Washington Consensus or Washington Confusion?

W-hat changes more often, the fashion designs coming from Paris and Milan or the economic policy designs that and Wall Street prescribe to less developed or post-communist countries? Although this comparison may seem frivolous, a review of the ideas that guided thinking and action about economic reforms in the 1990s shows they were as faddish as skirt lengths and tie widths. The difference, of course, is that fashions in economic policy affect how millions of people live and define their children's opportunity for a better future. Ideas about what makes a country prosperous have always been capricious. The last decade was no different in terms of the variety and volatility of the policy prescriptions that became dominant among academics, policy makers, and the better informed segments of the world's population. However, the 1990s were distinctive in one significant respect: The world was under the impression that a clear and robust consensus existed about what poor countries should do to become more prosperous. This delusion owed much to the surprising popularity of the term Washington Consensus, the name that economist John Williamson gave in 1989 to a list of 10 policy recommendations for countries willing to reform their economies see box on page 89.