. Currently the indicator uses data on the prevalence of child labor, disability rights, and overall labor rights. The child labor data is drawn from SDG 8.7.1.1 (though, as above, MCC claims to be pulling from the World Bank's data bank) which measures "Percentage of children ages 5–17 involved in economic activities." The data on disability rights is drawn from the World Bank's Women Business and the Law report on women with disabilities (users are cautioned about using this report as it is unclear if it will be produced again in the future). The data on overall labor rights is drawn from the Business Ready report, specifically 1.1.1 (while we have disparaged Business Ready's track record on labor rights measures in the past on this blog, out of the indicators they produce, 1.1.1 is the best of what they offer).

Given the shifts in these data and the fact that the WBL report may not be produced in the future, we would urge caution in readers using this indicator from MCC. Instead consider using these indicators on global labor rights.

13. Women in the Economy

MCC's Women in the Economy indicator (formerly Gender in the Economy) underwent some minor changes this year. Previously data on child marriage and constitutional protections for equality was sourced from WORLD to make up 1/9th of the indicator. The rest of the indicator was comprised of data from Women Business and the Law 1.0. Now that small component has been replaced with other data from the Women Business and the Law's 2.0 report focused on child marriage, femicide and citizenship. Overall readers are encouraged to just use WBL's data directly instead of this index created by MCC. If you have a particular interest in ensuring Child marriage is included, just use the WBL 2.0 index instead of the 1.0 index (which lacks this component), or source these data from one of the other child marriage indicator institutions we recommend in our blog on the subject.

14. Access to Credit

Last, MCC made changes to the Access to Credit indicator. These were quite minor, reflecting the fact that the IMF's Financial development index is no longer reporting data, so MCC was required to get these data directly from the IMF's Financial Access Surveys. The other source for these data (the World Bank's Findex report) remains the same. These two sources are also the top two sources that we have recommended for balancing supply and demand side data on credit access and financial inclusion here. While the new data will be more up to date, the underlying concepts have not changed at all. These data are a strong measure of financial inclusion and credit access, and MCC's marriage of the supply and demand side indicators is a useful metric for readers to use. It is a good combination of SDG 8.10.1 from the IMF and 8.10.2 from the World Bank.