What is Washington Consensus?
A term brought into the mental dictionaries through an article written by the economist John Williamson (1). Accordingly, this term meant to be “the lowest common denominator of policy advice being addressed by the Washington-based institutions to Latin American countries as of 1989.” Which were:
- Fiscal discipline
- A redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education, and infrastructure
- Tax reform (to lower marginal rates and broaden the tax base)
- Interest rate liberalization
- A competitive exchange rate
- Trade liberalization
- Liberalization of inflows of foreign direct investment
- Deregulation (to abolish barriers to entry and exit)
- Secure property right (2)
(1). Williamson, John: What Washington Means by Policy Reform, in: Williamson, John (ed.): Latin American Readjustment: How Much has Happened, Washington: Institute for International Economics 1989.
(3). Video of Williamson commenting on the topic.
(4). http://www.henryckliu.com/page40.html also look at this article.
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