G20 to ditch Washington consensus on development

Chris Giles writes on the FT website:

The Group of 20 leading economies will ditch free market recommendations for the poorest countries on Friday in favour of a more rounded approach that puts “resilient growth” at the heart of development strategy.

According to a draft communiqué seen by the Financial Times, dated November 3, the G20 agrees that “there is no single formula for development success” and stresses rich and poor countries should work as “partners” to foster enduring growth.

The agreement is termed the “Seoul consensus for shared growth”, an attempt to supplant the Washington consensus of the late 1980s that recommended free market solutions to lift countries out of poverty.

Instead of promoting deregulation, fiscal discipline and privatisation, as in the Washington consensus, the agreement in Seoul will suggest nine “pillars” for generating growth. These include building infrastructure to eliminate bottlenecks in the economy, securing private investment, financial inclusion, social protection, good governance and food security.

Interesting stuff. I was convinced by Joseph Stiglitz's Globalization and its Discontents (which was adopted by many as an anti-market book) that free trade was the route to development for Third World countries. But history shows that those countries who have trodden this path successfully have often deviated markedly from the pure free market route.

All in all this move by the G20 looks a victory for the sort of pragmatism that a modern Liberal instinctively supports.