The Pros And Cons Of Washington Consensus

The term “Washington Consensus” was created in 1989. It was first used in a background paper for a conference to examine the extent to which the old ideas of development economics (Williamson 2010). In order to ensure that it addresses the common set of issues, John Williamson made a list of ten policies that he thought the majority in Washington would agree were needed and labelled it the “Washington Consensus.” Williamson thinks that it would be a good policy to help the debtor countries overcome their debt burden with the changes in economic policy.

1.2 THE CHARACTERISTICS
The consensus originally stated by Williamson included ten broad sets of relatively specific policy recommendations:
1. Fiscal policy discipline
In order to avoid running large deficits that leads to balance of payments crises and high inflation that hit mainly the poor because the rich could easily park their money overseas.
2. Redirection of

Distributional concerns could be taken care of in the political process; more moderate advocates of Washington consensus policies deny the charge. The policies pursued by the international financial institutions which came to be called the Washington consensus policies or neo liberalism entailed a much more circumscribed role for the state than were embraced by most of the East Asian countries, a set of policies which came to be called the development state.

Some economists have argued that free trade is not necessarily the best option for developing economies. It can cause the economies to primarily only produce low income growth and their primary products. If the countries promotes new industries, it may require both selective tariffs on cheap imports and as well as government