What was the “Washington Consensus?
” Joseph Stiglitz: It was a consensus formulated between 15th Street and 19th Street in Washington among members of the International Monetary Fund (IMF), the U.S. Treasury Department, and the World Bank. It argued that the keys to success in developing countries were three things: macro-stability, liberalization (lowering tariff barriers and market deregulation) and privatization. It was largely formulated out of experience with Latin America. MM: Does it still exist as a consensus? Stiglitz: No. There is a consensus that those precepts, while important, are neither necessary nor sufficient for successful development. If you look around the world, the most successful economic performer in recent decades has been China. Roughly 75 percent of the increase in aggregate GDP among all the low-income countries has occurred within China in the last 20 years. China followed some elements of the Washington Consensus — such as macro-stability — but clearly did not follow other elements, such
