WASHINGTON CONSENSUS Meaning and
Definition
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The Washington Consensus refers to a set of economic policies and reforms that were broadly supported and promoted by international financial institutions, such as the International Monetary Fund (IMF) and the World Bank, during the late 20th century. The term "Washington Consensus" was coined by the economist John Williamson in 1989.
The Washington Consensus generally advocates for a free-market approach to economic development, emphasizing liberalization, privatization, and deregulation. It consists of ten policy prescriptions that include fiscal discipline, market liberalization, trade openness, deregulation, property rights protection, and the reduction of government intervention in the economy. The objective is to enhance economic growth, attract foreign investment, and reduce poverty levels in developing countries.
Critics argue that the Washington Consensus has often exacerbated inequality and social unrest, as it prioritizes market-based solutions without sufficient consideration for social safety nets, labor rights, or environmental sustainability. Some also contend that it has led to a dependency on foreign aid and increased vulnerability to global economic crises. However, proponents maintain that it has been successful in promoting economic growth in several countries and has played a significant role in poverty reduction.
The Washington Consensus has shaped economic policies in many developing countries, particularly in Latin America, Asia, and Eastern Europe, and has been a subject of intense debate in academic and policy circles since its inception. Its influence has waned in recent years as alternative development models and approaches have gained attention and prominence.
Etymology of WASHINGTON CONSENSUS
The term "Washington Consensus" was coined by John Williamson, an economist at the Institute for International Economics, in 1989. The name "Washington" refers to the city in the United States where many influential international economic institutions, such as the World Bank and the International Monetary Fund (IMF), are headquartered.
Williamson used the term to describe a set of policy recommendations that were being promoted by these institutions and other influential organizations based in Washington, D.C. The Washington Consensus was a collection of free market economic reforms that became popular during the 1980s and 1990s, particularly in developing countries.
The term gained significant attention and usage in economic and political circles, as it encapsulated the perceived dominance of Washington-based institutions in promoting neoliberal policies globally.
