IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Washington consensus and financial liberalization

  • PHILIP ARESTIS

The aim of this contribution is not to assess the overall performance of the Washington Consensus. It is, rather, to look critically at the Washington Consensus from the point of view of interest rate liberalization. Not only is the theoretical angle of financial liberalization discussed in this contribution, but the empirical side will also be appraised. The paper argues that from this perspective, the Washington Consensus has been a failure. Based on this assessment, the paper also evaluates the "revised" Washington Consensus, always from the financial liberalization perspective. The latter argues for completing the "first-generation" liberalizing reforms, which, of course, include the financial liberalization point of view. In this regard, the paper concludes that both the Washington Consensus and the "revised" Washington Consensus are not very promising. This conclusion is pertinent despite the concession by the Washington Consensus/"revised" Washington Consensus supporters that two important prerequisites of "early"--that is, the 1970s--financial liberalization attempts were not mentioned initially when proposing the initial "ten commandments" of the Washington Consensus. These two prerequisites were: sequencing in financial liberalization policies, where capital flows should follow the establishment of liberalized and robust domestic financial systems, and institutional preconditions, where sound financial institutions should be in place before financial liberalization is introduced. As shown in this contribution, the problematic nature of the financial liberalization aspect of Washington Consensus/"revised" Washington Consensus is by far deeper and more serious than the two preconditions alluded to in Williamson (2004-5). In fact, the evidence of the past 30 years or so demonstrates that the implementation of the 10 commandments of the Washington Consensus has proved to be a disaster for developing and other countries that pursue the Washington Consensus-type of policies. Our critique, therefore, of the Washington Consensus/"revised" Washington Consensus is based both on the theoretical underpinnings of the financial liberalization thesis and on the experience with the implementation of these policies in a number of countries.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://mesharpe.metapress.com/link.asp?target=contribution&id=J5UH9PFG1L0GVELX
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 27 (2004)
Issue (Month): 2 (December)
Pages: 251-271

as
in new window

Handle: RePEc:mes:postke:v:27:y:2004:i:2:p:251-271
Contact details of provider: Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:27:y:2004:i:2:p:251-271. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Nguyen)

The email address of this maintainer does not seem to be valid anymore. Please ask Chris Nguyen to update the entry or send us the correct address

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.