BELO HORIZONTE, Brazil - Over the course of two days of intense and fruitful discussions on the results of a set of policies known as the Washington Consensus, its implications for Latin America and the Caribbean and the outlook for deepening its course or carrying out changes in the international financial architecture, noted economists, Nobel Prize laureates and senior officials agreed that there are no easy recipes or solutions.
In the seminar Latin American Financing and the Role of Development Banks, which took place March 30-31 in conjunction with the Inter-American Development Bank Annual Meeting, distinguished figures examined recent changes in trade and the international capital market, the economic growth of Latin America and the role of development banks in light of the need for new strategies, areas of action and modern public policy instruments in the context of globalization.
Two Nobel Prize laureates participated in the event: Douglass North, of the University of Washington, St. Louis, Missouri; and Joseph Stiglitz, of Columbia University, New York. Also participating was noted researcher John Williamson of the Institute for International Economics, Washington, D.C., who inspired the Washington Consensus concept.
Institutional policies and reforms must not be limited by the ideas known as the Washington Consensus, said Williamson in his analysis of its implications for the region. “Latin America needs to go beyond the search for easy solutions that can be encapsulated in a slogan such as Washington Consensus… I don’t think that this reflects a desire to retreat on policy changes,” he said. “The reduction of poverty and a better distribution of income suggest that we are beginning to see some results.”
Joseph Stiglitz, winner of the 2001 Nobel Prize in economics, called for changes in the international financial architecture to improve the autonomy and effectiveness of national policies that would ensure a more dynamic role for national governments. Globalization will impose new challenges, more competition and inequality, and this will “require that the governments take an active role,” he said.
“Development is possible, but it is not easy; equitable development is even more difficult; institutions matter,”emphasized Stiglitz. He noted that success in development must also be measured by sustainability, equity and a democratic environment.
Douglass North, winner of the 1993 Nobel Prize in economics, said that Latin America and the Caribbean must work to build a structure of incentives to create a society of open access, where policies and institutions spur real competition, without monopolies. He added that planning and responsibility are needed in addition to incentives.
North agreed with his colleagues in rejecting the notion that there is a general formula for economic development. “There are no simple answers, no general panacea,” he declared. He said that the road to follow will depend on a society’s history and its ability to be flexible in the face of change. But at the same time, he called for a search for successful models.
IDB President Luis Alberto Moreno urged Latin America and the Caribbean and the multilateral banks to work together to ensure that the markets and financial services be more stable, efficient and competitive, as well as more inclusive and accessible. He proposed a financial democracy that would ensure that a greater percentage of the population, particularly marginal sectors—such as small firms, rural producers and poor families—have access to quality financial services at reasonable prices.
Also participating in the conference were Brazil’s Planning Minister Paulo Bernardo; the Governor of the State of Minas Gerais Aécio Neves da Cunha; the President of the Latin American Association of Development Finance Institutions (ALIDE) Mario Laborín Gómez; the President of the Board of the Development Bank of Minas Gerais (BDMG) Hindemburgo Chateaubriand Pereira-Diniz, and the mayor of Belo Horizonte, Fernando Damata Pimentel. The meeting was organized by BDMG and ALIDE in coordination with the IDB.
The Executive Secretary of the Economic Commission for Latin America and the Caribbean, José Luis Machinea, emphasized that there is no one development model, and that an integrated view is essential to promote equity. “Equity is relevant for economic policy, not just for social policy,” he said.
Brazil’s Vice President José Alencar Gomes da Silva, in closing the conference, urged participants to search for the best way to position the region’s countries in the process of globalization.
The conference was part of the activities sponsored by the IDB in Belo Horizonte prior to the plenary sessions of the 47th Annual Meeting of the Governors of the Bank and the 21st Annual Meeting of the Inter-American Investment Corporation, which will be held April 3-5.
The IDB Annual Meeting in Belo Horizonte, capital of the state of Minas Gerais, is the fourth held in Brazil, one of the founding members of the Bank. The IDB is the largest and oldest regional development bank and the main source of multilateral financing for Latin America and the Caribbean.