The "Washington
Consensus" is a set of ten economic policy prescriptions targeted at
developing economies and countries. It focuses on a switch to a free-market
system by providing aid packages. The hope is that this aid will help countries
get on their feet and privatize. This move to privatize and develop is also
seen as a push for these nations to "modernize."
There are many
fundamental positive expectations of the consensus. The hope is that through
aid and stimulus, the economies will grow. This growth in economy theoretically
will help with job creation to battle severe unemployment. As unemployment
increases, it is expected that standards of living will rise as well. Poverty,
as a result, will hopefully be reduced.
Many MENA states
have been reluctant to the Washington Consensus. It is seen as power move by
Western nations to "modernize" the region, which is a mindset that
can be considered a second wave of colonialism. Western nations and
institutions, such as the World Bank or IMF, assert control by attaching
strings to aid. These include the implementation of certain infrastructure or
requirements on health goals. By making aid conditional to Western values, MENA
states are left suspicious and hesitant.
There are many
counterproductive effects to this plan. For one, it has been known to lead to
destabilization of local economies since the change is not organic. In order to
achieve that goals, the change must come from local development and not from
top-down mandates. Also, the plan leaves the countries open to foreign
exploitation. Like what we saw in the documentary about the Zaballeen in Cairo,
foreign companies are contracted to provide services so that a country can meet
the conditional requirements for aid. But by contracting internationally, the
local economy is not growing.
I liked how you talked about the impacts of globalization on small-scale businesses that only operate within the local economy. While Western countries may think the Washington Consensus is helping MENA countries, it is harming small businesses and individuals more than it is helping them. Also, the concept of "modernizing" MENA countries by Westernizing them is very Western-centric and can cause resentment.
ReplyDeleteI feel that the failure of Western aid in MENA is because the western aid is being poorly planned by the western organizations. They have made the mistake of putting the appropriation of these funds in the hands of rentier or authoritarian states with little interest in acting in the best interest of their population. Any version of a trickle-down effect from the government is not able to happen in an economy where the government's economic activity is entirely separated from the main population. In fact, it could be argued that this aid even when contingent on meeting certain conditions perpetuates the harmful rentier situation of many MENA states. I think that if the international organizations took a more localized approach in supporting the efforts of small businesses and local entrepreneurs then their efforts would be more effective at stimulating and diversifying the economy. This would result in the creation of jobs and the eventual modernization of the economy. The local economy could then be made to embrace the benefits of international trade which in combination with the localized economic stimulus would raise the standard of living.
ReplyDeleteI like how you pointed out that the expectation of these policies is to help economies grow, because the trickle down effect almost insinuates a fundamental lack of understanding of the MENA region. With many MENA states being rentier states, the general public rarely ever sees a cent of the wealth bestowed upon authoritarian regimes. In order to keep up an image insinuating a trickle down, MENA states often engage in strategic pseudo-liberalization policies that are hollow imitations of effective policies. Additionally, many neo-liberal policies advocated through the Washington Consensus hurt the localized MENA economies more than they help, as seen with Jordan's adoption of IMF packages in the 80's. In a region where the state is often the largest employer, privatization policies generated higher levels of unemployment, as private companies now sought the cheap labor of foreigners. This begs the question of whether politicians even considered the true nature of MENA states and indicates a fundamental misunderstanding of the region.
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