Washington Consensus


Washington Consensus

The term Washington Consensus was initially coined in 1989 by John Williamson to describe a set of ten specific economic policy prescriptions that he considered to constitute a "standard" reform package promoted for crisis-wracked developing countries by Washington D.C based institutions such as the International Monetary Fund (IMF), World Bank and the U.S. Treasury Department. [ Williamson, John: [http://www.iie.com/publications/papers/paper.cfm?researchid=486 What Washington Means by Policy Reform] , in: Williamson, John (ed.): "Latin American Readjustment: How Much has Happened", Washington: Institute for International Economics 1989.]

Subsequently, as Williamson himself has pointed out, the term has come to be used in a different and broader sense, as a synonym for market fundamentalism; in this broader sense, Williamson states, it has been criticized by writers such as George Soros and Nobel Laureate Joseph E. Stiglitz,Williamson J. (2000). [http://www.iie.com/publications/papers/paper.cfm?ResearchID=351 What Should the Bank Think about the Washington Consensus] .] The Washington Consensus is also criticized by others such as some Latin American politicians and heterodox economists. The term has become associated with neoliberal policies in general and drawn into the broader debate over the expanding role of the free market, constraints upon the state, and US influence on other countries' national sovereignty.

Many countries have endeavored to implement varying components of the reform packages, with results that are much debated. Some critics focus on claims that the reforms led to destabilization [cite book |title=Development and Disorder: A History of the Third World since 1945 |last=Mason |first=Mike |authorlink= |coauthors= |year=1997 |publisher=University Press of New England |location=Hanover |isbn=0874518296 |pages=428 ] . Some critics have also blamed the Washington Consensus for particular economic crises such as that in Argentina, and for Latin America's economic inequalities. Criticism of the Washington Consensus has often been associated with -- or been accused of being associated with -- socialism and/or anti-globalism.

Williamson himself has summarized the overall results on growth, employment and poverty reduction in many countries as "disappointing, to say the least". He attributes this limited impact to three factors: (a) the Consensus "per se" placed no special emphasis on mechanisms for avoiding economic crises, which have proved very damaging; (b) the reforms -- both those listed in his article and, "a fortiori", those actually implemented -- were incomplete; and (c) the reforms cited were insufficiently ambitious with respect to targeting improvements in income distribution, and need to be complemented by stronger efforts in this direction. Rather than an argument for abandoning the original ten prescriptions, though, Williamson concludes that they are "motherhood and apple pie' and "not worth debating".Williamson J. (2002). [http://www.iie.com/publications/papers/paper.cfm?ResearchID=488 Did the Washington Consensus Fail?] ] Other analysts have pointed to longer term improvements in economic performance in a number of countries that have adopted the relevant policy changes consistently (below).

History

The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C.. [http://www.miami.com/mld/miamiherald/business/special_packages/business_monday/13527922.htm?source=rss&channel=miamiherald_business_monday] Williamson used the term to summarize the commonly shared themes among policy advice by Washington-based institutions at the time, such as the International Monetary Fund, World Bank, and U.S. Treasury Department, which were believed to be necessary for the recovery of Latin America from the economic and financial crises of the 1980s. However, Williamson rejects subsequent use of the term to cover a more general "neoliberal" agenda. [Moises Naim, [http://www.imf.org/external/pubs/ft/seminar/1999/reforms/Naim.HTM "Fads and Fashion in Economic Reforms: Washington Consensus or Washington Confusion?"] . October 26, 1999.]

A number of authors have stressed that Latin American policy-makers arrived at their packages of policy reforms primarily based on their own analysis of their countries' situations. Thus, according to Joseph Stanislaw and Daniel Yergin, authors of "The Commanding Heights", the policy prescriptions described in the Washington Consensus were "developed in Latin America, by Latin Americans, in response to what was happening both within and outside the region." [ Yergin, Daniel and Stanislaw, Joseph, "The Commanding Heights: The Battle Between Government and the Marketplace That Is Remaking the Modern World", 1998, pg. 237.] Joseph Stiglitz has written that "the Washington Consensus policies were designed to respond to the very real problems in Latin America and made considerable sense". Stiglitz is nevertheless a vociferous critic of IMF policies as applied to developing nations. [ Joseph Stiglitz, "Globalization and its Discontents" (2002), p. 53.] In view of the implication conveyed by the term Washington Consensus that the policies were largely external in origin, Stanislaw and Yergin report that the term's creator, John Williamson, has "regretted the term ever since", stating "it is difficult to think of a less diplomatic label." [Yergin and Stanislaw, op. cit., pg. 237.]

In Williamson's own words from 2002:

It is difficult even for the creator of the term to deny that the phrase "Washington Consensus" is a damaged brand name (Naím 2002). Audiences the world over seem to believe that this signifies a set of neoliberal policies that have been imposed on hapless countries by the Washington-based international financial institutions and have led them to crisis and misery. There are people who cannot utter the term without foaming at the mouth.

My own view is of course quite different. The basic ideas that I attempted to summarize in the Washington Consensus have continued to gain wider acceptance over the past decade, to the point where Lula has had to endorse most of them in order to be electable. For the most part they are motherhood and apple pie, which is why they commanded a consensus.

Williamson has argued that the term has taken on a different meaning more closely related to market fundamentalism than his original prescription entails. He claims that the first three prescriptions are uncontroversial in the economic community, but the others evoke some controversy. He claims that one of the least controversial prescriptions, the redirection of spending to infrastructure, healthcare, and education, was neglected. He also claims that while his prescriptions were focused on reducing the role of government, he does not endorse market fundamentalism, and believes that his prescriptions, if implemented correctly, would benefit the poor.

List of recommendations

The consensus included ten broad sets of recommendations] [ Williamson, John: [http://www.iie.com/publications/papers/paper.cfm?researchid=486 What Washington Means by Policy Reform] , in: Williamson, John (ed.): "Latin American Readjustment: How Much has Happened", Washington: Institute for International Economics 1989.] :

* Fiscal policy discipline;
* Redirection of public spending from subsidies ("especially indiscriminate subsidies") toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
* Tax reform – broadening the tax base and adopting moderate marginal tax rates;
* Interest rates that are market determined and positive (but moderate) in real terms;
* Competitive exchange rates;
* Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
* Liberalization of inward foreign direct investment;
* Privatization of state enterprises;
* Deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions; and,
* Legal security for property rights.

Macroeconomic adjustment

The widespread adoption by governments of the Washington Consensus was to a large degree a reaction to the macroeconomic crisis that hit much of Latin America, and some other developing regions, during the 1980s. The crisis had multiple origins: the drastic rise in the price of imported oil following the emergence of OPEC, mounting levels of external debt, the exogenous rise in US (and hence international) interest rates, and -- consequent to the foregoing problems -- loss of access to additional foreign credit. The import-substitution policies that had been pursued by many developing country governments in Latin America and elsewhere for several decades had left their economies ill-equipped to expand exports at all quickly to pay for the additional cost of imported oil (by contrast, many countries in East Asia, which had followed more export-oriented strategies, found it comparatively easy to expand exports still further, and as such managed to accommodate the external shocks with much less economic and social disruption). Unable either to expand external borrowing further or to ramp up export earnings easily, many Latin American countries faced no obvious sustainable alternatives to reducing overall domestic demand via greater fiscal discipline, while in parallel adopting policies to reduce protectionism and increase their economies' export orientation. [ See e.g., Patrice Franko, “The Puzzle of Latin American Development” (3rd edition, 2007), or Michael Read, "Forgotten Continent" (2007).]

Trade liberalization

The Washington Consensus, as framed by Williamson, envisaged a largely "unilateral" process of trade reform, by which countries would lower their non-tariff (especially) and tariff barriers to imports. Many countries, including the majority of those in Latin America, have indeed undertaken significant unilateral trade liberalization over subsequent years, opening their economies to greater import competition while simultaneously increasing the share of exports in their GDP (in parallel, Latin America's share in global trade has also increased).

A separate agenda -- only tangentially related to the Washington Consensus as framed by Williamson -- concerns various programs for "multilateral" trade liberalization, whether at the global (WTO) or regional level, including the NAFTA and DR-CAFTA agreements.

NAFTA and DR-CAFTA

As regards regional trade liberalization within the Americas, in the early 1990s, U.S. President George H. W. Bush began to draw up a U.S.-Mexican-Canadian free-trade proposal that came to be known as the North American Free Trade Agreement (NAFTA). NAFTA was later signed into law by Bush's successor, President Bill Clinton, and the three North American countries agreed to gradually phase out or sharply reduce tariffs on foreign goods, a policy perfectly in line with the ideals of the Consensus. Current President George W. Bush continues to support NAFTA, and his administration negotiated a similar agreement known as the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) with the Dominican Republic and Central America, which was approved by Congress in 2005.

Proponents of NAFTA and DR-CAFTA point out that they promote economic growth in the participating countries and are a boon to U.S. consumers, providing them with less-expensive foreign goods. Critics, who include figures coming both from a section of the political left (specifically including allies of the labor union movement and the anti-globalist left, such as Ralph Nader) and from part of the right (especially the nationalist/nativist tradition embodied by Patrick J. Buchanan), accuse the agreements of crippling the working class of the United States by promoting the relocation of production to cheaper labor markets in Mexico, and allege that such shifts have in addition resulted in the exploitation of Mexican laborers.

Empirical studies have found the quantitative impact of these trade agreements on the U.S. economy to be far smaller than predicted by either advocates or critics. ["NAFTA Revisited: Achievements and Challenges" edited by Gary Clyde Hufbauer and Jeffrey J. Schott (Washington, 2005, Peter G. Peterson Institute for International Economics).] While a Democratic president, Bill Clinton, signed NAFTA and a Republican president, George W. Bush, signed CAFTA, the United States Congress's subsequent support of these agreements has been more partisan. Most Republicans favor the agreements and most Democrats either oppose the agreements or call for their amendment -- e.g., to add stronger provisions on environmental protection and labor standards.

Criticisms of the Washington Consensus policies

As of 2008, several Latin American countries are led by socialist or other left wing governments, some of which have campaigned and adopted policies contrary to the Washington Consensus set of policies.

Anti-globalization movement

Many critics of trade liberalization, such as Noam Chomsky, Susan George, and Naomi Klein, see the Washington Consensus as a way to open the labor market of underdeveloped economies to exploitation by companies from more developed economies. The prescribed reductions in tariffs and other trade barriers allow the free movement of goods across borders according to market forces, but labor is not permitted to move freely due to the requirements of a visa or a work permit. This creates an economic climate where goods are manufactured using cheap labor in underdeveloped economies and then exported to rich First World economies for sale at what the critics argue are huge markups, with the balance of the markup said to accrue to large Multinational corporations. The criticism is that workers in the Third World economy nevertheless remain poor, as any pay raises they may have received over what they made before trade liberalization are said to be offset by inflation, whereas workers in the First World country become unemployed, while the wealthy owners of the multinational grow even more wealthy.

Anti-globalization critics further claim that First World countries impose what the critics describe as the consensus's neoliberal policies on economically vulnerable countries through organizations such as the World Bank and the International Monetary Fund and by political pressure and bribery. They argue that the Washington Consensus has not, in fact, led to any great economic boom in Latin America, but rather to severe economic crises and the accumulation of crippling external debts that render the target country beholden to the First World.

Many of the policy prescriptions (e.g., the privatization of state industries, tax reform, and deregulation) are criticized as mechanisms for ensuring the development of a small, wealthy, indigenous elite in the Third World who will rise to political power and also have a vested interest in maintaining the local status quo of labor exploitation.

Some specific factual premises of the critique as phrased above (especially on the macroeconomic side) are not accepted by defenders, or indeed all critics, of the Washington Consensus. To take a few examples, [ "Statistical Yearbook for Latin America and the Caribbean" (annual). UN Economic Commission for Latin America and the Caribbean. ] inflation in many developing countries is now at its lowest levels for many decades (low single figures for very much of Latin America). Workers in factories created by foreign investment are found typically to receive higher wages and better working conditions than are standard in their own countries' domestically-owned workplaces. Economic growth in much of Latin America in the last few years has been at historically high rates, and debt levels, relative to the size of these economies, are on average significantly lower than they were several years ago.

Despite these macroeconomic advances, poverty and inequality remain at high levels in Latin America. About one of every three people - 165 million in total- still live on less than $2 a day. Roughly a third of the population has no access to electricity or basic sanitation, and an estimated 10 million children suffer from malnutrition. These problems are not, however, new: Latin America was the most economically unequal region in the world in 1950, and has continued to be so ever since, during periods both of state-directed import-substitution and (subsequently) of market-oriented liberalization. [Michael Read, "Forgotten Continent" (2007), page 156.]

Some socialist political leaders in Latin America are vocal and well-known critics of the Washington Consensus, such as Venezuelan President Hugo Chávez, Cuban ex-President Fidel Castro, Bolivian President Evo Morales, and Rafael Correa, President of Ecuador. In Argentina, too, the recent Peronist party government of Nestor Kirchner undertook policy measures which represented a repudiation of at least some Consensus policies (see Continuing Controversy below).

Others on the Latin American left take a different approach. Governments led by the Socialist Party of Chile, by Alan Garcia in Peru, by Tabare Vasquez in Uruguay, and by Lula in Brazil, have in practise maintained a high degree of continuity with the economic policies described under the Washington Consensus (debt-paying, protection to foreign investment, financial reforms, etc.). But governments of this type have simultaneously sought to supplement these policies by measures directly targeted at improving productivity and helping the poor, such as education reforms and subsidies to poor families conditioned on their children staying in school.

Neo-Keynesian criticisms

Neo-Keynesian and post-Keynesian critics of the Consensus have argued that the underlying policies were incorrectly laid down and are too rigid to be able to succeed. For example, flexible labor laws were supposed to create new jobs, but economic evidence from Latin America is inconclusive on this point. In addition, some argue that the package of policies does not take into account economic and cultural differences between countries. Some critics have argued that this set of policies should be implemented, if at all, during a period of rapid economic growth and not – as often is the case – during an economic crisis.

Moises Naim, chief editor of "Foreign Policy", has made the argument that there was no 'consensus' in the first place. He has argued that there are and have been major differences between economists over what is the 'correct economic policy', hence the idea of there being a consensus was also flawed. Naim is, however, known among policy analysts as one who enjoys playing the role of devil's advocate or, to use his own words, "offering readers a perspective they can't find anywhere else". [ [http://www.mediabistro.com/articles/cache/a9651.asp Ellies 2007: So What Do You Do, Moisés Naím, Editor, Foreign Policy? - mediabistro.com Content ] ]

The case of Argentina

The Argentine economic crisis of 1999-2002 is often held out as an example of the economic devastation said by some to have been wrought by application of the Washington Consensus. Argentina's Deputy Foreign Minister Jorge Taiana, in an interview with the state news agency Télam on August 16 2005, attacked the Washington Consensus. There never was a real consensus for such policies, he said, and today "a good number of governments of the hemisphere are reviewing the assumptions with which they applied those policies in the 1990s," adding that governments are looking for a development model to guarantee productive employment and the generation of real wealth. [http://www.telam.com.ar/especial_xx04.asp]

Many economists, however, challenge the view that Argentina's failure can be attributed to close adherence to the Washington Consensus. The country's adoption of an idiosyncratic fixed exchange rate regime ("convertibility"), which became increasingly uncompetitive, together with its failure to achieve effective control over its fiscal accounts, both ran counter to central provisions of the Consensus, and paved the way directly for the ultimate macroeconomic collapse. The market-oriented policies of the early Menem-Cavallo years, meanwhile, soon petered out in the face of domestic political constraints (including Menem's preoccupation with securing re-election). [ See, e.g., Perry and Serven, "The Anatomy of a Multiple Crisis" (2003); Mussa, "Argentina and the Fund" (2002); Blustein, "And the Money Kept Flowing In.... and Out" (2005). ]

The IMF's independent evaluation office has issued a review of the lessons of Argentina for the institution, summarized in the following quotation:

::The Argentine crisis yields a number of lessons for the IMF, some of which have already been learned and incorporated into revised policies and procedures. This evaluation suggests ten lessons, in the areas of surveillance and program design, crisis management, and the decision-making process. [http://www.imf.org/External/NP/ieo/2004/arg/eng/index.htm"Report on the Evaluation of the Role of the IMF in Argentina, 1991–2001." Independent Evaluation Office of the IMF, July 2004.] ]

Some commentators argue that, in more recent years, Argentina under former President Nestor Kirchner made a break with the Consensus and that this led to a significant improvement in its economy; some add that Ecuador may soon follow suit. [Weisbrot, Mark, [http://www.iht.com/articles/2006/12/28/opinion/edweis.php "Doing it their own way,"] "International Herald Tribune", December 28, 2006] However, while Kirchner's reliance on price controls and similar administrative measures (often aimed primarily at "foreign-invested" firms such as utilities) clearly ran counter to the spirit of the Consensus, his administration in fact ran an extremely tight fiscal ship and maintained a highly competitive floating exchange rate; Argentina's immediate bounce-back from crisis, further aided by abrogating its debts and a fortuitous boom in prices of primary commodities, leaves open issues of longer-term sustainability. [ [http://www.petersoninstitute.org/publications/papers/mussa0406.pdf Global Economic Prospects 2006/2007 ] ] "The Economist" has argued that the Nestor Kirchner administration will end up as one more in Argentina's long history of populist governments. [ See, e.g., The Economist. 12 April 2006. Latin America - The return of populism.]

In 2003, Argentina's then-President Nestor Kirchner and Brazilian President Lula da Silva signed the "Buenos Aires Consensus," a manifesto in opposition to the policies of the Washington Consensus. [Massaldi, Julian, [http://www.zmag.org/content/showarticle.cfm?ItemID=4536 "Buenos Aires Consensus: Lula and Kirchner's agreement 'Against Neoliberalism'"] , Znet, November 20, 2003] Skeptical political observers note, however, that Lula's rhetoric on such public occasions should be distinguished from the policies actually implemented by his administration. [ See, e.g., Financial Times at following link: http://www.ft.com/cms/s/d62ca1a2-c219-11db-ae23-000b5df10621.html. ]

ubsidy for agriculture in Malawi

Some critics of the Washington Consensus cite Malawi's experience with agricultural subsidies as exemplifying perceived flaws in the package's prescriptions. For decades, the World Bank and donor nations pressed Malawi, a predominantly rural country in Africa, to cut back or eliminate government fertilizer subsidies to farmers. World Bank experts also urged the country to have Malawi farmers shift to growing cash crops for export and to use foreign exchange earnings to import food. [New York Times, 2007 December 2, "Ending Famine, Simply by Ignoring the Experts," http://www.nytimes.com/2007/12/02/world/africa/02malawi.html?em&ex=1196744400&en=8dc6209db5ec0efe&ei=5087%0A ] For years, Malawi hovered on the brink of famine; after a particularly disastrous corn harvest in 2005, almost five million of its 13 million people needed emergency food aid. Malawi’s newly elected president Bingu wa Mutharika then decided to reverse policy. Introduction of deep fertilizer subsidies (and lesser ones for seed), abetted by good rains, helped farmers produce record-breaking corn harvests in 2006 and 2007; according to government reports, corn production leapt from 1.2 million metric tons in 2005 to 2.7 million in 2006 and 3.4 million in 2007. The prevalence of acute child hunger has fallen sharply and Malawi recently turned away emergency food aid.

In a commentary on the Malawi experience prepared for the Center for Global Development [ [http://blogs.cgdev.org/globaldevelopment/2007/12/the_value_of_rejecting_expert_1.php Global Development: Views from the Center: The Value of Rejecting Expert Advice ] ] , development economists Vijaya Ramachandran and Peter Timmer argue that fertilizer subsidies in parts of Africa (and Indonesia) can have benefits that substantially exceed their costs. They caution, however, that how the subsidy is operated is crucial to its long-term success, and warn – for example – against allowing fertilizer distribution to become a monopoly. Ramachandran and Timmer also stress that African farmers need more than just input subsidies – they need better research to develop new inputs and new seeds, as well as better transport and energy infrastructure. The World Bank reportedly now sometimes supports the temporary use of fertilizer subsidies aimed at the poor and carried out in a way that fosters private markets: “In Malawi, Bank officials say they generally support Malawi’s policy, though they criticize the government for not having a strategy to eventually end the subsidies, question whether its 2007 corn production estimates are inflated and say there is still a lot of room for improvement in how the subsidy is carried out”. [New York Times, 2007 December 2, “Ending Famine, Simply by Ignoring the Experts,” http://www.nytimes.com/2007/12/02/world/africa/02malawi.html?em&ex=1196744400&en=8dc6209db5ec0efe&ei=5087%0A ]

Continuing controversy

Most Latin American countries continue to struggle with high poverty and underemployment. Chile has been offered as an example of a Consensus success story, and countries such as El Salvador and Uruguay have also shown some positive signs of economic development. Brazil, despite relatively modest rates of aggregate growth, has seen important progress in recent years in the reduction of poverty.

Joseph Stiglitz has argued that the Chilean success story owes a lot to state ownership of key industries, particularly its copper industry, and currency interventions stabilizing capital flows. Many other economists, though, argue that Chile's economic success is largely due to its combination of sound macroeconomics and market-oriented policies (though the country's relatively strong public institutions, including one of the better public school systems in the region, also deserve some credit). [ See, e.g., Martinez and Diaz, "Chile: the Great Transformation" (1995).]

There have been claims of discrepancies between the Washington Consensus as propounded by Williamson, and the policies actually implemented with the endorsement of the Washington institutions themselves. For example, the Washington Consensus stated a need for investment in education, but the policies of fiscal discipline promoted by the International Monetary Fund have sometimes in practise led countries to cut back public spending on social programs, including such areas as basic education. Those familiar with the work of the IMF respond that, at a certain stage, countries near bankruptcy have to cut back their public spending one way or another to live within their means. [ [http://econ161.berkeley.edu/Politics/Fischer_Asia.html Stanley Fischer on the IMF and East Asia ] ] Washington may argue for enlightened choices among different public spending priorities, but in the last analysis it is domestically-elected political leaders who ultimately have to make the tough political choices.

Countries that have implemented market policies following Washington Consensus

* Argentina
* Bolivia
* Brazil (Plano Real)
* Chile
* Colombia
* Costa Rica
* Dominican Republic
* Ecuador
* El Salvador
* Guatemala
* Honduras
* India
* Indonesia
* Mexico
* Morocco
* Nicaragua
* Paraguay
* Peru
* South Korea
* Thailand
* Tunisia
* Uruguay
* Zambia

Countries with governments opposed to Washington Consensus

"Note: incomplete list."

* Argentina
* Belarus
* Brazil (?) Clearly opposed in rhetoric, much less so in practice. Was able to be independent from the IMF monitoring and counseling.
* Bolivia
* Burma (Myanmar)
* People's Republic of China (?)
* Cuba
* Ecuador
* Iran
* North Korea
* Russia (an adjustment after the disasters on the 1990s)
* South Africa(?) Whatever the rhetoric, Finance Minister Trevor Manuel has maintained "orthodox" macroeconomic policy.
* Venezuela
* Vietnam (?)
* Zimbabwe (?) (Zimbabwe reportedly worked with -- and was rated as satisfactory by -- the IMF during a relatively brief period of the mid-1990s. [See MG article http://www.mg.co.za/articlePage.aspx?articleid=306523&area=/supzim0407_home/supzim0407_content/] )

Note, however, that not all analysts would agree that all countries can be assigned objectively to lists of this kind. Countries' actual policy actions often differ from their rhetoric, many countries are in a "gray" zone, and a case could be made for challenging and/or reversing many of the above classifications. Among other commentators, work published by the World Bank reports that Brazil, China and Vietnam, at least, in their practical policy actions, draw heavily on the substantive elements of the Washington Consensus. [ For general discussion of economic policies on a cross-country basis see, e.g., World Bank. "Economic Growth in the 1990s." (Washington, 2005). For Brazil, see Financial Times at following link: http://www.ft.com/cms/s/d62ca1a2-c219-11db-ae23-000b5df10621.html. ]

Beyond the Washington Consensus

A significant body of economists and policy-makers argues that what was wrong with the Washington Consensus as originally formulated by Williamson had less to do with what was "included" than with what was "missing". [ See, as examples representative of a much more extensive literature, e.g., Birdsall and de la Torre. "Washington Contentious" (2003); Kuczynski and Williamson (eds.), "After the Washington Consensus" (2003). ] This view asserts that countries such as Brazil, Chile, Peru and Uruguay, now governed by parties of the left, have – whatever their rhetoric – not in practice abandoned most of the substantive elements of the Consensus. Countries that have achieved macroeconomic stability through fiscal and monetary discipline have been loath to abandon it: Brazil's President Lula, the leader of the Workers' Party, is explicit that the defeat of hyperinflation was among the most important positive contributions of recent years to the welfare of the country's poor. Nor have these countries in practice reversed their more open orientation to global trade and international investment in favor of a return to the policies of autarchy pursued between the 1950s and 1980s.

These economists and policy-makers would, however, overwhelmingly agree that the Washington Consensus was "incomplete", and that countries in Latin America and elsewhere need to move beyond "first generation" macroeconomic and trade reforms to a stronger focus on productivity-boosting reforms and direct programs to support the poor. [ See, e.g., Birdsall and de la Torre, "Washington Contentious" (2003); de Ferranti and Ody, "Key Economic and Social Challenges for Latin America" (2006): http://www.brookings.edu/views/papers/20060803.pdf ] This includes improving the investment climate and elimination of red tape (especially for smaller firms), strengthening institutions (in areas like justice systems), fighting poverty directly via the types of Conditional Cash Transfer programs adopted by countries like Mexico and Brazil, improving the "quality" of primary and secondary education, boosting countries' effectiveness at developing and absorbing technology, and addressing the special needs of historically disadvantaged groups including indigenous peoples and Afro-descendant populations across Latin America.

ee also

* Macroeconomics
* Gross domestic product
* Democratic capitalism
* Economic growth
* Hyperinflation
* North American Free Trade Agreement (NAFTA)
* Central America Free Trade Agreement (CAFTA)

References

ources

;Development of the Washington Consensus model
* "Accelerated Development in Sub-Saharan Africa: An Agenda for Action", Eliot Berg, coord., (World Bank, 1981).
* "The Spirit of Democratic Capitalism", by Michael Novak (1982).
* "El Otro Sendero (The Other Path)", by Hernando de Soto (1986).
* "Toward Renewed Economic Growth in Latin America", by Bela Balassa, Gerardo M. Bueno, Pedro-Pablo Kuczynski, and Mario Henrique (Institute for International Economics, 1986).
* "Latin American Adjustment: How Much Has Happened", edited by John Williamson (Institute for International Economics, 1990).
* "The Macroeconomics of Populism in Latin America", edited by Rudiger Dornbusch and Sebastian Edwards (1991).
* "Global Linkages: Macroeconomic Interdependence and Cooperation in the World Economy", by Jeffrey Sachs and Warwick McKibbin (1991).
* "World Development Report 1991: The Challenge of Development", by Lawrence Summers, Vinod Thomas, et al. (World Bank, 1991).
* "Development and the "Washington Consensus"", in "World Development" Vol 21:1239-1336 by John Williamson (1993).
* “Recent Lessons of Development,” Lawrence H. Summers & Vinod Thomas (1993).
* "Latin America’s Journey to the Market: From Macroeconomic Shocks to Institutional Therapy", by Moises Naím (1994).
* "Economistas y Politicos: La Política de la Reforma Económica", by Agustín Fallas-Santana (1996).
* "The Crisis of Global Capitalism: Open Society Endangered", by George Soros (1997).
* "Beyond Tradeoffs: Market Reform and Equitable Growth in Latin America", edited by Nancy Birdsall, Carol Graham, and Richard Sabot (Brookings Institution, 1998).
* "The Third Way: Toward a Renewal of Social Democracy", by Anthony Giddens (1998).
* "The Lexus and the Olive Tree: Understanding Globalization", by Thomas Friedman (1999).
* [http://www.imf.org/external/pubs/ft/seminar/1999/reforms/Naim.HTM#I "Fads and Fashion in Economic Reforms: Washington Consensus or Washington Confusion?"] , by Moises Naim (IMF, 1999).
* "Washington Contentious: Economic Policies for Social Equity in Latin America", by Nancy Birdsall and Augusto de la Torre (Carnegie Endowment for International Peace and Inter-American Dialogue, 2001)
* [http://www.iie.com/publications/papers/williamson1102.htm "Did the Washington Consensus Fail?"] , by John Williamson (Speech at IIE, 2002).
* "After the Washington Consensus", edited by Pedro-Pablo Kuczynski and John Williamson (Institute for International Economics, 2003).

;Analysis and critiques
* [http://www.pbs.org/wgbh/commandingheights/ The Commanding Heights: The Battle for the World Economy] , by Daniel Yergin and Joseph Stanislaw (2002). PBS series and book that traces the debate between advocates of the Washington Consensus and their critics.
*" [http://taylorandfrancis.metapress.com/(yeetxzuumannzuneg4jipj45)/app/home/contribution.asp?referrer=parent&backto=issue,7,8;journal,8,37;linkingpublicationresults,1:101485,1 The contentious Washington Consensus: reforming the reforms in emerging markets] ." by Carlos Santiso (2004). Review of International Political Economy 11(4).
* [http://www0.gsb.columbia.edu/ipd/programs/item.cfm?ptid=4&prid=85&iyid=13&itid=946 "Stability with Growth: Macroeconomics, Liberalization, and Development (Initiative for Policy Dialogue Series C) ; "by Joseph E. Stiglitz, Jose Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar; Oxford University Press 2006"]
* "Economic Crisis and Policy Choice: The Politics of Adjustment in the Third World", edited by Joan M. Nelson (1990).
* "Latin American Political Economy in the Age of Neoliberal Reform and Democracy, Markets, and Structural Reform in Latin America", edited by William C. Smith, Carlos H. Acuña, and Eduardo A. Gamarra (North-South Center, 1994).
* "Crisis and Reform in Latin America: From Despair to Hope", by Sebastian Edwards (1995).
* "Politics, Social Change, and Economic Restructuring in Latin America", by William C. Smith and Roberto Patricio Korzeniewicz (North-South Center, 1997).
* "Fault Lines of Democracy in Post-Transition Latin America", Felipe Agüero and Jeffrey Stark (1998).
* "What Kind of Democracy? What Kind of Market? Latin America in the Age of Neoliberalism", by Philip D. Oxhorn and Graciela Ducatenzeiler (1998).
* "Latin America Transformed: Globalization and Modernity", by Robert N. Gwynne and Cristóbal Kay (1999).
* "The Internationalization of Palace Wars: Lawyers, Economists, and the Contest to Transform Latin American States", by Yves Dezalay and Bryant G. Garth (2002).
* "From the “Washington” towards a “Vienna Consensus”? A quantitative analysis on globalization, development and global governance", by Arno Tausch and Christian Ghymers, Nova Science Publishers, Haupauge, New York, 2006
* FONDAD: [http://www.fondad.org/publications/diversity/contents.htm "Diversity in Development: Reconsidering the Washington Consensus"] , edited by Jan Joost Teunissen and Age Akkerman (2004).
* [http://info.worldbank.org/etools/bspan/PresentationView.asp?PID=1003&EID=328 The Washington Consensus as Policy Prescription for Development] (World Bank)
* [http://www.worldbank.org/research/journals/wbro/obsaug00/pdf/(6)Williamson.pdf What Should the World Bank Think about the Washington Consensus?] , by John Williamson.
* [http://www.fabianglobalforum.net/knowledge/article023.html Fabian Global Forum for Progressive Global Politics: The Washington Consensus] , by Adam Lent.
* [http://www.mindfully.org/WTO/2003/Economics-Of-EmpireMay03.htm The Economics of Empire - Notes on the Washington Consensus] , by William Finnegan.
* [http://multinationalmonitor.org/mm2000/00april/interview.html Unraveling the Washington Consensus, An Interview with Joseph Stiglitz]
* [http://www.serendipity.li/hr/imf_and_dollar_system.htm How the IMF Props Up the Bankrupt Dollar System]

External links

* [http://www.cid.harvard.edu/cidtrade/issues/washington.html Center for International Development at Harvard University describing the Washington Consensus]
* [http://www.cid.harvard.edu/cidtrade/issues/washingtonlink.html Cited links to the above article]
* [http://www.imf.org/external/pubs/ft/fandd/2003/09/pdf/clift.pdf Beyond the Washington Consensus by Jeremy Clift]


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