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The Washington Consensus was a set of policies believed to be the formula for promoting economic growth in Latin America (although not for all countries). It was first presented by John Williamson from the Institute for International Economics in 1989.The consensus included ten reforms that should be undertaken as of 1989 (these reforms were also summarized by the World Bank in its year 2000 Poverty Report):
- Fiscal policy discipline
- Redirection of public spending toward education, health and infrastructure investment
- Tax reform - broadening the tax base and cutting marginal tax rates
- Interest rates that are market determined and positive (but moderate) in real terms
- Competitive exchange rates
- Trade liberalization - replacement of quantitative restrictions with low and uniform tariffs
- Openness to foreign direct investment
- Privatization of state enterpriseA state-owned enterprise (SOE) is an enterprise, often a corporation, owned by a government. See also: Nationalization Privatization State-Owned Enterprises of New Zealand Crown corporations of Canada Public corporation VEB.s
- DeregulationDeregulation is the process by which governments remove selected regulations on business in order to (in theory) encourage the efficient operation of markets. The theory is that fewer regulations will lead to a raised level of competitivness, therefore hi - abolition of regulations that impede entry or restrict competition, except or those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutionA financial institution acts as an agent that provides financial services for its clients. Financial institutions generally fall under financial supervision from a government authority. Examples of basic types Bank Building Society Check cashing store Cres
- Legal security for property rights
Some argue that the consensus is a set of neoliberal policies that have been imposed on hapless countries by the Washington-based international financial institutions and have led them to crisis and misery. These beliefs gained adherents in the early 21st century, when ArgentinaArgentina is a Spanish-speaking country in southern South America, situated between the Andes in the west and the southern Atlantic Ocean in the east. It is bordered by Paraguay and Bolivia in the north, Brazil and Uruguay in the northeast and Chile in th experienced an economic crisis despite following much of the consensus.
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