Washington consensus - Definition and Overview

The Washington Consensus is a set of policies believed to be the formula for promoting economic growth in Latin America (although not for all countries). It was first presented by John Williamson from the Institute for International Economics in 1989.

The consensus included reforms that should be undertaken from 1989 (these reforms were also summarized by the World Bank in its year 2000 Poverty Report):

• Fiscal policy discipline
• Redirection of public spending toward education, health and infrastructure investment
• Tax reform - broadening the tax base and cutting marginal tax rates
• Interest rates that are market determined and positive (but moderate) in real terms
• Competitive exchange rates
• Trade liberalization - replacement of quantitative restrictions with low and uniform tariffs
• Openness to foreign direct investment
• Privatization of state enterprises
• Deregulation - abolition of regulations that impede entry or restrict competition, except or those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions
• Legal security for property rights

Some argue that the consensus is 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. These beliefs gained adherents in the early 21st century, when Argentina experienced an economic crisis despite following much of the consensus.

External links

• Diversity in Development: Reconsidering the Washington Consensus (Jan Joost Teunissen and Age Akkerman (eds.), December 2004, book, pdf) (http://www.fondad.org/publications/diversity/contents.htm)
• Did the Washington Consensus Fail? (by John Williamson) (http://www.iie.com/publications/papers/williamson1102.htm)
• The Washington Consensus as Policy Prescription for Development (World Bank) (http://info.worldbank.org/etools/bspan/PresentationView.asp?PID=1003&EID=328)
• What Should the World Bank Think about the Washington Consensus? (by John Williamson) (http://www.worldbank.org/research/journals/wbro/obsaug00/pdf/(6)Williamson.pdf)
• Fabian Global Forum for Progressive Global Politics: The Washington Consensus (by Adam Lent) (http://www.fabianglobalforum.net/knowledge/article023.html)
• The Economics of Empire - Notes on the Washington Consensus (by William Finnegan) (http://www.mindfully.org/WTO/2003/Economics-Of-EmpireMay03.htm)