What do you understand by the term the Washington Consensus Does it Essay

What do you understand by the term the Washington Consensus Does it adequately describe the ideology which informs the policies of the IMF in the new millenniu - Essay Example From a technical viewpoint, the term ‘Washington Consensus’ is a name given to the policies which were suggested by Washington based institutes to the Latin American countries in order to bring up and improve their economies. The term was originally created by Williamson and has been a part of political and economic terminology ever since. The defenders of the consensus call it a boon and a path to greater economic freedom for the less developed countries of the world. Those who oppose it call it a cruel implementation of new liberalism and a tool for the global hegemony of America (Williamson, 2000). Williamson himself is well aware of the detractions and has said that people misunderstand the notion completely. He says that audiences around the world think that the Washington Consensus are a name given to neo-liberal policies that have been forced upon various weaker countries by the Washington-based international financial organisations that have led those countries towards a state of crisis and created misery for their people (Harvard University, 2003). The vastly different opinions created by the implementation of the Washington Consensus shows that the policies are controversial if nothing else. The policies themselves were outlined by Williamson (2000) as the implementation of monetary discipline in terms of trade, redirection of public expenditure towards projects that could given high economic returns to the people as well as alleviate poverty (healthcare, education etc.), a broader tax base, free floating interest rates, liberalized trade policies, creation of foreign investment opportunities, privatization of national enterprises, deregulation of the economy and the establishment of competitive exchange rates. While the policies mentioned above might be seen as helpful and useful for a developing economy, there are situations where such policies can be harmful if the implementation is weak or uncontrolled