POLI 243 Lecture Notes - Lecture 24: International Monetary Fund, United States Department Of The Treasury, Import Substitution Industrialization
4 Sep 2016
School
Department
Course
Professor
Malaysia and Capital Controls
April 11, 2016
The Washington Consensus
The Washington Consensus is a set of 10 economic policy prescriptions considered to
constitute the "standard" reform package promoted for crisis-wracked developing countries by
Washington, D.C.–based institutions such as the International Monetary Fund (IMF), World
Bank, and the US Treasury Department.
• The cold War ends: Fukuyaa calls it the 'end of history'
o History is a series of big debates -- Cold War perspectives
▪ communist argument: centralize authority, reorganize society, top-down,
no market
▪ Capitalist/west argument: democracy, classical liberal ideas (comparative
advantage, specialization), market based principles
o New intl economic order: managed international trade, welfare components,
similar to domestic economies
o Economic development: developing countries need govt regulation – not market
based approach
o Ideological battle ends: liberal (democracy, capitalism) arguments won
(fukuyama),
▪ Market based approach is the proper one for economic development
• Systemic and ideological constraints on economically developing countries change
o USSR no longer providing assistance in the early 90s causes communist countries
to re-evaluate their economic and political practices
o USSR failing is seen as an economic collapse – not a revolution from below
▪ Centrally planned economies are seen as failures – alternative is market
based
• Neo-liberal models dominate (classical liberal economic idea re-emerges)
• IMF and World Bank encourage:
o Free trade
▪ Development strategy: import substitution industrialization – put up tariffs
to maintain domestic market for internal producers – South Korea tried
this, but was not satisfied with it
▪ 90s many countries give up on this strategy
▪ Effective for some countries
o Open capital markets:
▪ Limited the in-flow, or out-flow (often both) of capital
▪ Need capital to industrialize
find more resources at oneclass.com
find more resources at oneclass.com
