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 the U.S. Treasury Department. John Williamson, born 1937, is an economist and coined the term Washington Consensus. Washington DC ( formally the District of Columbia and commonly referred to as Washington, the District, or simply D The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e The United States Department of the Treasury is a Cabinet department and the Treasury of the United States government. ^[1]

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. Originally coined by its critics and opponents " neoliberalism " is a label referring to the recent reemergence of Economic liberalism or Classical liberalism Market fundamentalism (also known as free market fundamentalism) is an expression used by critics of Laissez-faire capitalism, usually by adherents of Interventionist The United States of America —commonly referred to as the Hence, criticism of the Washington Consensus has often been associated with, or accused of being associated with, Socialism, anti-globalism, and anti-americanism. Socialism refers to a broad set of economic theories of social organization advocating state or collective ownership and administration of the Means of production and distribution " Anti-globalization " is a term that encompasses a number of related ideas Anti-Americanism, often anti-American sentiment, is opposition or hostility to the people culture or policies of the United States.

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. scapegoat was a Goat that was driven off into the wilderness as part of the ceremonies of Yom Kippur, the Day of Atonement in Judaism during the times

Contents 1 History 2 List of recommendations 3 Macroeconomic adjustment 4 Trade liberalization 5 Criticisms of the Washington Consensus policies 5.1 Anti-globalization movement 5.2 Neo-Keynesian criticisms 6 The case of Argentina 7 Subsidy for agriculture in Malawi 8 Continuing controversy 9 Countries that have implemented market policies following Washington Consensus 10 Countries with governments opposed to Washington Consensus 11 Beyond the Washington Consensus 12 See also 13 References 14 Sources 15 External links

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.. An economist is an expert in the Social science of Economics. A think tank (also called a policy institute) is an organization institute corporation or group that conducts Research and engages in advocacy in areas such Washington DC ( formally the District of Columbia and commonly referred to as Washington, the District, or simply D [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. The 1980s was the decade spanning from January 1 1980 to December 31 1989. However, Williamson rejects subsequent use of the term to cover a more general "neoliberal" agenda. ^[2]

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. Joseph Stanislaw is a Financial adviser on International markets and Politics. Daniel H Yergin (born February 6, 1947) is an American author speaker 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 "^[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". Joseph Eugene Stiglitz (born February 9, 1943) is an American Economist and a professor at Columbia University. 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]

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. Fiscal policy, taking the scope of Budgetary policy, refers to government policy that attempts to influence the direction of the economy through changes in government taxes Government spending or government expenditure is classified by economists into three main types Education encompasses both the Teaching and Learning of Knowledge, proper conduct, and technical competency Health is a state of complete physical mental and social well-being and not merely the absence of disease or infirmity Infrastructure typically refers to the technical structures that support a society such as Roads Water supply, Wastewater, Power grids Investment or investing is a term with several closely-related meanings in Business management, Finance and Economics, related to saving Tax reform is the process of changing the way Taxes are collected or managed by the Government. Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets In Finance, the exchange rates (also known as the foreign-exchange rate, forex rate or FX rate) between two currencies specifies how Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions ); 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. For other uses of this word see Tariff (disambiguation. A tariff is a tax imposed on goods when they are moved across a political boundary Foreign direct investment ( FDI) in its classic definition is defined as a company from one country making a physical investment into building a factory in another country Privatization is the incidence or process of transferring ownership of business from the Public sector (government to the Private sector (business A government-owned corporation, state-owned enterprise or government business enterprise is a legal entity created by a Government to undertake commercial Deregulation, a term which gained widespread currency in the period 1970-2000 can be seen as a process by which governments remove reduce or simplify Restrictions on Business In Financial economics, a financial institution acts as an agent that provides Financial services for its clients or members Property is any physical or virtual entity that is owned by an individual

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. Macroeconomics is a branch of Economics that deals with the performance structure and behavior of a national or regional Economy as a whole 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 Organization of the Petroleum Exporting Countries ( OPEC) is a Cartel of thirteen countries made up of Algeria, Angola, Ecuador 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]

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). The 1990s collectively refers to the years between and including 1990 and 1999 The President of the United States is the Head of state and Head of government of the United States and is the highest political official in United States by George Herbert Walker Bush (born June 12 1924 served as the forty-first President of the United States from 1989 to 1993 The United States of America —commonly referred to as the The United Mexican States ( or commonly Mexico (ˈmɛksɪkoʊ () is a federal constitutional Republic in North America. Country to "Dominion of Canada" or "Canadian Federation" or anything else please read the Talk Page Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions 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. William Jefferson "Bill" Clinton (born William Jefferson Blythe III, August 19 1946 served as the forty-second President of the United States 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. George Walker Bush ( born July 6 1946 is the forty-third and current President of the United States. The Dominican Republic ( Spanish: República Dominicana;) is a nation located in the Caribbean region and shares the island of Hispaniola with The United States Congress is the bicameral Legislature of the federal government of the United States of America, consisting of two houses 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. Economic growth is the increase in the amount of the goods and services produced by an economy over time 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. Ralph Nader (born February 27 1934 is an American Attorney, Author, Lecturer, political activist, and independent candidate for President Patrick Joseph "Pat" Buchanan (born November 2 1938 is an American Political commentator, Author, syndicated Columnist Working class is a term used in academic Sociology and in ordinary conversation to describe depending on context and speaker those employed in specific fields or types

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. The Democratic Party is one of two major Political parties in the United States, the other being the Republican Party. Bush, signed CAFTA, the United States Congress's subsequent support of these agreements has been more partisan. In politics a partisan is a committed member of a party In multi-party systems the term is typically understood to describe a person who supports their party's measures without an 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. Socialism refers to a broad set of economic theories of social organization advocating state or collective ownership and administration of the Means of production and distribution

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. Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions Avram Noam Chomsky (noʊm ˈtʃɑmski born December 7 1928 is an American linguist, Philosopher, cognitive scientist, Political Susan George (born 1934) is a well-known political scientist and writer on Third World poverty Underdevelopment and Debt. Naomi Klein (b 8 May 1970, Montreal Quebec) is a Canadian Journalist, Author and activist well known for her Labour economics seeks to understand the functioning of the Market and dynamics for labour. 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. A trade barrier is a general term that describes any government policy or regulation that restricts International trade. Market Forces is a Science fiction Novel by Richard Morgan, first published in 2004 A visa (short for the Latin carta visa, lit "a document that has been seen" is a document issued by a Country giving an individual 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. Third World is a name given to nations that are generally considered to be underdeveloped economically In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time Wealth derives from the old English word "weal" which means "well-being

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. " Anti-globalization " is a term that encompasses a number of related ideas Originally coined by its critics and opponents " neoliberalism " is a label referring to the recent reemergence of Economic liberalism or Classical liberalism Bribery, a form of pecuniary corruption is an act usually implying money or gift given that alters the behaviour of the recipient in ways not consistent with the duties of that person 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. External debt (or foreign debt) is that part of the total debt in a country that is owed to Creditors outside the country

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. Venezuela (ˌvɛnəˈzweɪlə) officially the Bolivarian Republic of Venezuela (Spanish República Bolivariana de Venezuela) is a country on the ||-||} Wikipedia talkFeatured lists for an explanation of this and other inclusion tags below -->The President of Venezuela (Presidente Hugo Rafael Chávez Frías (ˈuɰo rafaˈel ˈtʃaβ̞es ˈfɾias (born July 28 1954 is the current President of Venezuela. The Republic of Cuba (ˈkjuːbə or) consists of the island of Cuba (the largest and second-most populous island of the Greater Antilles) Isla de la Fidel Alejandro Castro Ruz (born August 13 1926 is a Cuban revolutionary leader who was prime minister of Cuba from December 1959 to December 1976 and then president until The Republic of Bolivia (República de Bolivia) named after Simón Bolívar, is a Landlocked country in central South America. The President of Bolivia is the head of state of Bolivia. According to the current constitution the president is elected by popular vote for a single non-renewable five year Juan Evo Morales Ayma (born October 26 1959 in Orinoca, Oruro) popularly known as Evo (ˈeβo is the President of Bolivia since Rafael Vicente Correa Delgado (born 6 April 1963 in Guayaquil) is the President of the Republic of Ecuador. For a topic outline on this subject see List of basic Ecuador topics. 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. Communism is a Socioeconomic structure that promotes the establishment of an egalitarian, classless, stateless Society based A planned economy or directed economy is an Economic system in which the Government or Workers' councils manages the Economy. Petroleum ( L petroleum, from Greek πετρέλαιον, lit 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). For a topic outline on this subject see List of basic Argentina topics. Peronism (Peronismo or Justicialism (Spanish Justicialismo) is an Argentine political movement based on the ideas and programs associated with Néstor Carlos Kirchner Ostoić (born February 25, 1950) was the President of Argentina from May 25, 2003 until December

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. Chile, officially the Republic of Chile ( Spanish:) is a country in South America occupying a long and narrow Coastal strip wedged between the Alan Gabriel Ludwig García Pérez (born May 23 1949 in Lima) is the current President of Peru, having won the 2006 elections on June 4 2006 in a run-off Peru (Perú Piruw Piruw officially the Republic of Peru ( reˈpuβlika del peˈɾu is a country in western South America. Tabaré Ramón Vázquez Rosas ( pron taβa'ɾe ra'mon 'bahkes 'rosas (born January 17, 1940) is the current President of Uruguay. Uruguay.(official full name in República Oriental del Uruguay;, Oriental Republic of Uruguay) is a country located in the southeastern part of South America Luiz Inácio Lula da Silva (pronounced /lu'iz i'nasju 'lulɐ da 'siwvɐ/; born October 27, 1945) known simply as Lula, is the thirty-fifth and |utc_offset = -2 to -4 |time_zone_DST = BRST |utc_offset_DST = -2 to -5 |cctld ). 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. New Keynesian economics is a school of contemporary Macroeconomics that strives to provide microeconomic foundations for Keynesian economics. Post Keynesian economics is a school of thought with its origins in The General Theory of John Maynard Keynes, although its subsequent development was influenced For example, flexible labor laws were supposed to create new jobs, but economic evidence from Latin America is inconclusive on this point. Labour law (also known as employment or labor law is the body of Laws administrative rulings and precedents which address the legal rights of and restrictions Job creation programs are programs or Project undertaken by a Government or State of a Nation in order to achieve assist the population 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. Moisés Naím (born 1952 is a Venezuelan author and the editor-in-chief of Foreign Policy magazine Foreign Policy is a bimonthly American Magazine founded in 1970 by Samuel P 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". In common Parlance, a devil's advocate is someone who takes a position sometimes one he or she disagrees with for the sake of argument. ^[11]

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. Jorge Enrique Taiana (b 31 May 1950; married three children is an Argentine Justicialist Party politician currently Foreign Minister Télam is the Argentine national News agency founded in 1945 It provides news and information to about 300 subscribers including government entities and national Events 1384 - The Hongwu Emperor of Ming China, Emperor Dong hears a case of a couple who tore paper money bills while fighting Year 2005 ( MMV) was a Common year starting on Saturday (link displays full calendar of the Gregorian calendar. 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]

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. Year 2003 ( MMIII) was a Common year starting on Wednesday of the Gregorian calendar. Luiz Inácio Lula da Silva (pronounced /lu'iz i'nasju 'lulɐ da 'siwvɐ/; born October 27, 1945) known simply as Lula, is the thirty-fifth and ^[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]

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. The Republic of Malawi (məˈlɑːwi or; formerly Nyasaland) is in southern Africa. 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. Bingu wa Mutharika (born February 24, 1934) is a Malawi economist politician and the current President of Malawi. 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^[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. The Center for Global Development (CGD is a Not-for-profit Think tank based in Washington D 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]

Continuing controversy

Most Latin American countries continue to struggle with high poverty and underemployment. Poverty (also called penury) is deprivation of common necessities that determine the quality of life including food clothing shelter and safe Drinking water, and In Economics, the term underemployment has three different distinct meanings and applications 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. El Salvador ( República de El Salvador,) is a country in Central America. 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. Joseph Eugene Stiglitz (born February 9, 1943) is an American Economist and a professor at Columbia University. Copper (ˈkɒpɚ is a Chemical element with the symbol Cu (cuprum and Atomic number 29 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]

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

Countries with governments opposed to Washington Consensus

Note: incomplete list. For a topic outline on this subject see List of basic Argentina topics. The Republic of Bolivia (República de Bolivia) named after Simón Bolívar, is a Landlocked country in central South America. |utc_offset = -2 to -4 |time_zone_DST = BRST |utc_offset_DST = -2 to -5 |cctld The Plano Real ( Real Plan, in Portuguese) was a set of measures taken to stabilize the Brazilian economy in early 1994 under the direction Chile, officially the Republic of Chile ( Spanish:) is a country in South America occupying a long and narrow Coastal strip wedged between the Colombia (kəˈlʌmbɪə officially the Republic of Colombia () is a country in northwestern South America. Costa Rica, officially the Republic of Costa Rica ( Spanish: Costa Rica or República de Costa Rica,) is a Country in The Dominican Republic ( Spanish: República Dominicana;) is a nation located in the Caribbean region and shares the island of Hispaniola with For a topic outline on this subject see List of basic Ecuador topics. El Salvador ( República de El Salvador,) is a country in Central America. Guatemala (República de Guatemala) is a country in Central America bordered by Mexico to the north and west the Pacific Ocean to the southwest Honduras in Spanish, República de Honduras) is a democratic republic in Central America. India, officially the Republic of India (भारत गणराज्य inc-Latn Bhārat Gaṇarājya; see also other Indian languages) is a country The Republic of Indonesia ( (Republik Indonesia is a Country in Southeast Asia. The United Mexican States ( or commonly Mexico (ˈmɛksɪkoʊ () is a federal constitutional Republic in North America. Morocco (المغرب "al-Maghrib" officially the Kingdom of Morocco (المملكة المغربية is a country located in North Africa Nicaragua (ˌnɪkəˈrɑgwə officially the Republic of Nicaragua () is a representative democratic republic and the largest nation in Central America Paraguay, officially the Republic of Paraguay ( Spanish: República del Paraguay; Guaraní: Tetã Paraguái) is one of the only Peru (Perú Piruw Piruw officially the Republic of Peru ( reˈpuβlika del peˈɾu is a country in western South America. South Korea, officially the Republic of Korea and often referred to as Korea ( Korean: 대한민국 tɛː The Kingdom of Thailand (ˈtaɪlænd ราชอาณาจักรไทย, râːtɕʰa-ʔaːnaːtɕɑ̀k-tʰɑj Tunisia (تونس Tūnis officially the Tunisian Republic ( is a country located in North Africa. Uruguay.(official full name in República Oriental del Uruguay;, Oriental Republic of Uruguay) is a country located in the southeastern part of South America The Republic of Zambia (ˈzæmbɪə is a Landlocked country in Southern Africa.

• Argentina
• Belarus
• Brazil (?) Clearly opposed in rhetoric, much less so in practice. For a topic outline on this subject see List of basic Argentina topics. Belarus ( Belarusian Беларусь / Biełaruś is a Landlocked country in Eastern Europe, bordered by Russia to the north and east |utc_offset = -2 to -4 |time_zone_DST = BRST |utc_offset_DST = -2 to -5 |cctld Was able to be independent from the IMF monitoring and counseling.
• Bolivia
• China (?)
• Cuba
• Ecuador
• Iran
• Myanmar (Burma)
• North Korea
• Russia (an adjustment after the disasters on the 1990s)
• Venezuela
• Vietnam (?)
• Zimbabwe (?) (Zimbabwe reportedly worked with -- and was rated as satisfactory by -- the IMF during a relatively brief period of the mid-1990s. The Republic of Bolivia (República de Bolivia) named after Simón Bolívar, is a Landlocked country in central South America. China ( Wade-Giles ( Mandarin) Chung¹kuo² is a cultural region, an ancient Civilization, and depending on perspective a National The Republic of Cuba (ˈkjuːbə or) consists of the island of Cuba (the largest and second-most populous island of the Greater Antilles) Isla de la For a topic outline on this subject see List of basic Ecuador topics. For a topic outline on this subject see List of basic Iran topics. Burma, officially the Union of Myanmar ( pjìdàunzṵ mjàmmà nàinŋàndɔ̀ is the largest country by geographical area in mainland Southeast Asia. North Korea is the commonly used short form name for the Democratic People's Republic of Korea (or DPRK) a State located in East Asia, Russia (Россия Rossiya) or the Russian Federation ( Rossiyskaya Federatsiya) is a transcontinental Country extending Venezuela (ˌvɛnəˈzweɪlə) officially the Bolivarian Republic of Venezuela (Spanish República Bolivariana de Venezuela) is a country on the Vietnam (ˌviːɛtˈnɑːm Việt Nam) officially See also Great Zimbabwe National Monument. For information about the March and June 2008 presidential elections see Zimbabwean presidential election ^[24])

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. ^[25]

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. ^[26] 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. Productivity in Economics refers to measures of output from production processes per unit of input ^[27] 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 " is a derisive term for excessive Regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents Conditional Cash Transfer (CCT programs aim to reduce Poverty by making welfare programs conditional upon the receivers' actions For indigenous peoples in the United States other than Hawaii and Alaska see also Native Americans in the United States. An Afro-Latin American (also Afro-Latino) is a Latin American person of at least partial Black African ancestry the term may also refer to historical

See also

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

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). Warwick McKibbin (born 21 April 1957 in Sydney) is an Australian Professor of economics at the Australian National University who
• 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

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

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