to constitute the "standard" reform package promoted for crisis-wracked

developing countries by Washington, D.C.–based institutions such as the

International Monetary Fund, World Bank, and the US Treasury Department. It was

coined in 1989 by English economist John Williamson. The prescriptions

encompassed policies in such areas as macroeconomic stabilization, economic

opening with respect to both trade and investment, and the expansion of market

forces within the domestic economy. Subsequent to Williamson's use of the

terminology, and despite his emphatic opposition, the phrase Washington

Consensus has come to be used fairly widely in a second, broader sense, to

refer to a more general orientation towards a strongly market-based

approach. In emphasizing the magnitude of the difference between the two

alternative definitions, Williamson himself has argued that his ten

original, narrowly defined prescriptions have largely acquired the status of

"motherhood and apple pie", whereas the subsequent broader definition,

representing a form of neoliberal manifesto, "never enjoyed a consensus

[in Washington] or anywhere much else" and can reasonably be said to be dead.

Discussion of the Washington Consensus has long been contentious. Partly this

reflects a lack of agreement over what is meant by the term, in face of the

contrast between the broader and narrower definitions But there are also

substantive differences involved over the merits and consequences of the

various policy prescriptions involved. Some critics take issue, for example,

with the original Consensus's emphasis on the opening of developing countries

to global markets, and/or with what they see as an excessive focus on

strengthening the influence of domestic market forces, arguably at the expense

of key functions of the state. For other commentators the issue is more what is

missing, including such areas as institution-building and targeted

efforts to improve opportunities for the weakest in society. Despite these areas

of controversy, a number of developmental institutions and

economists would by now accept the more general proposition that strategies best

work if they are specifically designed to the certain circumstances of the

individual countries. History

= Original sense: Williamson's Ten Points =

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.

Williamson used the term to summarize 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 countries in Latin America from the

economic and financial crises of the 1980s.

The consensus as originally stated by Williamson included ten broad sets of

relatively specific policy recommendations:

Fiscal policy discipline, with avoidance of large fiscal deficits relative to

GDP; Redirection of public spending from

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 in real terms;

Competitive exchange rates; Trade liberalization: liberalization of

imports, with particular emphasis on elimination of quantitative

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 prudential oversight of financial institutions;

Legal security for property rights. = Origins of policy agenda =

Although Williamson's label of the Washington Consensus draws attention to

the role of the Washington-based agencies in promoting the above agenda,

a number of authors have stressed that Latin American policy-makers arrived at

their own 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 Stiglitz has written that "the Washington Consensus policies

were designed to respond to the very real problems in Latin America and made

considerable sense". 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." A 2010 paper by Nancy Birdsall, Augusto

de la Torre, and Felipe Valencia Caicedo likewise suggests that the policies in

the original consensus were largely a creation of Latin American politicians

and technocrats, with Williamson's role having been to gather the ten points in

one place for the first time, rather than to "create" the package of

policies. In Williamson's own words from 2002:

= Broad sense = Williamson recognizes that the term has

commonly been used with a different meaning from his original prescription;

he opposes the alternative use of the term, which became common after his

initial formulation, to cover a broader market fundamentalism or "neoliberal"

agenda. I of course never intended my term to

imply policies like capital account liberalization, monetarism, supply-side

economics, or a minimal state, which I think of as the quintessentially

neoliberal ideas. If that is how the term is interpreted, then we can all

enjoy its wake, although let us at least have the decency to recognize that these

ideas have rarely dominated thought in Washington and certainly never commanded

a consensus there or anywhere much else...

More specifically, Williamson argues that the first three of his ten

prescriptions are uncontroversial in the economic community, while recognizing

that the others have evoked some controversy. He argues that one of the

least controversial prescriptions, the redirection of spending to

infrastructure, health care, and education, has often been neglected. He

also argues that, while the prescriptions were focused on reducing

certain functions of government, they would also strengthen government's

ability to undertake other actions such as supporting education and health.

Williamson says that he does not endorse market fundamentalism, and believes that

the Consensus prescriptions, if implemented correctly, would benefit the

poor. In a book edited with Pedro-Pablo Kuczynski in 2003, Williamson laid out

an expanded reform agenda, emphasizing crisis-proofing of economies,

"second-generation" reforms, and policies addressing inequality and

social issues. As noted, in spite of Williamson's

reservations, the term Washington Consensus has been used more broadly to

describe the general shift towards free market policies that followed the

displacement of Keynesianism in the 1970s. In this broad sense the

Washington Consensus is sometimes considered to have begun at about 1980.

Many commentators see the consensus, especially if interpreted in the broader

sense of the term, as having been at its strongest during the 1990s. Some have

argued that the consensus in this sense ended at the turn of the century, or at

least that it became less influential after about the year 2000. More

commonly, commentators have suggested that the Consensus in its broader sense

survived until the time of the 2008–2009 global financial crisis. Following the

strong intervention undertaken by governments in response to market

failures, a number of journalists, politicians and senior officials from

global institutions such as the World Bank began saying that the Washington

Consensus was dead. These included former British Prime Minister Gordon

Brown, who following the 2009 G-20 London summit, declared "the old

Washington Consensus is over". Williamson was asked by The Washington

Post in April 2009 whether he agreed with Gordon Brown that the Washington

Consensus was dead. He responded: It depends on what one means by the

Washington Consensus. If one means the ten points that I tried to outline, then

clearly it's not right. If one uses the interpretation that a number of

people—including Joe Stiglitz, most prominently—have foisted on it, that it

is a neoliberal tract, then I think it is right.

After the 2010 G-20 Seoul summit announced that it had achieved agreement

on a Seoul Development Consensus, the Financial Times editorialized that "Its

pragmatic and pluralistic view of development is appealing enough. But the

document will do little more than drive another nail into the coffin of a

long-deceased Washington consensus." Context

Many countries have endeavored to implement varying components of the

reform packages, with implementation sometimes imposed as a condition for

receiving loans from the IMF and World Bank. The results of these reforms are

much debated. Some critics focus on claims that the reforms led to

destabilization. Some critics have also blamed the Washington Consensus for

particular economic crises such as the Argentine economic crisis, and for

exacerbating Latin America's economic inequalities. Criticism of the

Washington Consensus has often been dismissed as socialism and/or

anti-globalism. While these philosophies do criticize these policies, general

criticism of the economics of the consensus is now more widely

established, such as that outlined by US scholar Dani Rodrik, Professor of

International Political Economy at Harvard University, in his paper Goodbye

Washington Consensus, Hello Washington Confusion?.

The institutions that formed the consensus started softening their

insistence on these policies in the 2000s largely due to political pressures

surrounding globalization, but any reference of these ideas as a consensus

essentially ended in the wake of the 2008 global financial crisis, as market

fundamentalism lost favour. Though, it should be noted, that most of the core

specific policies are still generally regarded favourably, but the policies

have come to be viewed as not preventing nor alleviating acute economic crises.

This is perhaps most notable in the work of the IMF with South Korea to create a

new sort of intervention program to the one that South Korea was forced to

accept during the Asian Financial Crisis of the late 1990s. That intervention,

which was heavily grounded in the Washington Consensus, was hailed at the

time for stopping the "Asian Contagion" but eventually the program came to be

seen more skeptically. Williamson himself has summarized the

overall results on growth, employment and poverty reduction in many countries

as "disappointing, to say the least". He attributes this limited impact to three

factors: the Consensus per se placed no special emphasis on mechanisms for

avoiding economic crises, which have proved very damaging; the reforms—both

those listed in his article and, a fortiori, those actually

implemented—were incomplete; and the reforms cited were insufficiently