Washington Consensus Essay

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The current economic meltdown may have been caused by the policies that were formed because of the ‘Washington Consensus’. The ‘Washington Consensus’ was first introduced in 1989 by the economist John Williams. Williams described ten recommendations that were intended to liberalize countries, specifically those with low incomes. Collectively, these ten recommendations established the ‘Washington Consensus’; which included: 1) fiscal policy control; 2) a shift in public spending towards primary education, healthcare and infrastructure investment[1]; 3) tax reforms; 4) a moderation of interest rates; 5) competitive exchange rates; 6) liberalization of trade and imports; 7) liberalization of foreign direct investments; 8) Privatization; 9) Deregulation for market entry and restriction in competition; and 10) Property rights[2]. It was Williams’ opinion that adopting these recommendations as a guideline, and moving in the direction of free trade, would benefit a nation and the world. The ‘Washington Consensus’ was readily accepted by economists, and implemented around the world. It was thought to be a formula for the trajectory of economic growth of nations through international trade. According to Dani Rodrik, Professor of International Political Economy at Harvard University, the consensus was established to, “Stabilize, privatize and liberalize...developing worlds and of the political leaders they counselled[3].” Although the Washington Consensus was considered a success by many economists, it was also subject to scrutiny by those who saw it as a negative ideology. This pessimistic view of the consensus appears to have been validated over time. In 1989 The International Monetary Fund, the World Bank, and the U.S. Treasury Department took these recommendations and transformed them into a neoliberal development model[4]. This model was then introduced to

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