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 IMF and the World Bank's policy vision for developing countries before and after the global 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, the good governance and broad institutions dimension of the agenda has recorded a notable decline since the crisis; 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 the ongoing transformations in development finance. Rather than constitute a shift in policy paradigm, the partial decline of the PWC reflects an adjustment in policy practice towards greater flexibility and discretion in the challenging environment facing the twins. These findings have implications for the study of the Fund and Bank; they also highlight the evolving parameters of North-South development cooperation.

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