Whither the post-Washington Consensus? International financial institutions and development policy before and after the crisis

ABSTRACT

This article explores the direction, drivers and implications of change in the International Monetary Fund (IMF) and the World Bank’s policy vision for developing countries before and after the global economic crisis. By examining the evolution of the Fund’s structural conditionalities and the thematic distribution of Bank commitments, it provides evidence for a significant change on the ground: a partial retreat from the post-Washington Consensus (PWC) agenda, which marked a turn-of-the-century upgrade of orthodox neoliberalism. Conceptualising the PWC as a paradigm expansion that followed severe policy failures, the analysis finds that although narrow institutional reforms towards upgrading fiscal and financial regimes remain popular, there is now less emphasis on good governance and broad institutions; meanwhile in social policy the twins increasingly diverge. It is argued that this selective disengagement is driven by extant operational imperatives and constraints, which are further intensified by changes in lending framework and ongoing transformations in development finance. Rather than constitute a paradigm shift, the partial decline of the PWC reflects an adjustment in policy practice towards increased flexibility and discretion in a progressively challenging environment. These findings have implications for the study of the twins. They also highlight the evolving parameters of North–South development cooperation.

KEYWORDS:

• Development policy
• good governance
• IMF
• institutional reform
• policy paradigms
• post-Washington Consensus
• social policy
• World Bank

Acknowledgments

The author wishes to thank Dermot Hodson, Deborah Mabbett, Ziya Öniş, Richard Sandbrook and David Styan for comments on earlier versions of the paper.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. SDR (special drawing rights) is IMF currency; at the time of writing (Aug 2017), 1 SDR equals 1.41 US$. IMF financial year (FY) runs from 1 May to 30 April (e.g. FY2017 runs from 1 May 2016 to 30 April 2017).

2. MONA is available at https://www.imf.org/external/np/pdr/mona/index.aspx.

3. Interview with World Bank Country Director, 25 July 2012.

4. Currently, there are more than 10,000 IBRD-IDA projects listed in the World Bank's project database. See http://projects.worldbank.org/advancedsearch?lang=en (accessed 31 August 2017).

5. Note the difference in the types of data presented in Figures 5–8 versus in Figures 9 and 10. The former compare the volume of commitments to major themes in relation to total volume of Bank commitments in each region to determine relative trends, whereas the latter indicate the frequency with which individual themes appear in Bank projects.

6. Interview with former IMF mission head, 12 May 2016.

7. Interview with former IMF regional deputy director, 9 August 2016; emphasis added.

8. Interview with World Bank senior human development specialist at country office, 3 December 2015.

9. Interview with World Bank governance specialist at country office, 9 June 2016.

10. Interview with World Bank governance specialist at country office, 9 June 2016.

11. Best (2012a, 2012b) considers ambiguity a key mechanism in the development of Bank's good governance agenda and in the long-term evolution of the Fund's conditionality practice.

Additional information

Notes on contributors

Ali Burak Güven

Ali Burak Güven ([email protected]) is Lecturer in International Relations and International Political Economy in the Department of Politics at Birkbeck, University of London. He has published widely on comparative and international political economy, international organisations and global governance, and the politics of development. He is the co-editor, with Richard Sandbrook, of Civilizing Globalization: A Survival Guide, Revised and Expanded Edition (SUNY, 2015).