Does Washington Consensus Provide Sound Economic Advice?

2882 words - 12 pages

Development of economic thinking has been providing different policy guidance throughout the years formulated to cure problems of developing countries and most often these policy prescriptions have been used developed countries as a reference point. Policies that were offered reflected waves of economic thoughts and problems the world economy was facing. In 1776 Adam Smith’s invisible hand and market liberalism was followed by John Stuart Mill’s political economy problems and utilitarianism in 1848. Then these main ideas have been have been superseded by the theories of ‘the Big Push’, industrialization and structuralist approach in 1940-1960 after which there has been a shift from physical ...view middle of the document...

To see the importance Washington Consensus presented at the times of transition we would need to see how and why it emerged and the center of our attention should be the practice of developing countries as it is a popular international concern to improve life in these countries. The agencies of the developing countries that are engaged in this process always receive support from richer countries, which disburse official development aid, as well as from non-government organizations that are concerned with channeling popular concerns and from intergovernmental organizations such as United Nations, which are set up to resolve various development problems. However, it mostly due to of the activities if the former that one could witness the tendency of governments to copy successful practice elsewhere, particularly in the developing countries. The ideas propagated by these international development agencies to guide the practice of development shifted the 1980’s thinking about the adoption and approach of the practice to be used by these countries and was called “Washington Consensus”. Charles Gore in his article says that “Propagated through the stabilization and structural adjustment policies of the International Monetary Fund (IMF) and World Bank, this has been the dominant approach to development from the early 1980s to the present”. The name “Washington Consensus” was coined by John Williamson and it was in his works where the clear summary of this approach was formulated, mostly referencing to the policy reforms in Latin America, which has been going through an economic and financial crisis in the 1980’ and John Williamson was trying to form the policies that solved problems of these countries by outlining a set of policies that were undertaken. Shift to Washington Consensus did not only bring the substantial differences in earlier approaches, but also the different world view.

The Washington Consensus has been designed as a universal template of reforms and it implied that to grow the economy certain conditions have to be met regardless of the country-specific conditions. This set of economic policy prescriptions John Williamson considered a “standard” reform package promoted for developing countries in crisis by Washington-based institutions such as International Monetary Fund (IMF), World Bank and the US Treasury Department. The original consensus included 10 relatively specific policy recommendations:
1) Fiscal discipline – large and sustained fiscal deficits contribute towards inflation and capital flight, therefore governments should keep them to a minimum.
2) Public expenditure priorities - 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. Subsidies need to be lowered or eliminated.
3) Tax reform - tax base should be broad and marginal tax rates should be...

Other Essays Like Does Washington Consensus Provide Sound Economic Advice?

The Money Class Reaction Paper

1105 words - 5 pages of the book as the author attempts to open our eyes to the financial instability and difficulties as a result of economic recession which most of us experience, it also took a turn positively by giving hope to the readers through sound and intelligent advice. I definitely agree with Ms. Suze Orman as she emphasizes her important point that a change of attitude and perspective will surely help us through these trying times by making us more

Consensus Essay

1659 words - 7 pages A strategic leader can utilize decision-making teams as a powerful asset in successfully coping with the environment. Such teams improve their decision making by using a process of consensus, a process useful when developing national security strategy, military strategy, or strategic planning in other public or private sectors. Knowing how to forge consensus for policy development and implementation is critical to successful management and

Non Profit

4266 words - 18 pages as a community volunteer Marissa Knolls who is widely depended on for advice and support. The board of directors is able to productively entrust duties by creating a strong culture within the organization. In recent study researchers found that positive relationships among transformational leadership, organizational values, and cultural consensus indicate that leadership practices employed in the study created strong cultural consensus around

Sales/Marketing Director

3560 words - 15 pages not agree with mine, but that it does not mean they do not hold any validity. References Holmes, B. (2009). One nation under lock and key. Retrieved April 12, 2009 from: http://uwmpost.com/article/53/22/4422-One-nation-under-lock-and-key Kiplinger, K. (2009, March 15). Extra help for laid-off employees. The Washington Post, pp.G03. Retrieved March 13, 2009 from Business RSS Feed. Martin, M. W. (2008). Ethics applied to life. Mason, OH: Cengage Learning. Zeese, K. B. (1988). Summary of results of state-sponsored medical marijuana studies. The Science of Medical Marijuana. Retrieved March 28 from: http://www.medmjscience.org/Pages/science/zeesestates.html

Szt1 Community Assessment

1790 words - 8 pages Pierce County, WA Community Assessment Western Governors University Pierce County, WA Community Assessment Community Description and Data Interpretation Pierce County is situated in the central west of Washington State. The county is divided by Puget Sound, with the majority of the land to the east of the major waterway. There are several small islands included in the county that are located near the southern edge of the Sound

Reluctant Politician

1658 words - 7 pages € (Washington, 1796) Washington foresaw future challenges from other countries, predicting future wars with other countries by implication as well as the economic differences between the North and the South that eventually contributed to the causes of the Civil War. He then argued for great unity among the citizens of the United States, saying, “_and, what is of inestimable value, they must derive from Union an exemption from those broils and

How Latin America Could Get Out of Imf's Control

3460 words - 14 pages the IMF and the World Bank among many South American countries. Mark Weisbrot, co-director of the Center for Economic and Policy Research in Washington, also sees it as one of many signs of a new independence from institutions such as the IMF and its unwanted austerity measure. "At the beginning of this decade, scepticism in Latin America was sealed when Argentina disregarded IMF advice by defaulting on its debt and then experienced robust

World Trade Federation

946 words - 4 pages specialist committees. It is based at the WTO headquarters in Geneva. They are involved in the key decision-making arm of the WTO for most issues. Several bodies report directly to the General Council. The Trade Policy Review Body is composed of all the WTO members, and oversees the Trade Policy Review Mechanism of the Uruguay Round. It reviews the trade policies and practices of all member states. These reviews are to provide a general

Evaluating the Tax Incentives for Foreign Investors Policy

4086 words - 17 pages may affect the industry in the longer term. It is recommended that: * The government increase the breadth of its proposal to all investors in the manufacturing industry so as to reduce competitive pressures on local manufacturers. * The government increases investment in training to provide a skilled workforce and reduce inflationary wage pressures. Introduction This Report shall be to determine whether or not tax incentives, with

Homelessness in California

2528 words - 11 pages Russia: A Comparative Perspective, Bergin and Garvey, Westport, Connecticut, 1999 Hombs, Mary Ellen, and Mitch Snyder, Homelessness in America: A Forced March to Nowhere, Community on Creative Non-Violence, Washington, D.C., 1982. O’Flaherty, Brendan, “An Economic Theory of Homelessness and Housing,” Journal of Housing Economics, Vol. 4, 1995, pp. 13–49. Quigley, John M. and Steven Raphael, “The Economics of Homelessness: Evidence from

Financial System of Malaysia

2229 words - 9 pages Negotiable Certificates of Deposit (FRNCDs), as well as to provide an active secondary market for these activities. 1.2.7 Representative Offices of Foreign Banks in Malaysia There are 32 foreign banks that have establishing representative offices in Malaysia, with all concentrated in Kuala Lumpur. Most of the banks originate from Europe and Japan. Representative office is merely a liaison office and does not offer banking products directly to

Related Papers

Imf International Monetary And Financial Committee

5134 words - 21 pages for countries implementing sound economic policies, which may find themselves threatened by a crisis elsewhere in the world economy--a phenomenon known as "financial contagion." The CCL is subject to shorter repayment terms than the SRF, and carries a smaller surcharge of 1½-3½ percentage points. Lastly, the Compensatory Financing Facility (CFF) was established in the 1960s to assist countries experiencing either a sudden shortfall in

Globalization Essay

3345 words - 14 pages , regulatory delays, traffic gridlock—those are my major concerns with the business environment in Washington. Does Weyerhaeuser intend to continue doing business in Washington state? Yes—as long we can do so and meet shareholder expectations. We like it here. We have roots here. But we must remain competitive—and we need for Washington state to provide a conducive environment for profitable business. Those of you in the audience can play a part

Global Economy Essay

2837 words - 12 pages and economic aspects. REFERENCES Journals Amsden, A. H. ‘’Asia’s Next Giant: South Korea and late Industrialization’, Oxford, Oxford University Press, 1989, ch. 6 Beeson, Mark and Islam, Iyanatul ‘Neo-liberalism and East Asia: Resisting the Washington Consensus’, The Journal of Development Studies, 2005, pp.198-206 Carley, M., Christie, T. ‘Managing Sustainable Development’, Mineapolis, University of Mineassota Press, 1993, p.50 Chang, Ha- Joon

Golden Age Of Europe Essay

1858 words - 8 pages Economic Advisers In the United States, Congress set the goal of achieving full employment, full production, and stable prices in the Employment Act of 1946. It also created the Council of Economic Advisers to provide objective economic analysis and advice on the development and implementation of a wide range of domestic and international economic policy issues. In its first 7 years the CEA made five technical advances in policy making:.[14] 1