The Washington Consensus
Table of Contents:
1. Introduction: pg: 2
2. Washington Consensus pg: 2
(i) Success of WC pg: 4
(ii) Failures of WC pg: 5
3. Role of East Asian Countries pg: 6
4. Post Washington Consensus: pg: 7
5. Does it offer fresh opportunities?: pg: 9
6. Conclusion: pg: 12
7. Bibliography: pg: 13
Discuss how the approaches of the post-Washington Consensus differ from those of the Washington Consensus, and then show whether these new approaches offer fresh opportunities for the South.
The Washington Consensus was formulated in 1989 in response to the failure of the developmental aid in yielding the results desired. It was attributed to ineffective government
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Mexico showed that even if a country got its own fiscal house in order and kept inflation in check, it could have a crisis. The problem, supposedly, was a lack in domestic savings (Stiglitz 2004: 5). This becomes problematic when states experience stagnation or negative economic growth as not only does it result in an inability to afford welfare services, the loans obtained from the IMF and WB do not yield any positive growth in the economy resulting in a vicious cycle of dependency on debt and the subsequent inability to repay it. Consequently, when such situations arise, foreign investors lose confidence in the market and the state’s ability to manage its economy and pull out their investments. Because most of the economy is developing countries is usually controlled by FDI, this situation results in a collapse of the economy and the crisis that occurred in many of the developing nations. Growth in Latin America during the 90s- the decade of reform- was just half of what it was in the 60s and 70s, the decades marked by the ‘failed’ policies of import substitution, and was exacerbated by the debt crisis as opposed to the development policies themselves (Stiglitz 2004:4).
Economic growth occurs as a result of productive economic activity which in turn results in increases in employment, consumer spending and increased tax revenue for