Indonesia Compact - Constraints Analysis

MCC’s evidence-based approach to its investments begins with a mutual understanding of a country’s main growth challenges. During the first phase of the compact or threshold program development process, MCC and the selected partner country, jointly conduct a constraints-to-growth analysis (CA). This analysis identifies the constraints to private investment and entrepreneurship that are most binding to economic growth in the country. The results of this analysis enable the country, together with MCC, to select activities most likely to contribute to sustainable, poverty-reducing growth.

The Constraints Analysis Report for the Indonesia Compact highlights the following binding constraints to economic growth:

1. Inadequate and poor quality of infrastructure, particularly transport networks and electricity supply, as well as irrigation supply in some provinces; 
2. Weaknesses in governance and institutions, especially in the prevalence of corruption, poor government effectiveness, and occasional occurrence of terrorism and violence incidences; and
3. Unequal access to and poor quality of education, particularly secondary and 
   vocational education.