Presentation Title

Capitalism and Democracy: The Spillover Effects of the Washington Consensus on Democratization

Faculty Mentor

Roger White

Start Date

18-11-2017 10:45 AM

End Date

18-11-2017 11:00 AM

Location

9-251

Session

Interdisciplinary 2

Type of Presentation

Oral Talk

Subject Area

business_economics_public_administration

Abstract

The Washington Consensus has long been debunked as a failed economic reform, largely for three interlaced reasons. First, conception – for failing to consider each practicing country’s unique sociocultural framework. Second, and as an extension of the first reason, administration – for having invited only subjective interpretations of the paradigm by the practicing governments. Third, results – for failing to stimulate a sustainable growth in GDP per capita, and instead contributing to the widening of income inequality, in Latin America. Later studies provide empirical support for this view, and this paper acknowledges the shortcomings of the Washington Consensus. However, if Lipset’s assertion that there is a causal relationship between wealth and democratization may be more broadly understood as saying what achieves greater economic prosperity will also improve democracy, then it may be worthwhile to see whether Williamson’s economic instruments have affected democratization in Latin America and worldwide. This study evaluates the statistical significance of each of the ten policy recommendations of the Washington Consensus, along with each country’s prior year’s democracy index, GINI index, and a dummy variable for post-Soviet Union countries, by using the Ordinary Least Square (OLS) regression technique. The data consists of annual values for more than 100 countries that span the period from 1990 through 2016. Where necessary, literature-sound proxy variables are used. The results suggest that only some of the independent variables exert significantly positive influence on the annual change in democracy index, a proxy for democratization, whereas the factors that are referred to as neoliberal by prior studies are found to be insignificant from zero.

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Nov 18th, 10:45 AM Nov 18th, 11:00 AM

Capitalism and Democracy: The Spillover Effects of the Washington Consensus on Democratization

9-251

The Washington Consensus has long been debunked as a failed economic reform, largely for three interlaced reasons. First, conception – for failing to consider each practicing country’s unique sociocultural framework. Second, and as an extension of the first reason, administration – for having invited only subjective interpretations of the paradigm by the practicing governments. Third, results – for failing to stimulate a sustainable growth in GDP per capita, and instead contributing to the widening of income inequality, in Latin America. Later studies provide empirical support for this view, and this paper acknowledges the shortcomings of the Washington Consensus. However, if Lipset’s assertion that there is a causal relationship between wealth and democratization may be more broadly understood as saying what achieves greater economic prosperity will also improve democracy, then it may be worthwhile to see whether Williamson’s economic instruments have affected democratization in Latin America and worldwide. This study evaluates the statistical significance of each of the ten policy recommendations of the Washington Consensus, along with each country’s prior year’s democracy index, GINI index, and a dummy variable for post-Soviet Union countries, by using the Ordinary Least Square (OLS) regression technique. The data consists of annual values for more than 100 countries that span the period from 1990 through 2016. Where necessary, literature-sound proxy variables are used. The results suggest that only some of the independent variables exert significantly positive influence on the annual change in democracy index, a proxy for democratization, whereas the factors that are referred to as neoliberal by prior studies are found to be insignificant from zero.