The false promises of the (second) Washington consensus: evidence from Latin America and the Caribbean (1990-2003)

Abstract

The objective of this paper is twofold. Firstly, we show how, and to what extent, Latin American and Caribbean countries applied the precepts of the second Washington consensus, i.e. a consensus which stresses the capital account liberalization. Secondly, we highlight the effects of this set of reforms on their economies. Thus, we show that countries having most scrupulously followed these recommendations did not experience better economic results. On the contrary, their situation as regards inequality and debt is getting worse than others.

Keywords

• Washington consensus
• Financial liberalization
• Macroeconomic policy
• International financial institutions
• Latin America
• Caribbean