UNIT 4 (6. WASHINGTON CONSENSUS) Flashcards
What were the historical and global contexts that contributed to the emergence of neoliberalism?
The historical context includes factors such as economic growth following World War II, the founding of Bretton Woods institutions, the dominance of Keynesian economics, and the oil shocks of the 1970s. The global context involved major Western nations favoring market-oriented strategies due to the end of the Cold War and reduced ideological conflict.
Who coined the term ‘Washington Consensus’ and what does it refer to?
British economist John Williamson coined the term ‘Washington Consensus’ in 1989. Initially, it referred to a list of reforms in Latin America that major players in Washington could agree on. However, it eventually became a derogatory phrase used to describe the harmonization of policies suggested by these institutions.
What are some of the main premises of the Washington Consensus?
The main premises include fiscal discipline, prioritizing public expenditure, tax reform, interest rate liberalization, trade liberalization, liberalization of foreign direct investment (FDI), privatization, deregulation, and property rights development.
What are some of the obstacles to development associated with the Washington Consensus?
Some of the obstacles include social inequality and poverty, lack of institutional capacity in implementing the reforms, insufficient attention to social and environmental concerns, poor governance and corruption, and the promotion of economic goals above social and environmental considerations.
How did the debt crisis and the influence of financial institutions contribute to the emergence of the Washington Consensus?
The debt crisis in Latin American countries in the 1980s led to the formation of the Washington Consensus as a response by the IMF, World Bank, and U.S. Treasury. These institutions played important roles in addressing the economic difficulties caused by the crisis. Additionally, major Western nations believed that market-oriented strategies were crucial for developing-country prosperity.
What were some of the key factors in the political context that contributed to the emergence of neoliberalism?
The conclusion of the Cold War favored market-oriented economic policies, with less influence from centrally planned economies and less ideological conflict. This created a favorable atmosphere for the spread of neoliberal ideals.
