Prior tomany countries quite deliberately adopted policies that were designed to insulate their economies from the world market in order to give their domestic industries an opportunity to advance to the point where they could be competitive. The policy of development via import substitution, for example, was often associated with protective tariffs and subsidies for key industries. Performance requirements on foreign investment were also common. These measures often required foreign investors to employ native workers in skilled positions, and to purchase inputs from domestic producers, as ways of ensuring technology transfers.
Some of the conditions for structural adjustment can include: Cutting expenditures, also known as austerity. Focusing economic output on direct export and resource extractionDevaluation of currencies, Trade liberalisationor lifting import and export restrictions, Increasing the stability of investment by supplementing foreign direct investment with the opening of domestic stock marketsRemoving price controls and state subsidiesPrivatizationor divestiture of all or part of state-owned enterprises, Enhancing the rights of foreign investors vis-a-vis national laws, Improving governance and fighting corruption.
These conditions are known as the Washington Consensus.
Benefits[ edit ] These loan conditions ensure that the borrowing country will be able to repay the IMF and that the country will not attempt to solve their balance-of-payment problems in a way that would negatively impact the international economy.
This indicates that IMF lending does not impose a burden on creditor countries, as lending countries receive market-rate interest on most of their quota subscription, plus any of their own-currency subscriptions that are loaned out by the IMF, plus all of the reserve assets that they provide the IMF.
This led to the devaluation of national currencies and a decline in world trade. The representatives of 45 governments met at the Bretton Woods Conference in the Mount Washington Hotel in Bretton Woods, New Hampshirein the United States, to discuss a framework for postwar international economic co-operation and how to rebuild Europe.
There were two views on the role the IMF should assume as a global economic institution. American delegate Harry Dexter White foresaw an IMF that functioned more like a bank, making sure that borrowing states could repay their debts on time.
British economist John Maynard Keynes imagined that the IMF would be a cooperative fund upon which member states could draw to maintain economic activity and employment through periodic crises.
The increase reflected in particular the attainment of political independence by many African countries and more recently the dissolution of the Soviet Union because most countries in the Soviet sphere of influence did not join the IMF.
This is known as the Nixon Shock. Since [ edit ] The IMF provided two major lending packages in the early s to Argentina during the — Argentine great depression and Uruguay after the Uruguay banking crisis. Property taxes are equitable and efficient, but underutilized in many economies There is considerable scope to exploit this tax more fully, both as a revenue source and as a redistributive instrument.
The former Czechoslovakia was expelled in for "failing to provide required data" and was readmitted inafter the Velvet Revolution.
Poland withdrew in —allegedly pressured by the Soviet Union —but returned in Members needed to make periodic membership payments towards their quota, to refrain from currency restrictions unless granted IMF permission, to abide by the Code of Conduct in the IMF Articles of Agreement, and to provide national economic information.
However, stricter rules were imposed on governments that applied to the IMF for funding. Please help improve this article by adding citations to reliable sources.
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February Learn how and when to remove this template message Board of Governors[ edit ] The Board of Governors consists of one governor and one alternate governor for each member country. Each member country appoints its two governors. The Board normally meets once a year and is responsible for electing or appointing executive directors to the Executive Board.
The International Monetary and Financial Committee has 24 members and monitors developments in global liquidity and the transfer of resources to developing countries.
They also advise on trade and environmental issues. The Executive Directors represent all member countries in a geographically based roster. The Executive Director representing the largest constituency of 22 countries accounts for 1.Structural adjustment programmes (SAPs) consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experienced economic crises.
The two Bretton Woods Institutions require borrowing countries to implement certain policies in order to obtain new loans (or to lower interest rates on existing ones). The tenets of the Washington Consensus are no longer confined to arcane provisos in IMF and World Bank programs.
They are now the pillars of a new regime of international law. They are embedded in the charter of the World Trade Organization, for instance - a quasi-judiciary body as well as a regulator of international trade and much more besides.
But this corroborates my point that the policies, while consistent with the Washington consensus, were tailored to countries’ circumstances because they emerged from a domestic political consensus.
This notion of a 'domestic political consensus' is quite a stretch. The Washington Consensus was created in by John Williamson; it was used to describe the 10 policy prescriptions.
The Washington Consensus was made to be the baseline of directions for countries, who are in need of assistance from international economic entities, for example the international Monetary Fund and the World Bank.
The Washington Consensus was made to be the baseline of directions for countries, who are in need of assistance from international economic entities, for example the . Globalization > Issues in Depth > IMF/World Bank > Why Is the IMF Controversial Since they were headquartered in Washington, D.C.
the IFIs’ strategy was called the “Washington Consensus.” As summarized by the World Bank, it had ten basic points: the way in which the Washington Consensus was uniformly presented to a wide range.