The IMF, World Bank and the Washington Consensus

The IMF, World Bank and the chapiter ConsensusThe uppercase Consensus was occasiond in 1989 by earth-closet Williamson it was used to describe the 10 policy prescriptions. The majuscule Consensus was make to be the baseline of directions for countries, who be in guide of assistance from international scotch entities, for example the international Monetary gillyflower and the World Bank. uppercase Consensus has been referenced many times this has made it a general term of disparagement to those who go against the free mart radicalism. (Williamson 1989)The x points of the working capital Consensus were rather vague because they were to represent a baseline. The points included were, liberalizing hostile investment opportunities, keeping competitive ex remove rates within the nation, privatizing enterprises assort by the responsibility, letting interest rates be handled by the market and re chief(prenominal)(prenominal)ing positive and moderate, difficult legal guara ntees for property rights, using up out array from subsidies and to direct investments in infrastructure, education and health care, deregulation and reduce competition, just for consumer safety, environmental health and financial institutional stability. The last point raised is reforming the tax system to a broader tax base. (Williamson 1989)The working capital Consensus has resulted in express success when it has been applied in nations which are suffering frugal crisis. It has make sense under many comment for a number of destabilisations for example the Argentinean crisis. John Williamson himself tell that the results take a shit been disappointing upon implementation and how it could be improved and noned some of the flaws. John Williamson pointed out that the reason for failed results were that the uppercase Consensus did not fanny any special measures on mechanisms for avoiding economic crisis. (Williamson 1989)People who opposed the ideas of the capital of the United States Consensus believe that it represents exploitation of develop countries by actual countries. some(a) nations in Latin the States obligate implemented policies which go directly against the Washington Consensus which resulted in good results in some occasions. Some socialist leaders care Evo Morales, Hugo C fork overz and Nestor Kirchner have all spoken out against the Washington Consensus and implemented policies which have taken their nations to in truth different directions. (Reed 2007)Though some other Latin American counties with judicatures of the left wing have in drill adopted the bulk of the policies included in Williamsons list tho they often criticize the principles of market fundamentalism that they are often associated with. These policies have been promoted by the world(prenominal) Monetary Fund but have come under some lit crit by US economists like Rodrik and Joseph Stiglitz. They have both challenged the fundamental policies of the IMF (Inter national Monetary Fund) and the US treasury, Stiglitz called this a one size fits all doing for individual economies. Joseph Stiglitz stated that the treatment that was suggested by the IMF is far too primary he utter the policies did not prioritise or look for side effects. (Reed 2007)The policies for the Washington Consensus were originally created as a response to the crisis that was happening in Latin America. In 2010, several nations from the area are now cosmos led by socialists or other left wing g all overnments. Some of the countries are campaigning for and have adopted some policies which are frigid to the Washington Consensus policies. Even though some nations in Latin America have left wing governments such as Chile, Peru and Brazil, they have free adopted most of the policies that are in the Washington Consensus, even though they go against the principle of market fundamentalism that on such occasions are associated with. (Reed 2007)There has been a lot of critiq ue about the Washington Consensus. to the highest degree of the criticism has been focused on the elimination of subsidies and on trade liberalisation. The criticism has been rather harsh towards the agriculture sector. Countries which have a substantial number of natural resources, they have criticised the privatisation of industries exploiting these resources.Neo-Keynesian and post-Keynesian have both been very critical of the consensus and they have argued that the core policies were wrongly been laid out and are too fossilized to be successful. An example of this would be flexible labour laws were supposedly meant to create parvenue job opportunities economic evidence from Latin America has been generally inconclusive. Some critics have criticised that the policies do not take into account of the pagan and economic differences in the midst of the nations. They believe that these policies should be only implemented at times of economic growth and should not be implemented during economic crisis. (Naim 1999)Foreign Policy chief editor, Moises Naim, argued that there was no such consensus in the first place. Moises Naim had argued that there was and be quiet is important differences between economists over what is the take up and correct economic policy. This is the reason the idea of there being a consensus was as well as flawed. (Naim 1999) cum WORLD BANK and ECLACAs you can mind from the chart above, it shows that Brazil and Latin America who have implemented the Washington Consensus from 1990-2004 have showed that the Economic Growth has dropped by more than half. East Asia economic growth has gone up and they have not implemented the Washington Consensus. This has shown that the Washington Consensus has had a considerable impact on the growth.East Asia did not follow the Washington Consensus policies in some important wishs. They adopted strong industrial and government policies, as intimately as creating successful government enterprises. They were also slow to liberalise capital markets and trade. Such difference accounted for the performances between East Asia and Latin America, because of this there was faster and increased growth in East Asia. They also benefited from growth that was widely shared and became more stalls except for the 1997 crisis where all the countries recovered quickly expect for Indonesia. (Franko 2007)SOURCE ECLACSOURCE ECLACThe adoption of the Washington Consensus has had an immense impact on gross domestic product per Capita. The GDP per Capita at the end of 2003 is -0.3 % and in the 1960s it was 2.6%The Washington Consensus policies had only produced very limited growth, but when growth occurred it was not equitably share. The Washington Consensus was at best indifferent, and at worst hostile, to specific ideas and policies that would have promoted equality. Unemployment rates have steadily been rising and the Washington Consensus has no impact on reduce unemployement rates.Critics of tr ade liberalisation such as Tariq Ali and Susan George, see that the Washington Consensus is a way to open up labour markets of underdeveloped economies so companies from developed nations can exploit this. Washington Consensus allows free movement of items across the borders, nonetheless labour is not allowed to move freely there are requirements like a work permit or a visa. This consequently creates a scenario which goods are manufactured by cheap labour in developing nations and then these good are exported to developed nations for a big mark-up. The criticism of this is that the underdeveloped economies workers remain poor, any pay rises that the workers may receive over the money they made before the trade liberalisation are then offset by inflation. Developed nations workers become unemployed because of work being moved offshore and the owners of the businesses become richer. (Reed 2007)Joseph Stiglitz believed that the Washington Consensus had proved that it was neither ade quate nor necessary to be successful for instruction. He believed that even if each of its policies made sense for specific nations at specific times it was still unsuccessful. Joseph Stiglitz said that any future consensus cannot be made just in Washington and that any upstart framework should provide tailored adaptation to particular(a) circumstances that the nations are involved in. (Change, 2001)There has been a lot of criticism of the Washington Consensus policies there has been evidence of their impact on health, which has led to the information of the post-Washington Consensus. The ideas and policies of the post-Washington Consensus aimed toCreate vertical and horizontal policy coherenceInclude the entry of enforceable codes and standards, and concessions to social welfare through targeted social safety nets sell liberalized trade, finance and monetary systemsInclude firms and businesses in a Global bosom for Development and the PRSP process.Many supporters of the post- Washington Consensus believe it differs from the original ideas and fundamentals of the Washington Consensus. The main goal for the Washington Consensus was to make economic growth in development. The new post-Washington Consensus differed from this and moved away from the neo-liberal, market-friendly approach and places sustainable, egalitarian and democratic development at the heart of the agenda. The post-Washington Consensus is more focused on poverty, which supports and protects the poor and aims towards social spending on health and education. Some still argue that the original ideas of the Washington Consensus neo-liberal agenda still underpins the new ideas and policies of the post-Washington Consensus, referring to the social safety net aspects of the new policies are there to be an add-on to cope with market failures. (World wellness Organisation 2010)Joseph Stiglitz believed that new framework was needed to guide us to stable, democratic, sustainable and equitable develop ment. He also believed the framework should reform global economic architecture to promote efficiency, developing countries to focus on their goals and objectives, stability and virtue among nations. The post-Washington Consensus looks at the importance of employment, and balanced roles of the government and markets. This would be completed by promoting and regulating markets, providing physical and institutional infrastructure and also by endorsing innovation, engineering and education. (Change 2001)The Post-Washington Consensus recognises the importance of the a nation in open markets as well as more liberal policy environment. This approach sees the importance of avoiding state failure which needs institutional innovation and democratic governance. The Post-Washington Consensus sees the need to undertake inequality as well as poverty as their main objectives looking away from efficiency and growth objectives. An example would be that markets, themselves do not produce efficient outcomes when there is a changing of engineering science or the learning about markets. These processes are important in development and East Asiatic countries recognised this but the Washington consensus did not. In respect to all these points the Post-Washington Consensus is a more progressive approach to development match to the Washington Consensus. (Onis and Senses, 2005)There has been criticism of the Post-Washington Consensus that it adopts a technocratic and narrow approach to markets in both a global and at national level. The Post-Washington Consensus sees existing causality structures as pre-determined. This is the reason why it fails to tackle the asymmetries of top executive and the fundamental power relations that are between the classes at level of nation state, and also the powerful versus less strong nations in the economy. These issues would need to be tackled in order to get over development issues. (Onis and Senses, 2005)The IMF and the World bank have not welcomed the Post-Washington Consensus policies. The IMF went through a crisis with their identity straight after the Asian crisis and they have been trying to reform themselves. However the IMF has a restrictive mind and viewpoint of what should be the foundations for the Post-Washington Consensus. This has had vital consequences because the IMF is an important player for crisis nations and emerging nations. (Onis and Senses, 2005)The criticisms that was stipulation to the Washington Consensus by the newly designed Post-Washington Consensus has fallen short in terms of dealing with the main issues but the Post-Washington Consensus still has cracked the liberal approach, which may lead to new and fresh viable alternative. The jury is still out for the Post-Washington Consensus as a definitive viable alternative but together with flourishing other globalisation movements and alongside the background of development distributional imbalances at every level, this would bring such a c hange to be an alternative option.