The Washington Consensus a What were the main findings of th

The Washington Consensus

a. What were the main findings of the three multi-country studies on the effects of different trade regimes? (7 points)

b. What is the Washington Consensus? Give five of its ten commandments. (6 points)

c. Explain the evolution of the focus of the Washington Consensus over time (6 points)

d. Identify and explain two major blind spots in the Washington Consensus (6 points)

Solution

a) Main findings of the 3 multi-country studies on the effects of different trade regimes

Pillar 1 - Latin America more protectionist; average effective tariff rate in East Asia was significantly lower than in Latin America

Pillar 2 - Variance in effective rates much smaller in East Asia, than in Latin America. The region of Latin America is more prone to creating winners, and, losers. The market forces have a smaller force in resource allocation. Variance is zero when the composition of importable is decided entirely by market forces.

Pillar 3

East Asian Nation\'s trade regime makes firms indifferent between producing for the external, and, the internal market. It is more profitable for Latin American firms to sell in the domestic markets.

2. Washington Consensus Commandments

3. A shift in focus from areas or countries that do not have a comparative advantage in. The focus should be on Corporate Governance, and, property rights.

4. Blind spots