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The Washington Consensus is a phrase initially coined in 1989 by John Williamson to describe a set of ten economic policy prescriptions that he considered to constitute a "standard" reform package promoted for crisis-wracked countries by Washington, D.C-based institutions such as the International Monetary Fund (IMF), World Bank and U.S. Treasury Department.^[1] John Williamson is an economist and the originator of the Washington Consensus. ... In economics, crisis is an old term in business cycle theory, referring to the sharp transition to a recession. ... ... IMF redirects here. ... The World Bank logo The World Bank (the Bank) is a part of the World Bank Group (WBG), is a bank that makes loans to developing countries for development programs with the stated goal of reducing poverty. ... The United States Department of the Treasury is a Cabinet department, a treasury, of the United States government established by an Act of U.S. Congress in 1789 to manage the revenue of the United States government. ...

Several countries have attempted to implement components of the reform package. As a result, the Washington Consensus has attracted a great deal of debate outside of economics as well, being criticized publicly by Latin American politicians among others, while proponents argue those same politicians implement most of the reforms in their own governments. In the political arena the Washington Consensus is invariably brought up as part of a larger argument involving issues such as an expanding role of market forces, constraining the role of the state, neo-liberalism or market fundamentalism, or American influence. Hence, criticism of the Washington Consensus has often been associated with, or accused of being associated with, Socialism, anti-globalism, and anti-americanism. The term neoliberalism is used to describe a political-economic philosophy that had major implications for government policies beginning in the 1970s – and increasingly prominent since 1980 – that de-emphasizes or rejects positive government intervention in the economy, focusing instead on achieving progress and even social justice by encouraging free... Market fundamentalism (or free-market fundamentalism) is a conviction that free markets are generally beneficial. ... Socialism refers to the goal of a socio-economic system in which property and the distribution of wealth are subject to control by the community. ... Anti-globalization (anti-globalisation) is a political stance of opposition to the perceived negative aspects of globalization. ... Anti-Americanism, often Anti-American sentiment, is defined as being opposed or hostile to the United States of America, its people, its principles, or its policies. ...

Notably, critics have blamed the Washington Consensus for particular economic crises of the late 1990's such as Argentina, and Latin American wealth inequalities. Meanwhile proponents argue the reform package is being used as a scapegoat for governments' financial mismanagement, and that most of the principles of the Washington Consensus, or variants of them have gained widespread acceptance. The Scapegoat by William Holman Hunt, 1854. ...

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.. [1] 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 financial crisis of the 1980s. However, Williamson rejects subsequent use of the term to cover a more general "neoliberal" agenda.^[2] Alan Greenspan, former chairman, United States Federal Reserve. ... The Institute for International Economics (IIE) is a think tank focused on international economics, based in Washington, D.C. It was founded in 1981. ... This article is about the institution. ... For other uses, see Washington, D.C. (disambiguation). ... The 1980s refers to the years from 1980 to 1989, also called The Eighties. The decade saw social, economic and general upheaval as wealth, production and western culture migrated to new industrializing economies. ...

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."^[3] 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. ^[4] 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." ^[5] Dr. Joseph Stanislaw is a leading adviser on international markets and politics. ... Daniel H. Yergin (born February 6, 1947) is an American author and economic researcher. ... Commanding Heights: The Battle for the World Economy is a book by Daniel Yergin and Joseph Stanislaw, first published as The Commanding Heights: The Battle Between Government and the Marketplace That Is Remaking the Modern World in 1998. ... Joseph Stiglitz (born February 9, 1943) is an American economist, author and winner of Nobel Prize for economics ( 2001). ...

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.^[6]

List of recommendations

The consensus included ten broad sets of recommendations:

• 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.

Fiscal policy is the economic term that defines the set of principles and decisions of a government in setting the level of public expenditure and how that expenditure is funded. ... Public finance (government finance) is the field of economics that deals with budgeting the revenues and expenditures of a public sector entity, usually government. ... Invest redirects here. ... Tax reform is the process of changing the way taxes are collected or managed by the government. ... An interest rate is the price a borrower pays for the use of money he does not own, and the return a lender receives for deferring his consumption, by lending to the borrower. ... Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers. ... Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        For other uses of this word, see tariff (disambiguation). ... This article is about economics. ... Origins People Theories Ideas Movements Topics Related Philosophy Portal Politics Portal        Privatization is the incidence or process of transferring ownership of business from the public sector (government) to the private sector (business). ... A state-owned enterprise (SOE) is an enterprise, often a corporation, owned by a government. ... Deregulation is the process by which governments remove, reduce, or simplify restrictions on business and individuals in order to (in theory) encourage the efficient operation of markets. ... In financial economics, a financial institution acts as an agent that provides financial services for its clients. ... This page deals with property as ownership 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.^[7] Circulation in macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, and behavior of a national economy as a whole. ... The Organization of Petroleum Exporting Countries (OPEC) is a large group of countries[1][2] made up of Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Venezuela, and Ecuador (which rejoined OPEC in November 2007). ...

Trade liberalization

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. For the band, see 1990s (band). ... Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas  US Government Portal      For other uses, see President of the United States (disambiguation). ... George Herbert Walker Bush (born June 12, 1924) was the 41st President of the United States, serving from 1989 to 1993. ... Motto: (traditional) In God We Trust (official, 1956–present) Anthem: The Star-Spangled Banner Capital Washington, D.C. Largest city New York City Official language(s) None at the federal level; English de facto Government Federal Republic  - President George W. Bush (R)  - Vice President Dick Cheney (R) Independence - Declared - Recognized... Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers. ... NAFTA redirects here. ... William Jefferson Bill Clinton (born William Jefferson Blythe III[1] on August 19, 1946) was the 42nd President of the United States, serving from 1993 to 2001. ... George Walker Bush (born July 6, 1946) is the forty-third and current President of the United States of America, originally inaugurated on January 20, 2001. ... Presidents Francisco Flores Pérez (former), Ricardo Maduro, George W. Bush, Abel Pacheco (former), Enrique Bolaños and Alfonso Portillo (former) The Dominican Republic–Central America Free Trade Agreement, commonly called DR-CAFTA (pronounced Doctor Cafta), is a free trade agreement (legally a treaty under international law, but not under... For other uses, see Central America (disambiguation). ... Type Bicameral Houses Senate House of Representatives President of the Senate President pro tempore Dick Cheney, (R) since January 20, 2001 Robert C. Byrd, (D) since January 4, 2007 Speaker of the House Nancy Pelosi, (D) since January 4, 2007 Members 535 plus 4 Delegates and 1 Resident Commissioner Political... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ...

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. World GDP/capita changed very little for most of human history before the industrial revolution. ... Ralph Nader (born February 27, 1934) is an American attorney, author, lecturer, political activist, and candidate for President of the United States in five elections. ... Patrick Buchanan Patrick Joseph Buchanan (born November 2, 1938), usually known as Pat Buchanan, is an American conservative journalist and a well known television political commentator. ... The term working class is used to denote a social class. ...

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. ^[8]

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. Federal courts Supreme Court Circuit Courts of Appeal District Courts Elections Presidential elections Midterm elections Political Parties Democratic Republican Third parties State & Local government Governors Legislatures (List) State Courts Local Government Other countries Atlas  Politics Portal      Further information: Politics of the United States#Organization of American political parties The Democratic... GOP redirects here. ... Look up Partisan (political) in Wiktionary, the free dictionary In politics, a partisan is a person who supports a cause, party, or goal fervently, usually to the exclusion of all others. ...

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. Latin America consists of the countries of South America and some of North America (including Central America and some the islands of the Caribbean) whose inhabitants mostly speak Romance languages, although Native American languages are also spoken. ... Socialism is a social and economic system (or the political philosophy advocating such a system) in which the economic means of production are owned and controlled collectively by the people. ...

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. Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers. ... Avram Noam Chomsky (born December 7, 1928) is an American linguist, philosopher, political activist, author, and lecturer. ... Susan George is a well known political scientist and writer on Third World poverty, underdevelopment and debt. ... Naomi Klein (b. ... Labour economics seeks to understand the functioning of the market for labour. ... A trade barrier is general term that describes any government policy or regulation that restricts international trade, the barriers can take many forms, including: Import duties Import licenses Export licenses Quotas Tariffs Subsidies Non-tariff barriers to trade Most trade barriers work on the same principle: the imposition of some... Market Forces is a science-fiction novel by Richard Morgan, first published in 2004. ... Entry visa valid in Schengen treaty countries. ... For the Jamaican reggae band, see Third World (band). ... Wealth usually refers to money and property. ...

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. Anti-WEF grafiti in Lausanne. ... For the school of international relations, see Neoliberalism in international relations. ... Bribery is a crime implying a sum or gift given alters the behaviour of the person in ways not consistent with the duties of that person. ...

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,^[9] 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.^[10]

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. Cuba is a Communist planned economy and Venezuela implements Chávez's own brand of "twenty-first century socialism," powered by Venezuela's large oil reserves. 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). List of Presidents of Venezuela José Antonio Páez (1830-1835) José María Vargas (1835-1837) Carlos Soublette (1837-1839) José Antonio Páez (1839-1843) Carlos Soublette (1843-1847) José Tadeo Monagas (1847-1851) José Gregorio Monagas (1851-1855) José Tadeo Monagas (1855-1858) Julián Castro (1858... Hugo Rafael Chávez Frías (pronounced ) (born July 28, 1954) is the current President of Venezuela. ... Fidel Alejandro Castro Ruz (born on August 13, 1926) is the current President of Cuba but on indefinite medical hiatus. ... The President of Bolivia is the head of state of Bolivia. ... Juan Evo Morales Ayma (born October 26, 1959 in Orinoca, Oruro), popularly known as Evo (pronounced ), is the President of Bolivia, and has been declared the countrys first fully indigenous head of state since the Spanish Conquest in 470 years. ... Rafael Vicente Correa Delgado (born 6 April 1963 in Guayaquil) [1]is the President of the Republic of Ecuador. ... This article is about the form of society and political movement. ... This article refers to an economy controlled by the state. ... Petro redirects here. ... Peronism is an Argentine political ideology based on the ideas and programs associated with former president Juan Perón. ... Néstor Carlos Kirchner Ostoić (born 25 February 1950) is the current President of Argentina. ...

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 (macro-economic discipline, opening to trade and 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. Alan Garc rez (born May 23, 1949 in Lima) was President of Peru from 1985 to 1990. ... Luiz Inácio Lula da Silva (pron. ...

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. New Keynesian economics developed partly in response to new classical economics. ... Post-Keynesian economics is a school of thought which is based on the ideas of John Maynard Keynes. ... This article is in need of attention. ... Job creation programs are programs or project undertaken by a government or state of a nation in order to achieve assist the population in seeking employment. ... In economics, crisis is an old term in business cycle theory, referring to the sharp transition to a recession. ...

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". ^[11] Moisés Naím is editor and publisher of Foreign Policy. ... A countrys foreign policy is a set of political goals that seeks to outline how that particular country will interact with other countries of the world and, to a lesser extent, non-state actors. ... For other uses, see Devils advocate (disambiguation). ...

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. [2] Jorge Taiana is an Argentine Justicialist Party politician, currently Foreign Minister (canciller) in the government of President Néstor Kirchner. ... Télam is the Argentine national news agency founded in 1945. ... is the 228th day of the year (229th in leap years) in the Gregorian calendar. ... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ...

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). ^[12]

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. ^[13]

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. ^[14] 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. ^[15] The Economist has argued that the Nestor Kirchner administration will end up as one more in Argentina's long history of populist governments. ^[16]

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. ^[17] Skeptical political observers note, however, that Lula's rhetoric on such public occasions should be distinguished from the policies actually implemented by his administration. ^[18] Year 2003 (MMIII) was a common year starting on Wednesday of the Gregorian calendar. ... Luiz Inácio Lula da Silva (born October 6, 1945) is a left-wing Brazilian politician. ...

Subsidy 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.^[19] 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. President Bingu wa Mutharika addressing the United Nations General Assembly. ...

In a commentary on the Malawi experience prepared for the Center for Global Development^[20] , 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”.^[21] The Center for Global Development (CGD) is a think tank focused on reducing global poverty and inequality, headquartered in Washington, D.C. CGD was founded in November 2001 by Edward W. Scott, Jr. ...

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. A boy from Jakarta, Indonesia shows his find. ... In economics, the term underemployment has at least three different distinct meanings and applications. ...

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). ^[22] Joseph Stiglitz (born February 9, 1943) is an American economist, author and winner of Nobel Prize for economics ( 2001). ... For other uses, see Copper (disambiguation). ...

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.^[23] 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

The Plano Real (Portuguese, Real Plan) was a set of measures taken to stabilize the Brazilian economy in the early 1990s, under the direction of Fernando Henrique Cardoso as the Minister of Finance. ...

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
• China (?)
• Cuba
• Ecuador
• Iran
• Myanmar (Burma)
• North Korea
• Russia
• Venezuela
• Vietnam (?)
• Zimbabwe

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.^[24]

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.^[25] 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. Lula may refer to: // [edit] Geography Lula, a village in Groningen province, the Netherlands. ...

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.^[26] 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. Red tape (or sometimes paperwork) is a derisive term for excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents action or decision-making. ... -1... For other uses, see Native Americans (disambiguation). ... Language(s) Portuguese, Spanish, and several creoles Religion(s) Predominantly Christian (mainly Roman Catholic); minorities practicing Judaism, Islam, or no religion Related ethnic groups sub-Saharan, African American, Afro-European An Afro-Latin American (also Afro-Latino) is a Latin American person of at least partial African ancestry; the term...

See also

• Macroeconomics
• Gross domestic product
• Democratic capitalism
• Economic growth
• Hyperinflation
• NAFTA
• CAFTA

Circulation in macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, and behavior of a national economy as a whole. ... GDP redirects here. ... Democratic Capitalism is a right-of-center ideology that supports a mainly capitalist market economy, with some limitations (i. ... World GDP/capita changed very little for most of human history before the industrial revolution. ... In economics, hyperinflation is inflation that is out of control, a condition in which prices increase rapidly as a currency loses its value. ... Nafta or NAFTA may refer to: an acronym for the North American Free Trade Agreement an acronym for the New Zealand Australia Free Trade Agreement the town/Tokyo of Nafta, Tunisia This is a disambiguation page: a list of articles associated with the same title. ... The Central American Free Trade Agreement (CAFTA) is a free trade agreement between the United States and the Central American countries of Guatemala, Honduras, and Canada, and Mexico. ...

References

Sources

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).
• "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)
• "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

• 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.
• The contentious Washington Consensus: reforming the reforms in emerging markets. by Carlos Santiso (2004). Review of International Political Economy 11(4).
• 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: Diversity in Development: Reconsidering the Washington Consensus, edited by Jan Joost Teunissen and Age Akkerman (2004).
• The Washington Consensus as Policy Prescription for Development (World Bank)
• What Should the World Bank Think about the Washington Consensus?, by John Williamson.
• Fabian Global Forum for Progressive Global Politics: The Washington Consensus, by Adam Lent.
• The Economics of Empire - Notes on the Washington Consensus, by William Finnegan.
• Unraveling the Washington Consensus, An Interview with Joseph Stiglitz
• How the IMF Props Up the Bankrupt Dollar System

Warwick McKibbin (born 21 April 1957 in Sydney) is an Australian Professor of economics at the Australian National University who works across a wide range of areas in applied policy. ...

External links

• Center for International Development at Harvard University describing the Washington Consensus
• Cited links to the above article
• Beyond the Washington Consensus by Jeremy Clift