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PPGPortal > Home > Concept Dictionary > W, X, Y, Z > Washington Consensus
 

Washington Consensus 

Term used to describe the market-oriented policy advice that is addressed by Washington-based institutions like the International Monetary Fund and World Bank towards governments of developing countries.

(Center for International Development at Harvard University. Washington Consensus. Retrieved from http://www.cid.harvard.edu/cidtrade/issues/washington.html.)

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The phrase “Washington Consensus” is today a very popular and often pilloried term in debates about trade and development. It is often seen as synonymous with “neoliberalism” and “globalization.” As the phrase’s originator, John Williamson says: “Audiences the world over seem to believe that this signifies a set of neoliberal policies that have been imposed on hapless countries by the Washington-based international financial institutions and have led them to crisis and misery. There are people who cannot utter the term without foaming at the mouth.”

Williamson originally coined the phrase in 1990 “to refer to the lowest common denominator of policy advice being addressed by the Washington-based institutions to Latin American countries as of 1989.”

These policies 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

- Privatization

- Deregulation (to abolish barriers to entry and exit)

- Secure property rights

     

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© University of Toronto 2008
School of Public Policy and Governance