Some Fundamental Inadequacies of the Washington Consensus: Misunderstanding the Poor by the Brightest
The Washington Consensus suffers from fundamental inadequacies, and that a more comprehensive framework of the economic process is needed to guide the formulation of country-specific development strategies. The following five propositions summarise the set of interrelated arguments made in this paper: 1. The Washington Consensus was based on a wrong reading of the East Asian growth experience. This explains why some observers have called the trade regimes of Korea and Taiwan in the 1965- 1980 period “free trade regimes” even though they featured extensive import tariffs and export subsidies. 2. There have been two phases to the Washington Consensus doctrine. The mantra of the first phase (Washington Consensus Mark 1) is “get your prices right”, and the falsification of this first mantra led to the emergence of the second phase of the Washington Consensus doctrine. The new mantra from the Washington Consensus Mark 2 is “get the institutions right.” The danger is that an elastic definition of the term “institutions” will render the current mantra intellectually vacuous. 3. While central planning went overboard in suppressing the private market economy, the Washington Consensus runs the danger of denying the state its rightful role in providing an important range of public goods. The Washington Consensus also runs the danger of denying the limitations of self-help in the case of sub-Saharan Africa by overlooking the possibility of poverty traps. 4. The Washington Consensus does not understand that the ultimate engine of growth in a predominantly private market economy is technological innovations, and that the state can play a role in facilitating technological innovations. The Washington Consensus is too hooked upon trade-led growth to acknowledge that science-led growth is becoming even more important. 5. The Washington Consensus does not recognize the constraints that geography and ecology could set on the growth potential of a country. For example, the trade-led growth strategy of East Asia cannot work with the same efficiency for a landlocked country. Foreign direct investment is also less likely to go to places that are malaria- infested.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Woo, Wing Thye, 1987. "Some Evidence of Speculative Bubbles in the Foreign Exchange Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(4), pages 499-514, November.
- Sachs, J.D. & Woo, W.T., 1994. "Structural Factors in the Economic Reforms of China, Eastern Europe and the Former Soviet Union," Papers 94-01, California Davis - Institute of Governmental Affairs.
- Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
- John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1999. "Geography and Economic Development," International Regional Science Review, SAGE Publishing, vol. 22(2), pages 179-232, August.
- Williamson, John, 2000. "What Should the World Bank Think about the Washington Consensus?," World Bank Research Observer, World Bank Group, vol. 15(2), pages 251-64, August.
- Sylvie Démurger & Jeffrey D. Sachs & Wing Thye Woo & Shuming Bao & Gene Chang & Andrew Mellinger, 2002.
"Geography, Economic Policy, and Regional Development in China,"
Asian Economic Papers,
MIT Press, vol. 1(1), pages 146-197.
- Sylvie Demurger & Jeffrey D. Sachs & Wing Thye Woo & Shuming Bao, Gene Chang & Andrew Mellinger, 2002. "Geography, Economic Policy, and Regional Development in China," NBER Working Papers 8897, National Bureau of Economic Research, Inc.
- Sylvie Demurger & Jeffrey D. Sachs & Wing Thye Woo & Shuming Bao & Gene Chang & Andrew Mellinger, 2002. "Geography, Economic Policy and Regional Development in China," Harvard Institute of Economic Research Working Papers 1950, Harvard - Institute of Economic Research.
- Sylvie DEMURGER & BAO & CHANG & MELLINGER & SACHS & Wing Thye WOO, 2001. "Geography, Economic Policy and Regional Development in China," Working Papers 200109, CERDI.
- David Lipton & Jeffrey D. Sachs, 1992. "Prospects for Russia's Economic Reforms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 213-284.
- Deepak Lal, 1993. "Poverty and Development," UCLA Economics Working Papers 707, UCLA Department of Economics.
- Author-Name: Jeffrey D. Sachs & John W. McArthur & Guido Schmidt-Traub & Margaret Kruk & Chandrika Bahadur & Michael Faye & Gordon McCord, 2004. "Ending Africa's Poverty Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 117-240.
- John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
- Jagdish N. Bhagwati, 1978. "Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1, September.
- Cornia, Giovanni Andrea & Popov, Vladimir (ed.), 2001. "Transition and Institutions: The Experience of Gradual and Late Reformers," OUP Catalogue, Oxford University Press, number 9780199242184, December.
- Woo, Wing Thye, 1990. "The art of economic development: markets, politics, and externalities," International Organization, Cambridge University Press, vol. 44(03), pages 403-429, June.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpdc:0411021. 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: (EconWPA)
If references are entirely missing, you can add them using this form.