Briefly explain the core ideas emerging from Washington

Consensus, as articulated by the World Bank and the

International Monetary Fund. Are these ideas in contrast
with the core propositions of the Right to Development as
articulated by the United Nations?
Answer 4.

The concept and name of the Washington Consensus were first presented
in 1989 by John Williamson, an economist from the Institute for
International Economics.
Williamson used the term to summarize commonly shared themes among
policy advice by Washington-based institutions at the time, such as the
International Monetary Fund, World Bank, and U.S. Treasury
Department, which were believed to be necessary for the recovery of
countries in Latin America from the economic and financial crises of the
1980s.
The consensus as originally stated by Williamson included ten broad sets
of relatively specific policy recommendations:
1. Fiscal policy discipline, with avoidance of large fiscal deficits
relative to GDP;
2. Redirection of public spending from subsidies ("especially
indiscriminate subsidies") toward broad-based provision of key
pro-growth, pro-poor services like primary education, primary
health care and infrastructure investment;
3. Tax reform, broadening the tax base and adopting moderate
marginal tax rates;
4. Interest rates that are market determined and positive (but
moderate) in real terms;
5. Competitive exchange rates;
6. Trade liberalization: liberalization of imports, with particular
emphasis on elimination of quantitative restrictions (licensing,
etc.); any trade protection to be provided by low and relatively
uniform tariffs;
7. Liberalization of inward foreign direct investment;
8. Privatization of state enterprises;
9. Deregulation: abolition of regulations that impede market entry or
restrict competition, except for those justified on safety,
environmental and consumer protection grounds, and prudential
oversight of financial institutions;
10.Legal security for property rights.

These prescriptions are meant as a baseline of directions for nations in

need of assistance from international economic entities, such as the World
Bank and the International Monetary Fund.

Criticism 1. Over the years, the Consensus has been blamed for a number of
massive destabilizations, most notably the Argentinean crisis.
2. Opponents of the Consensus note that it do a great deal to open
developing nations to exploitation by already developed nations,
sometimes with catastrophic results. A number of countries, particularly
in Latin America, have pursued policies in recent years that go directly
against the Consensus, sometimes with very positive results.

UNITED
NATIONS
DEVELOPMENT:

MODEL

OF

RIGHT

BASED

The right to development is included in the mandate of several UN

institutions and offices.
It says "All peoples shall have the right to their economic, social and cultural
development with due regard to their freedom and identity and in the
equal enjoyment of the common heritage of mankind." (Article -22)
"Indigenous peoples have the right to determine and develop priorities
and strategies for exercising their right to development. (Article -23)
Comparision between the UN Universal Declaration of Human Rights
and neo-liberal policies adopted by Bretton Woods Institutions clashed at
several points.
1) Itrusion , After effects and Accountability

All human beings are entitled to participate, contribute and enjoy

economic, cultural and political development of their nation. Though
Bretton Woods instituions (WB , IMF , WTO) are actively participating
and getting involved in domestic policies, people donot have any say in
this process. There is no accountability or representation of people in
IMF, WTO or WB. People elect politicians who then elect officials to act
as members of these organisations. IMF and WB provide term bound
policies that have direct impact on people of the indebted countries.
While in return people donot have any right to question. The right
does get bargained away when a country approaches these institutions.
2 )Intrusion in environmental issuesa) WTO provides that no member can use trade policies to force another
member to enforce stronger environmental standards on its territory or in
specific production processes. The US ban on tuna imports from Mexico
(on the grounds that Mexican fishing boats did not use dolphin- friendly
nets as required under US regulations) was ruled as illegal by the GATT.
The ruling, however, reinforced the perception that not only did the
GATT/WTO give preference to trade over environment, but also that it
forced consumers to accept products into their markets with little regard
to the ethical concerns of the importing country.
b) Similarly the aim of the Sanitary and Phytosanitary Measures (SPS)
Agreement is to maintain the sovereign right of any government to
provide the level of health protection it deems appropriate. The scope of
this agreement was debated in the US case against the Euro- pean Union
(EU) for prohibiting the use of hormones in meat imports.
The WTO disputes panel ruled that the EU ban was inconsistent. When
the EU announced its inability to comply with the rul- ing, the plaintiffs
(US and subsequently, Canada) were authorised retaliation in amounts
that were determined by an arbitration panel.
3)Abuse of right to equality
Article 2 and 3 provides equal opportunities for all and fair distribution of
income. Following IMF and World Bank models of development, neoliberal policies in 1980-2000, developing countries have grew by 1.5%
per capita income. While following their own indegenous knowledge,
they have grown at the rate of 3% per capita, 1960-1980
4)Imposed economical policies -

Article 2 clause 3 points out that states have the right and duty to
formulate appropriate national developmental policies. The IMF has used
conditionality to exact major changes, called structural adjustments,
in borrowing countries fiscal and monetary policies, including such
issues as banking regulations, government deficits, and pension policy.
example of the IMFs insistence that the Korean Central Bank focus on
fightinginflation during the 1997 Asian Financial Crisis, not because
monetary policy was a cause of the crisis, but rather because the IMF
believed that fighting inflation should be the primary purpose of a central
bank.

5) Imposed Policies without concern and understanding of regional

situations
policies were imposed all at once, rather than in an appropriate sequence.
For example, the IMF demands that countries it lends to privatize
government services rapidlythat is, sell them to private investors rather
than operate the services itselfsuch as water supply and utilities.
According to Stiglitz, this is a result of the IMFs market
fundamentalism, a blind faith in the free market, that ignores the fact
that the ground must be prepared for privatization. Private owners are
most interested in operating a company efficiently, which often means
letting go of staff.
if a countrys unemployment program and other social safety nets are not
sufficiently developed, those fired staff will have no way to support their
families.