JanJoost Teunissen and Age Akkerman [eds.], Diversity in Development: Reconsidering the Washington Consensus, The Hague: FONDAD, 2004.
The debate on the "Washington Consensus" is rife. And this comes as no surprise, given the policy experiment's outcome in reforming economies in Africa, Asia, and particularly in Latin America. To be sure, some countries did benefit from the wide-ranging structural reforms, including privatization and trade liberalisation, undertaken in the 1990s on the back of John Williamson's broad recommendations (see, for instance, Kuczynski and Williamson, 2003). Yet many economies' post-reform performance has been disappointing, and poor growth and financial instability still prevail. Some analysts argue that these developments underscore the need to marshal further wide-spread policy reforms, while others call for designing and implementing policies on a country-by-country basis. Acknowledging this debate's importance the Forum on Debt and Development (FONDAD), a Netherlands-based development policy think tank, convened a conference on the topic. Jan Joost Teunissen and Age Akkerman subsequently edited the book under review.
The volume contains nineteen chapters organised in three Parts. These focus on (1) the Washington Consensus' strengths and weaknesses; (2) financial stability; and (3) future development policy options. So the book covers a range of topics, even though not all the chapters provide indepth analysis. In fact, conference discussant's comments are printed as chapters themselves. The book's core is made-up by contributions from Wing Thye Woo, José Antonio Ocampo, Ricardo Ffrench-Davis, Charles Wyplosz, Yung Chul Park et al, and Amar Bhattacharya and Stephany Griffith-Jones.
Wing Thye Woo challenges the Washington Consensus' foundations. He argues that many building blocks underpinning John Williamson's agenda are flawed, chiefly because they are part of a one-size-fits-all policy. Along these lines, a reasonable point in Woo's paper is that some countries, particularly in sub-Saharan Africa, cannot rely on the market alone, and may not be able to take-off towards growth and prosperity without additional aid from the rest of the world. The key reason is that they are stuck in what economists call a "poverty-trap." It is worth noting that Jeffrey Sachs and his colleagues at Columbia University's Earth Institute and at the United Nations' Millennium Project argue along these lines rather convincingly. (Non-technical readers would probably benefit from reading Sachs, 2005.)
José Antonio Ocampo engages on several aspects of the globalisation debate. In so doing he puts forward, inter alia, an alternative development agenda for Latin America vis-à-vis the Washington Consensus. But above all Ocampo's emphasis on the importance of developing and implementing sound national development agendas is worth pondering. Osvaldo Sunkel discusses and comments on Ocampo and on the potential challenges from adopting an alternative development approach. In particular, Sunkel advocates national structural and institutional policies to foster human capital development, industrial capability, and science and technology.
Many commentators argue that the reforms put in place during the 1990s require serious rethinking, and Ricardo Ffrench-Davis tackles this issue head-on. He explicitly singles-out several vital points to consider in "reforming the reforms." Particularly, Ffrench-Davis calls for macroeconomic policy reforms leading to a stronger link between financial liberalisation and market supervision, and for a counter-cyclical fiscal policy, among others. He also urges for sensible capital and labour market reforms that should in turn contribute to boosting an economy's competitiveness. And he also argues for policies that support a more predictable environment for exports, notably by means of achieving real exchange-rate stability -a tall order for any developing country. …