The post Washington consensus discusses the importance of the failures of the Washington consensus, and the failures in understanding the economic structures of developing countries. The Washington consensus failed to recognize the constant change of free markets which consisted of updated technology, and that every state develops differently. "The consensus policies often assumed the worst about the nature and capability of governments and made that one size fit all." (The Post Washington Consensus) A successful developmental strategy cannot be reached in the confinement of Washington alone. Developing countries must be involved just as much as Washington. Each developing country must have their own personalized rules because what might work in one country might not work in another. For example east Asian economies which were successful, and didn't follow the Washington consensus. We also have to succumb to the fact that some areas in the field have not yet been provided by sufficient evidence to result in a direct answer of what countries should do.
John Williamson's ten reforms don't provide specific information on how to deal with certain developing countries. For example Africa put a sufficient amount of belief in the market when referring to liberalization of agricultural prices without paying attention to the elements that make that effective such as functioning markets, credit availability and infrastructure. Allowing the market to let the prices go where they go as Williamson believed, resulted in higher interest rates without improving Africa's credit. If there were positive elements to the Washington consensus they still haven't been enjoyed. Weak financial institutions still existed in the United States and other global north countries which really never gave countries in Latin America a chance. Privatization served as another core problem in Latin American countries that Williamson implemented in his Washington consensus. Privatization led by corruption resulted in a monopoly which generated higher prices for consumers. Instead of still relying on the Washington consensus as a guide for developing countries we must start looking at this issue from a different angle. First we must ask, "What can each country, on its own, do to enhance sustainable, stable, equitable, and democratic development?" (The Post Washington Consensus) Along with asking, "How should the global economic architecture be changed, to make the global economy more stable, to promote equity among countries, and to enhance the ability of developing countries to pursue their objectives," (The Post Washington Consensus) especially in reference to the first question which can result in a movement towards change in achieving the goal to help developing countries.
I agree with the statement that we need to look at each country more individually as well as invite them into the conversation about their own economic futures. I also think that the Washington Consensus seemed to ignore a lot of the power dynamics at play between the countries of the North (including the U.S.) and the developing countries, most of which are previous colonies of the North. These power dynamics have an effect on trade, political systems in the country, and foreign policy and acceptance of such bold advise as the Washington Consensus outlines.
ReplyDeleteI think whats important to remember about free trade is it does not always help developing countries as you noted. One growing trend recently that I think is quiet interesting is the increase in free trade but fair trade. This means that while there is free trade between nations, they trade at a fair price and do not take advantage of them. This means that they are providing workers with living wages and helping the local economy.
ReplyDeleteYes, that does seem ideal for countries that could both use something from each other, but still wouldn't work for all nations. For example, if a state relies on another state for cotton, but the other state doesn't rely on anything from them then this would be unfair for that state. A country such as the United States can be self efficient and can produce a lot of what it needs on its own so trade with another country isn't a necessity where it could be for example a landlocked country. This would require modification for the trade at hand.
DeleteOne of my favorite class discussions was when we went over the reasons for why countries are poor, and the one I felt stood out the most was government incompetence and political instability. While the ten points in the Washington Consensus are economic agendas, I felt that one of the key components in economic reform is a competent government that can ensure that citizens will have adequate public goods and services that help them as well as invest in R&D. These countries that want reform not only need to cooperate with Washington but to an extent need to be able to help themselves.
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