Washington Consensus, Things to Think About

In: Social Issues

Submitted By mmpirrottina
Words 1654
Pages 7
Even their most ardent supporters now concede that growth has been below expectations in Latin America (and the “transition crisis” deeper and more sustained than expected in former socialist economies).

“is that there is no unique universal set of rules…. [W]e need to get away from formulae and the search for elusive ‘best practices’….” (p. xiii).4

The record - RESULTS
Here is how Learning from Reform summarizes the surprises of the 1990s. First, there was an unexpectedly deep and prolonged collapse in output in countries making the transition from communism to market economies. More than a decade into the transition, many countries had still not caught up to their 1990 levels of output. Second, Sub-Saharan Africa failed to take off, despite significant policy reform, improvements in the political and external environments, and continued foreign aid. The successes were few—with Uganda, Tanzania, and Mozambique the most commonly cited instances—and remained fragile more than a decade later. Third, there were frequent and painful financial crises in Latin America, East Asia, Russia, and Turkey. Most had remained unpredicted by financial markets and economists until capital flows started to reverse very suddenly. Fourth, the Latin American recovery in the first half of the 1990s proved short-lived. The 1990s as a whole saw less growth in Latin America in per-capita GDP than in 1950-80, despite the dismantling of the state-led, populist, and protectionist policy regimes of the region. Finally, Argentina, the poster boy of the Latin American economic revolution, came crashing down in 2002 as its currency board proved unsustainable in the wake of Brazil’s devaluation in January 1999.

The evidence that macroeconomic policies, price distortions, financial policies, and trade openness have predictable, robust, and systematic effects on national growth…...

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