Full Description
A set of economic policy prescriptions promoted by Washington-based institutions — the IMF, World Bank, and US Treasury — for developing countries in crisis, particularly in Latin America during the 1980s and 1990s. The standard package included fiscal austerity, trade liberalisation, privatisation of state enterprises, deregulation, and the removal of barriers to foreign investment. Coined by economist John Williamson in 1989, the term became associated with the dominance of free-market orthodoxy in international development policy.
Critical Perspective
The Washington Consensus was applied most aggressively to economies that had no democratic mandate for its implementation — often imposed as conditions of IMF lending during financial crises when governments had no alternative. In country after country, the results included sharp increases in inequality, the destruction of welfare systems, and the concentration of wealth in the hands of those connected to privatisation processes. Joseph Stiglitz, former World Bank chief economist, called it “market fundamentalism” and documented its consistent failures.
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