Structural adjustment and crises - which way now?

This paper provides a critical evaluation of an orthodox policy framework that came to be known as the "Washington consensus". The paper traces its ideological and political genesis as it became embodied in World Bank and International Monetary Fund aid conditionalities. Despite following reforms prescribed by the donors as part of aid conditionalities, many developing countries failed to achieve 1960s per capita growth rates. The Washington consensus prescriptions are too restrictive. They not only limited developing countries' fiscal and policy space to deal with shocks and support structural change, but also increased their vulnerability to crises. The paper calls for governments to play a stronger role in dealing with developmental issues.