Friday, October 22, 2010

Washington Consensus

Forgive me if this is blunt, but maybe the Washington Consensus was not given the proper chance to prove itself.

The Washington Consensus was all about free-markets all over the world, but agricultural subsidies in the developed world killed the agricultural exports in the developing world; and it still is.  If you think about it, agriculture is the comparative advantage of the developing world as well as the largest sector in terms of value and employment.

There seems to be a lot of judgment on developing policies solely looking at the results (well, how else?).  Combine agricultural subsidies, the Washington Consensus, and failed development results, and a possible conclusion is that Washington Consensus = no good.

So, maybe a more complete free-market initiative that eliminates agricultural subsidies could have redeemed the Washington Consensus' poor reputation.

Please let me know if otherwise.


Kabir said...

I don't think the Washington Consensus said anything about developed economies becoming more open to trade...only about developing economies. It was also much more comprehensive than just trade liberalization. For example, there was a huge push for privatization, which is great in some sectors (eg telecom in Inda) but terrible in others (eg water in Bolivia). Basically, it was a simplistic top-down policy which grossly underestimated the high variation of problems faced by different developing countries. So I don't think it should be given another chance.

Free-er trade, however, could be good. That is more what the WTO is doing. But I don't know how small developing countries would possibly compete with China and India on anything other than raw materials. Becoming dependent on extraction is a potentially dangerous situation. Need to give that some more thought though. I think India/China would definitely benefit if all economies became fully open and got rid of subsidies, but I'm no longer sure that it would be globally the best option. If all borders were opened too, then that would definitely be a huge poverty alleviation step.

anne said...

ah yes... kabir... the one who always wants to get rid of all the borders. G-citz