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Washington_Consensus[1] - Lauren Lawson Globalization and...

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Lauren Lawson Globalization and Democracy- Erica Owen November 23, 2011 A ‘One Size Fits All’ That Doesn’t Always Fit Globalization has been rapidly increasing in the past thirty years, and due to this influx of international integration of goods, people, and ideas, many societies have benefitted greatly. However, as more and more developing nations are embracing the global market and adjusting their economic policies in an effort to maximize profits, the repercussions of specific policy decisions are being strongly and negatively felt. In this essay, I will discuss the ways in which one approach to globalization, known as the Washington Consensus, can leave developing countries vulnerable to financial crises if certain social, financial and political institutions are not well- established prior to partaking in its policies. The Washington Consensus is an economic approach strongly backed by Washington D.C.- based international economic institutions such as the International Monetary Fund, World Bank, and U.S. Treasury Department. Known as the “free-market” approach, the Washington Consensus advocates that, in order to achieve long-term economic growth, “countries should pursue macroeconomic stability, rely on private enterprise rather than state-owned firms, and reduce barriers to trade and investment.”(Grieco & Ikenberry, 256) Although stated generally, the implementation of these policies, while engaging in the international market, would allow the natural process of comparative advantage to take place so that the nation’s human capital and natural resources would be used most efficiently. Yet despite the over-all growth seen in free trade, comparative advantage can leave many workers, particularly producers of the nation’s
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relatively scarce factor(s), unemployed due to import competition. While this should essentially,
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