Goodbye Washington Consensus

Goodbye Washington Consensus - Goodbye Washington...

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Goodbye Washington Consensus, Hello Washington Confusion? Dani Rodrik Melissa Prusock I. The Washington Consensus Washington Consensus (John Williamson 1990): policy proscription for economic reform in poor countries-stabilize, privatize, liberalize Reforms were unsuccessful: market oriented reforms did not produce growth in Latin America or Africa in the 1990s China, South Korea, Vietnam and India experienced growth and poverty reduction through unconventional policies-trade protection, no privatization, extensive industrial policies, lax fiscal and financial policies: they did not follow the Washington Consensus Washington Consensus is dead: what will replace it? II. World Bank’s Learning from Reform (2005) There is no universal set of rules for economic reform in poor countries Emphasized need for humility, policy diversity, selective and modest reform, and experimentation Warns us to be skeptical of top-down, comprehensive, universal solutions-no matter how well intentioned they may be 1. Conventional reforms did not pay enough attention to stimulating the dynamic forces that lie behind the growth process. 2. The objectives of economic reform-market oriented incentives, macroeconomic stability, outward orientation-don’t translate into a specific set of policy actions, ie. To achieve trade openness, can lower tariffs, but can also use duty drawbacks, export subsidies, special economic zones, export processing zones, etc. 3. Different contexts require different solutions to solving common problems. This is why countries that are growing have diverse policy configurations 4. Tendency in the 1990s to exaggerate the rules over discretion in government behavior-rules meant to discipline the malfeasance of governments but government discretion cannot be bypassed 5. Reforms need to be selective and focus on the binding constraints on economic
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This note was uploaded on 03/27/2008 for the course PS 061 taught by Professor Eichenberg during the Fall '08 term at Tufts.

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Goodbye Washington Consensus - Goodbye Washington...

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