What is the Washington Consensus?
The Washington Consensus is a set of polices arguments advocated through free market economists to motivate growth and it is at the heart of International Monetary Fund, World Bank and developed countries thinking on development policies. The devastating consensus in between rich countries is that markets work and government planning not success to deliver growth. Markets are not ideal and government has a main role to play into correcting market failure. But fundamentally LDC governments wanting growth should abandon intervention, get out of the method and establish the rule of the market by as follows:
a. Getting prices right through:
• Eliminating price controls and subsides
• Motivating competition by privatisation
• Deregulation to eliminate barriers to free movement of resources among the industries
b. Making sure macroeconomic stability through
• Balanced government budgets by tight fiscal policy (G=T) and
• Tight monetary policy to attain low inflation
c. Liberalising (open up) trade by:
• Abandoning fixed swap over rates,
• Removal of limitations on imports for examples quotas and tariffs,
• Allowing unlimited capital flows as like FDI.