From Washington to Post-Washington Consensus: A Global Analysis

Résumé du document

During the 90s the Washington Consensus was the most popular economic framework used not only by Latin America but by countries all around the world. As Naim (2000) expresses, the term Washington Consensus soon acquired a life of its own, becoming a brand name known worldwide and used independently from its original intent and even of its content. The popularity of this economic framework came with the need for new economic alternatives after the collapse of the Soviet system. This work revises the implementation and results of the Washington Consensus. The first part of this paper will explain the origins and objectives of the framework as an alternative to previous failed methods as was the case of structuralism at the end of the 80s in Latin America. We will also describe the critics and problems which led to the creation of the Post-Washington Consensus. The second part of our work will give a global economic overview mentioning cases that handled the recommendations of the Washington Consensus in different ways and also a case that shows the correlation between economic changes and political stability.The second half of the XX century starts a new plan in economics for developed and developing countries. The creation of the Bretton Woods Institutions, the newly acquired independence of several countries and the modernization of political and economic systems in developing countries were all factors that allowed new economic theories to come into place.

Extraits

[...] It is widely believed in Mexico that the Washington Consensus reforms triggered the rise of the EZLN movement, because the EZLN is an organization that has fought against those reforms through arms or most recently through politics and diplomacy. The Mexican Case shows us how the strong implementation of the Washington Consensus reforms had short-term positive results until the 1994 crisis. On the long term however, they caused social, political and economic instabilities as demonstrated by the EZLN movement, the loss of government credibility, high corruption and migratory movements to the US. The political party has now changed and improvements have been made but the results are still far from satisfactory. [...]

[...] There was a fall in economic activity which led to an increase in both corporate and public deficits. To fight off the inflation and fund the budget deficit, the Russian government issued large amounts of Treasury bills to foreign investors. This immediately led to a widespread movement of speculation from foreign investors, causing the yields to go up to unprecedented levels. When the interest rates went up in 1997, the country suffered a generalized financial crisis and defaulted on its Treasury bills. [...]

[...] Therefore, a post-Washington Consensus had to be created A Second Chance: The Post-Washington Consensus The so-called Post-Washington Consensus was meant as a correction of the initial consensus, as its founders realized that their economic model for development did not necessarily reduce poverty. Indeed, they came to the conclusion that some of the objectives imposed by the Washington Consensus, such as market efficiency, were in face pre-conditions to some of the other objectives, such as trade liberalization. In other words, a corrupted and inefficient economy would not benefit from increased trade and investment. [...]

[...] Conclusion The Washington Consensus came as an alternative to structuralism after its failure in Latin America. The new framework marked the end of the division between development economics and orthodox economics, and quickly gained global popularity and function. It boasted instant results and quick growth. A positive aspect of this change was the evolution from an administrative economy to a market economy in developing countries. The weaknesses of the Washington Consensus came from the lack of focus on the distribution of income, which led to an increase in inequalities. [...]

[...] 5-44. Berr, Eric and Combarnous, François. L'impact du consensus de Washington sur les pays en développement : une évaluation empirique. Centre d'économie et développment, p. 1-22. Bresser Pereira, Luiz Carlos. La crise de l'Amérique latine: consensus de Washington ou crise budgétaire? Problèmes d'Amérique latine, avril-juin 1999, no p. 81-98. Chesnais, F. [...]