Why did the Washington Consensus Policies Fail?

Overview

During the 1990s, Latin America was ridden by crisis that left the region in desperate need of economic reform. The region’s governments firmly embraced the Washington Consensus, a standard reform package recommended by Washington, D.C.-based institutions such as the World Bank and the IMF. Prescribed policies rested on three principles: macroeconomic discipline, openness to trade and investment, and greater market competition. However, the results were largely disappointing. Despite the surge of private capital influx into the region, unemployment rose, poverty remained widespread, crime rose, and the general sense of injustice followed. The reason behind that was that the recommendations were one-size-fits-all, too simple, and incomplete. More importantly, they presumed the existence of mechanisms necessary for market economies.

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