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24 / 09 / 2004
The forum dialogue “From the Washington Consensus towards a new global governance” makes an assessment of the state of the economy

John Williamson, the founder of the plan of economic measures and the Nobel Prize for Economics, Joseph Stiglitz, took part this morning in the opening session of the dialogue “From the Washington Consensus towards a New Global Governance”

The president of the Fundació CIDOB, Narcis Serra, was in charge of the welcoming remarks of the dialogue which, he stated, “will focus on the importance of a new world governance”. Serra explained that the Washington Consensus “means different things to different people.”

Serra called for all policies to be adequately backed by academic research and for “the reform of institutions as a key factor for the development of poorer countries.”

The founder of the Washington Consensus, John Williamson, presented a brief history of the term and defined it as “a list of recommended measures that was developed in 1989 to create wealth in the Latin American countries.”

Williamson said “some economists were critical of these measures as being part of economic neoliberalism or market fundamentalism.” Williamson believes that the problems are “The Consensus is not being analyzed in what it originally stands for. The term was interpreted as an economic policy aimed at defining a global policy agenda but originally it was only meant for Latin America.”

The current debate on the Washington Consensus focuses on ways of modifying it and creating new economic policies. According to Williamson, “We must insist on the original meaning and leave behind other uses of the term in order to consider a consensus Post–Washington Consensus.”

Williamson explained that the ideas on development economics “were born in 1989 when economic policies distinguished between countries within the OECD and developing countries.” Williamson pointed out, “The Consensus was meant to avoid an intellectual apartheid based on differing economic behaviors.”

Among the Consensus ideas, Williamson stated, “It was adopted in a widely liberal sense as if it were the doctrine of the International Monetary Fund, the World Bank or the U.S. Public Treasury.” For Williamson, the critical voices of the Washington Consensus are based in cases in which its policies were not followed rather than observed.”

The underlying principle of the Consensus is “That countries should adopt a market economy,” said Williamson. For the founder of the Consensus, “The same model cannot be applied to everyone; specific institutions need to be created and respond to each country’s specific situation.”

Williamson added, “it is important to guarantee equity because it is not enough to increase income if it is not adequately distributed.” Williamson highlighted the importance of training and education for economic development, which requires investments in human capital.”

The Nobel Prize for Economics Joseph Stiglitz stated in turn, “Developing countries should be treated with the same economic perspectives applied to developed countries,” For Stiglitz, “There is a lack of consensus in most of the political and economic issues.” In this respect, he pointed, many issues “stop being debated in economic terms to become political issues.”

For Stiglitz “Both markets and governments are necessary for development; governments should have an important and decisive role.”

According to Stiglitz “A single model cannot be statistically established as an economic policy applicable to all countries.”

For the Nobel Prize winner, consensus means “to give importance to equity since all experts agree on the importance of income distribution.” If a new consensus were to be adopted, Stiglitz proposed, “A consensus not based exclusively on the criterion of Washington but a policy mix that includes the perspectives of governments and of the market.”

For Stiglitz the two key issues to consider are “the assessment that each country should make with regard to ways of ensuring sustainable development and to the restructuring of the global economy in order to promote stability and equity in all countries.”