In addition to pressing donors to increase their aid commitments toward meeting the Millennium Development Goals, aid advocates should also press governments to stop supporting “failed policies” of the Washington Consensus, economist and author Rick Rowden argues.
“Despite recent high-profile claims by the World Bank that it has reduced the number of conditions on its loans, a number of studies have shown that the reduction is not as significant as the bank claims, particularly on sensitive issues such as trade liberalization, and that new, non-transparent forms of conditionality are being applied, contrary to responsible financing principles,” Rowden writes in the Guardian’s “Poverty Matters” blog.
The Washington Consensus refers to market-friendly policies that are popular in mainstream economies and institutions such as the World Bank and International Monetary Fund. These policies, as Rowden describes, include fiscal discipline, interest rate liberalization, cutting tax rates, competitive exchange rates and trade liberalization.
Rowden argues that government representatives to the executive boards of the World Bank and IMF are still approving Washington Consensus-type loan conditions, while trade ministers are trying to codify similar policies in legal arrangements at the World Trade Organization negotiations.
“So while calling on donors to give more aid to meet the MDGs is absolutely crucial, more aid alone will not address the failure of the current development model. Aid advocates must also take steps to get their governments to cease and desist with pushing the failed policies of the Washington consensus,” concludes the author, who penned the book “The Deadly Ideas of Neoliberalism: How the IMF has undermined public health and the fight against Aids.”