Is the Washington Consensus a Help or Hinderence

1040 Words Mar 28th, 2011 5 Pages
‘The Washington Consensus has proved more of a help than a hindrance to the economic development of countries. Assess the validity of this claim.’

The Washington Consensus refers to the idea that the International Monetary Fund, the World Trade Organisation and the World Bank share common ideals. This is the idea that trade liberalisation and moving towards free trade is the best way for countries to develop.
The IMF has 185 member countries; their work mainly consists of monitoring and advising countries on exchange rates, providing loans in emergencies, both long and short term and providing assistance and training. The IMF requires countries that receive loans to put in place reforms in the form of “Structural Adjustment Programs”
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They argue that the US cotton subsidies WTO agreements and that US cotton subsidies were harmful to Brazilian cotton growers.
In 2009 The WTO accused the US of using subsidies exceeding the cap. This victory gained by Brazil confirms the idea that US subsidies are harmful.

In this dispute, Benin and Chad gave support as third parties, they would be likely to win a case on similar grounds to Brazil however they would reap little reward as they import very little from the US so any sanction upon this would be unlikely to have much effect. Another risk of opening conflicts with the US for these countries are that they receive aid form them, to speak out alone against them could leave them very vulnerable.
In this case study, these developing countries should not be in this position. The idea of subsidies goes against the ideals of the WTO’s trade liberalisation approach and has by their own rules been declared illegal however it is allowed to continue under he conditions of a cap which really doesn’t benefit anyone.

These organisations do provide help to the developing countries of the world, this is undisputed. However they also do a lot of damage. It is clear that free-trade, loans, SAPs and privatization are key to economic development and globalization. Although the evidence seems to support the fact that the Washington consensus is ineffective in reducing poverty and facilitating trade. They are also heavily criticized for being heavily in favour of the
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