Washington consensus: Difference between revisions
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==Characteristics== | ==Characteristics== | ||
'''Washington Consensus''' is a document presented in 1989 by James Williamson- fellow at the Peter G. Peterson Institute for International [[Economics]] (formerly: Institute for International Economics). It was a response to the Latin America debt crisis, but later became a universal "policy handbook" for countries experiencing economic instability or transformation to the [[market]]- based economy. The document consisted of a set of instructions, policy guidelines and recommendations which should be promoted by "Washington", which according to Williamson consisted of: US Congress, members of the administration, economic agencies of the US [[government]], the Federal Reserve [[Board]], think tanks and international financial institutions (such as [[International Monetary Fund]] or the [[World Bank]]). | '''Washington Consensus''' is a document presented in 1989 by James Williamson - fellow at the Peter G. Peterson Institute for International [[Economics]] (formerly: Institute for International Economics). It was a response to the Latin America debt crisis, but later became a universal "policy handbook" for countries experiencing economic instability or transformation to the [[market]] - based economy. The document consisted of a set of instructions, policy guidelines and recommendations which should be promoted by "Washington", which according to Williamson consisted of: US Congress, members of the administration, economic agencies of the US [[government]], the Federal Reserve [[Board]], think tanks and international financial institutions (such as [[International Monetary Fund]] or the [[World Bank]]). | ||
Apart from Latin America Countries, many of document's policy recommendations were adopted in post- communist countries, such as Poland, Hungary, Czech Republic. | Apart from Latin America Countries, many of document's policy recommendations were adopted in post - communist countries, such as Poland, Hungary, Czech Republic. | ||
==Recommendations== | ==Recommendations== | ||
The document consisted of ten areas of interest: | The document consisted of ten areas of [[interest]]: | ||
*'''Fiscal discipline'''- budget deficits limited to 1 * 2% of Gross National [[Product]] | * '''Fiscal discipline''' - budget deficits limited to 1 * 2% of Gross National [[Product]] | ||
*'''Public Expenditure Priorities'''- government spending should concentrate on productive areas, such as: health care, [[education]], infrastructure | * '''Public Expenditure Priorities''' - government spending should concentrate on productive areas, such as: health care, [[education]], infrastructure | ||
*'''Tax Reform'''- moderate marginal tax rates | * '''Tax Reform''' - moderate marginal tax rates | ||
*'''Interest rates'''- market- determined interest rates | * '''Interest rates''' - market - determined interest rates | ||
*'''The Exchange Rate'''- market- determined exchange rates | * '''The Exchange Rate''' - market - determined exchange rates | ||
*'''Trade Policy'''- liberalization of [[international trade strategy|international trade]] (especially- refrain from [[Protectionist policy|protectionism]]) | * '''Trade Policy''' - liberalization of [[international trade strategy|international trade]] (especially - refrain from [[Protectionist policy|protectionism]]) | ||
*'''Foreign Direct Investment'''- liberalization of FDI | * '''Foreign Direct [[Investment]]''' - liberalization of FDI | ||
*'''Privatization'''- emphasis of a superiority of the private sector above state- ownership | * '''Privatization''' - emphasis of a superiority of the private sector above state - ownership | ||
*'''Deregulation'''- establishing business- friendly [[environment]] | * '''Deregulation''' - establishing business - friendly [[environment]] | ||
*'''Property Rights'''- key to market economy | * '''Property Rights''' - key to market economy | ||
{{infobox5|list1={{i5link|a=[[Monetary union]]}} — {{i5link|a=[[International Monetary Fund]]}} — {{i5link|a=[[Global bank]]}} — {{i5link|a=[[Federal reserve system]]}} — {{i5link|a=[[European Coal and Steel Community]]}} — {{i5link|a=[[Laissez faire government]]}} — {{i5link|a=[[Development bank]]}} — {{i5link|a=[[World Bank]]}} — {{i5link|a=[[Foreign exchange reserves]]}} }} | |||
==References=== | |||
* Williamson, J. (1990), ''[http://www.iie.com/publications/papers/paper.cfm?researchid=486 What Washington Means by Policy Reform]'', Peterson Institute for International Economics. | * Williamson, J. (1990), ''[http://www.iie.com/publications/papers/paper.cfm?researchid=486 What Washington Means by Policy Reform]'', Peterson Institute for International Economics. | ||
{{a|Bartosz Cioch}} | {{a|Bartosz Cioch}} | ||
[[Category:Macroeconomics]] | [[Category:Macroeconomics]] | ||
Latest revision as of 06:48, 18 November 2023
Characteristics
Washington Consensus is a document presented in 1989 by James Williamson - fellow at the Peter G. Peterson Institute for International Economics (formerly: Institute for International Economics). It was a response to the Latin America debt crisis, but later became a universal "policy handbook" for countries experiencing economic instability or transformation to the market - based economy. The document consisted of a set of instructions, policy guidelines and recommendations which should be promoted by "Washington", which according to Williamson consisted of: US Congress, members of the administration, economic agencies of the US government, the Federal Reserve Board, think tanks and international financial institutions (such as International Monetary Fund or the World Bank). Apart from Latin America Countries, many of document's policy recommendations were adopted in post - communist countries, such as Poland, Hungary, Czech Republic.
Recommendations
The document consisted of ten areas of interest:
- Fiscal discipline - budget deficits limited to 1 * 2% of Gross National Product
- Public Expenditure Priorities - government spending should concentrate on productive areas, such as: health care, education, infrastructure
- Tax Reform - moderate marginal tax rates
- Interest rates - market - determined interest rates
- The Exchange Rate - market - determined exchange rates
- Trade Policy - liberalization of international trade (especially - refrain from protectionism)
- Foreign Direct Investment - liberalization of FDI
- Privatization - emphasis of a superiority of the private sector above state - ownership
- Deregulation - establishing business - friendly environment
- Property Rights - key to market economy
| Washington consensus — recommended articles |
| Monetary union — International Monetary Fund — Global bank — Federal reserve system — European Coal and Steel Community — Laissez faire government — Development bank — World Bank — Foreign exchange reserves |
References=
- Williamson, J. (1990), What Washington Means by Policy Reform, Peterson Institute for International Economics.
Author: Bartosz Cioch
