Washington Consensus

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The Washington Consensus was formulated on 1990 by John Williamson, who was formally an adviser to the International Monetary Fund, as his interpretation of the IMF’s (and the World Bank’s) conditions for financial assistance to developing countries [1].

He saw those requirements as:

  • Fiscal Discipline
  • A redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education and infrastructure
  • Tax reform (to lower marginal rates and broaden the tax base)
  • Interest rate liberalization
  • A competitive exchange rate
  • Trade liberalization
  • Liberalization of inflows of foreign direct investment
  • Privatization
  • Deregulation
  • Secure property rights

John Williamson has reviewed the interpretations on his proposals that have been applied by the IMF [2] [3] [4], and those interpretations have been attacked by Joseph Stiglitz [5]

References

  1. John Williamson, , "What Washington Means by Policy Reform", in J. Williamson, ed., Latin American Adjustment: How Much Has Happened? Institute for International Economics 1990
  2. John Williamson What Should the Bank Think about the Washington Consensus? (Paper prepared as a background to the World Bank's World Development Report 2000)
  3. John Williamson Did the Washington Consensus Fail? Outline of speech at the Center for Strategic & International Studies Washington, DC November 6, 2002[1]
  4. A conversation with John Williamson, Washington Post, Sunday, April 12, 2009; Page B02
  5. Joseph Stliglitz Globalization and its Discontents Norton and Company, 2002