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Fads and fashion in economic reforms: Washington Consensus or Washington Confusion?

2000; Taylor & Francis; Volume: 21; Issue: 3 Linguagem: Inglês

10.1080/01436590050057753

1360-2241

Moisés Naím,

Fiscal Policies and Political Economy

What changes more often the fashion designs coming from Paris and Milan or the economic policy designs Washington and Wall Street prescribe for countries that are less developed or that are emerging from decades of communism? While this comparison may seem frivolous, a review of the ideas that have guided thinking and action about economic reforms in this decade shows that they are as faddish as skirt lengths and tie widths. The difference, of course, is that economic policy fashions affect the way millions of people live and define their children's chances of a better future. Ideas about what makes a country prosperous have always been fickle. This decade has been no different in terms of the variety and volatility of the policy prescriptions that became dominant among academics, policy makers and the better-informed segments of the world's population. The 1990s, however, have been different in one significant respect: during this decade the world has been under the impression that there was a clear and robust consensus about what a poor country should do to become more prosperous. This misimpression clearly owes a lot to the surprising popularity of the term 'Washington consensus' the name that economist John Williamson gave in 1989 to a list of 10 policy recommendations for countries willing to reform their economies.' The general ideas derived from the Washington Consensus had a huge influence on the economic reforms of many countries. Yet the way these countries interpreted such ideas varied substantially and their actual implementation even more so. Moreover, the original 10 policy prescriptions of the Washington Consensus reigned unchallenged for only a short time. Changes in the international economic and political environment and new domestic realities in the reforming countries created problems the Consensus did not envision or encompass, thus forcing the search for new answers. The newfound answers often complemented the recommendations originally offered by the Washington Consensus, but some also ran counter to them. The wildly gyrating ideas about controls on foreign capital or about exchange rate regimes that have been offered at different times are good examples of the lack of consensus or indeed the confusion that prevailed among the experts. Moreover, throughout the decade, both the general media and expert commentators often characterised the reforms implemented in countries as different as MoisesNaim is the Editor-in-Chief of Foreign Policy, 1779MassachusettsAvenue, Washington, DC20036, USA.