Towards a New Paradigm for Development: Strategies, Policies, and Processes

In an address to the World Institute for Development Economics Research (WIDER) in Helsinki at the beginning of this year, I argued that we needed to go beyond the Washington consensus: there were broader objectives to development than were embodied in that consensus, the set of policy recommendations upon which it focused was certainly not sufficient for development, and indeed some of the most successful developers had paid little heed to its dictums. That consensus all too often confused means with ends: it took privatization and trade liberalization as ends in themselves, rather than as means to more sustainable, equitable, and democratic growth. I talked there about many of the ways in which the Washington consensus had gone astray. It focused too much on price stability, rather than growth and the stability of output. It failed to recognize that strengthening financial institutions is every bit as important to economic stability as controlling budget deficits and increasing the money supply. It focused on privatization, but paid too little attention to the institutional infrastructure that is required to make markets work, and especially to the importance of competition. In today’s lecture, I want to go beyond these by now well-documented failures of the Washington consensus to begin providing the foundations of an alternative paradigm,