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.
[...] Mexico started to implement the instruments that the Washington Consensus recommended after suffering a decade of economic stagnation and high inflation. The country liberalized the trade sector in 1985, implemented an economic stabilization plan in 1987 and introduced market-oriented institutions. The most important reforms of the “economic stabilization plan” were made under the government of President Carlos Salinas de Gortari (December 1988- December 1994); those reforms brought economic growth with an average of per year from 1989 to 1994. The image being promoted was the prosperity of the country; after two decades, inflation was brought down to single-digit levels for the first time since 1993, large capital inflows began in 1990 as a result of foreign investment, debt was renegotiated, etc. [...]
[...] The implementation was a change from the administrative economy of structuralists to the market economy regulated by prices. The Stabilization Programs had the objective of demand contraction and deflationist measures. The instruments used were: 1. Monetary policies (credit control and higher interest rates) Budget policies (limitation of public deficit) Exchange policies (depreciation of real exchange rate and currency convertibility). The Structural Adjustment Programs (SAP) was based on the relative price system reforms and the structure of reincorporation of exterior competitivity and internal 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. The Post- Washington Consensus prescribed more institutional and political reforms, but the experience has shown that there is no “one-size-fits-all” approach, and that structural reforms have to be adapted to the local context. Change has to come from the inside! [...]
[...] Therefore, the use of protectionist and inflationist policies, and the disappointing economic and social results from unsustainable budgets in Latin America, Africa, India and the Middle- East during the 60s, 70s, and 80s were the basis of this last decade being the period to look for new economic methods in search of a better situation in developing countries The Alternative: The Washington Consensus After the economic crisis of the 80s, developing countries found themselves in a difficult situation. One on the most important and popular frameworks used to solve the problems of developing countries was the Washington Consensus, introduced by the economist John Williamson in 1989. [...]
[...] Le débat sur le développement: au-delà du consensus de Washington. Revue internationale des sciences sociales, décembre 2000, no p. 529-580. Naim, Moises. Avatars du consensus de Washington Le Monde diplomatique, March 2000. Naim, Moises. Washington Consensus or Washington Confusion? Foreign Policy, Philip, George. Washington Consensus Politics in Latin American Context : Some lessons from Mexico, Peru and Venezuela. Paper presented at Workshop Democracy in the Third World: What Should be Done? Van Waeyenberge, Elisa. From Washington to Post-Washington Consensus; Illusions of [...]
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