Academic journal article Journal of International Affairs

Scoring the Millennium Goals: Economic Growth versus the Washington Consensus

Academic journal article Journal of International Affairs

Scoring the Millennium Goals: Economic Growth versus the Washington Consensus

Article excerpt

According to the International Monetary Fund and the World Bank, "[based] on current trends, most Millennium Development Goals (MDGs) will not be met by most countries." (1) This assessment, issued in 2004, is widely shared and reinforced by a 2005 United Nations report. (2) The joint Bank-Fund report identifies the first of "the three essential elements" urgently needed if most countries are to reach the MDGs as 'Accelerating reforms to achieve stronger economic growth." (3) The other two essential elements include increased and improved delivery of human development and related services, and support from developed countries and international agencies. These three elements have also been emphasized by the UN report, which paid particular attention to the case for increasing aid.

There is no denying that sustained, rapid economic growth is necessary for reaching the MDGs. (4) Aside from its most obvious and direct bearing on reducing income poverty and halving the number of people living on less than a dollar a day by 2015, economic growth will also facilitate the provision of resources vital to achieve other MDGs. There is also no disputing the joint IMF-World Bank report in its emphasis on the salience of economic policy reforms rather than just focusing on increased financing for improved growth.

But what kinds of reforms are to be accelerated for improved growth? And what role should the providers of development assistance, particularly the Bretton Woods Institutions (BWIs), play in helping to bring them about? The answers to these questions in the joint Bank-Fund report are more controversial, as this paper will show. There are two distinct, though overlapping strands of thinking on these questions. One pertains to development strategies or the content of reforms, particularly the type of policy and institutional reforms advocated by the BWIs and the United States Treasury in the context of adjustment programs. The second theory pertains to a host of other issues, albeit often related, that bear on the effectiveness of external assistance.

The BWIs, along with the US Treasury, are often accused of a neo-liberal or "market fundamentalism" bias captured in the shorthand of the Washington Consensus. That label has come to refer to a somewhat caricaturized version of the policies that these institutions recommended, particularly in the 1980s and the 1990s. While recognizing that, Joseph Stiglitz observes that:

   [Whatever its original content and intent, the term 'Washington
   Consensus,' in the minds of most people around the world, has come
   to refer to development strategies focusing around privatization,
   liberalization, and macrostability (meaning mostly price stability);
   a set of policies predicated upon a strong faith stronger than
   warranted in unfettered markets and aimed at reducing, or even
   minimizing, the role of government. That development strategy stands
   in marked contrast to the successful strategies pursued in East Asia,
   where the development state took an active role. (5) ]

While the BWIs, especially the World Bank, have been moving away from the Washington Consensus, there remains the question of whether they have moved far enough--especially in practice rather than research or rhetoric--and in which direction they should be moving if the MDGs are to be realized. (6) Much of the debate on the reform of reforms revolves around the role of governments, in particular raising the following questions:

1. Is there a conception of the nature of the state or efficacy of government interventions that underlies the policy recommendations of the BWIs? If so, what is it and why?

2. How are these policies informed by the experience of both the successes and failures of public policy in promoting economic growth, especially of the "developmental states" of East Asia?

3. How should they be so informed? How can policy advice be tailored more to country circumstances, especially the type of state and its stage of development? …

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