[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/bla/devchg/v52y2021i3p429-459.html
   My bibliography  Save this article

The Wall Street Consensus

Author

Listed:
  • Daniela Gabor
Abstract
The Wall Street Consensus is an elaborate effort to reorganize development interventions around partnerships with global finance. The UN's Billions to Trillions agenda, the World Bank's Maximizing Finance for Development or the G20's Infrastructure as an Asset Class update the Washington Consensus for the age of the portfolio glut, to ‘escort’ global (North) institutional investors and the managers of their trillions into development asset classes. Making development investible requires a two‐pronged strategy: enlist the state into risk‐proofing development assets and accelerate the structural transformation of local financial systems towards market‐based finance that better accommodates portfolio investors. Ten policy commandments forge the ‘de‐risking state’. They create a safety net for investors in development assets, protecting their profits from demand risks attached to commodified infrastructure assets; from political risks attached to (progressive) policies that would threaten cash flows, including nationalization, higher minimum wages and, critically, climate regulation; and from liquidity and currency risks. These risks are transferred to the balance sheet of the state. The new ‘development as de‐risking’ paradigm narrows the scope for a green developmental state that could design a just transition to low‐carbon economies.

Suggested Citation

  • Daniela Gabor, 2021. "The Wall Street Consensus," Development and Change, International Institute of Social Studies, vol. 52(3), pages 429-459, May.
    • Handle: RePEc:bla:devchg:v:52:y:2021:i:3:p:429-459
    DOI: 10.1111/dech.12645
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/dech.12645
    Download Restriction: no
    File URL: https://libkey.io/10.1111/dech.12645?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Fichtner, Jan & Heemskerk, Eelke M. & Garcia-Bernardo, Javier, 2017. "Hidden power of the Big Three? Passive index funds, re-concentration of corporate ownership, and new financial risk†," Business and Politics, Cambridge University Press, vol. 19(2), pages 298-326, June.
    2. Rodrigo Barbone Gonzalez & Dmitry Khametshin & José-Luis Peydró & Andrea Polo, 2018. "Hedger of last resort: Evidence from Brazilian FX interventions, local credit, and global financial cycles," Economics Working Papers 1648, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2022.
    3. Markus K. Brunnermeier & Lasse Heje Pedersen, 2009. "Market Liquidity and Funding Liquidity," The Review of Financial Studies, Society for Financial Studies, vol. 22(6), pages 2201-2238, June.
    4. Natalya Naqvi & Anne Henow & Ha-Joon Chang, 2018. "Kicking away the financial ladder? German development banking under economic globalisation," Review of International Political Economy, Taylor & Francis Journals, vol. 25(5), pages 672-698, September.
    5. Rey, Hélène, 2015. "Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence," CEPR Discussion Papers 10591, C.E.P.R. Discussion Papers.
    6. Andrew M. Fischer, 2019. "Bringing Development Back into Development Studies," Development and Change, International Institute of Social Studies, vol. 50(2), pages 426-444, March.
    7. Florence Dafe & Dennis Essers & Ulrich Volz, 2018. "Localising sovereign debt: The rise of local currency bond markets in sub‐Saharan Africa," The World Economy, Wiley Blackwell, vol. 41(12), pages 3317-3344, December.
    8. Harvey, David, 2005. "The New Imperialism," OUP Catalogue, Oxford University Press, number 9780199278084.
    9. Mkandawire, Thandika, 2001. "Thinking about Developmental States in Africa," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 25(3), pages 289-313, May.
    10. Robert H. Wade, 2018. "The Developmental State: Dead or Alive?," Development and Change, International Institute of Social Studies, vol. 49(2), pages 518-546, March.
    11. Servaas Storm, 2018. "Financialization and Economic Development: A Debate on the Social Efficiency of Modern Finance," Development and Change, International Institute of Social Studies, vol. 49(2), pages 302-329, March.
    12. Williamson, John, 2000. "What Should the World Bank Think about the Washington Consensus?," The World Bank Research Observer, World Bank, vol. 15(2), pages 251-264, August.
    13. Wade, Robert H., 2018. "The developmental state: dead or alive?," LSE Research Online Documents on Economics 87356, London School of Economics and Political Science, LSE Library.
    14. Yavuz Arslan & Mathias Drehmann & Boris Hofmann, 2020. "Central bank bond purchases in emerging market economies," BIS Bulletins 20, Bank for International Settlements.
    15. Paula Freire Santoro, 2019. "Inclusionary housing policies in Latin America: São Paulo, Brazil in dialogue with Bogotá, Colombia," European Journal of Housing Policy, Taylor and Francis Journals, vol. 19(3), pages 385-410, July.
    16. Patrick Bigger & Sophie Webber, 2021. "Green Structural Adjustment in the World Bank’s Resilient City," Annals of the American Association of Geographers, Taylor & Francis Journals, vol. 111(1), pages 36-51, January.
    17. Pablo G. Bortz & Annina Kaltenbrunner, 2018. "The International Dimension of Financialization in Developing and Emerging Economies," Development and Change, International Institute of Social Studies, vol. 49(2), pages 375-393, March.
    18. Brett Christophers, 2019. "Environmental Beta or How Institutional Investors Think about Climate Change and Fossil Fuel Risk," Annals of the American Association of Geographers, Taylor & Francis Journals, vol. 109(3), pages 754-774, May.
    19. Patrick Bolton & Morgan Despres & Luiz Awazu Pereira da Silva & Frédéric Samama & Romain Svartzman, 2020. "The green swan," BIS Books, Bank for International Settlements, number 31.
    20. Benjamin M. Hunter & Susan F. Murray, 2019. "Deconstructing the Financialization of Healthcare," Development and Change, International Institute of Social Studies, vol. 50(5), pages 1263-1287, September.
    21. Kate Bayliss & Elisa Van Waeyenberge, 2018. "Unpacking the Public Private Partnership Revival," Journal of Development Studies, Taylor & Francis Journals, vol. 54(4), pages 577-593, April.
    22. Paula Freire Santoro, 2019. "Inclusionary housing policies in Latin America: São Paulo, Brazil in dialogue with Bogotá, Colombia," International Journal of Housing Policy, Taylor & Francis Journals, vol. 19(3), pages 385-410, July.
    23. Cornel Ban & Mark Blyth, 2013. "The BRICs and the Washington Consensus: An introduction," Review of International Political Economy, Taylor & Francis Journals, vol. 20(2), pages 241-255, April.
    24. Daniela Gabor, 2018. "Goodbye (Chinese) Shadow Banking, Hello Market†based Finance," Development and Change, International Institute of Social Studies, vol. 49(2), pages 394-419, March.
    25. Razmig Keucheyan, 2018. "Insuring Climate Change: New Risks and the Financialization of Nature," Post-Print halshs-01717381, HAL.
    26. Mariana Mazzucato, 2016. "From market fixing to market-creating: a new framework for innovation policy," Industry and Innovation, Taylor & Francis Journals, vol. 23(2), pages 140-156, February.
    27. Michael Pryke & John Allen, 2019. "Financialising urban water infrastructure: Extracting local value, distributing value globally," Urban Studies, Urban Studies Journal Limited, vol. 56(7), pages 1326-1346, May.
    28. Peter Hördahl & Ilhyock Shim, 2020. "EME bond portfolio flows and long-term interest rates during the Covid-19 pandemic," BIS Bulletins 18, Bank for International Settlements.
    29. Morag I. Torrance, 2008. "Forging Glocal Governance? Urban Infrastructures as Networked Financial Products," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 32(1), pages 1-21, March.
    30. Razmig Keucheyan, 2018. "Insuring Climate Change: New Risks and the Financialization of Nature," Development and Change, International Institute of Social Studies, vol. 49(2), pages 484-501, March.
    31. Hyun Song Shin, 2012. "Global Banking Glut and Loan Risk Premium," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 60(2), pages 155-192, July.
    32. Bull, Benedicte & Miklian, Jason, 2019. "Towards global business engagement with development goals? Multilateral institutions and the SDGs in a changing global capitalism," Business and Politics, Cambridge University Press, vol. 21(4), pages 445-463, December.
    33. Daniela Gabor & Sally Brooks, 2017. "The digital revolution in financial inclusion: international development in the fintech era," New Political Economy, Taylor & Francis Journals, vol. 22(4), pages 423-436, July.
    34. Aleksandr V. Gevorkyan & Ingrid Harvold Kvangraven, 2016. "Assessing Recent Determinants of Borrowing Costs in Sub-Saharan Africa," Review of Development Economics, Wiley Blackwell, vol. 20(4), pages 721-738, November.
    35. Gore, Charles, 2000. "The Rise and Fall of the Washington Consensus as a Paradigm for Developing Countries," World Development, Elsevier, vol. 28(5), pages 789-804, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gabor, Daniela, 2020. "The Wall Street Consensus," SocArXiv wab8m, Center for Open Science.
    2. Gabor, Daniela, 2021. "The Liquidity and Sustainability Facility for African Sovereign Bonds: a good ECA/PIMCO idea whose time has come?," SocArXiv erku6, Center for Open Science.
    3. Jorge Garcia-Arias & Alan Cibils & Agostina Costantino & Vitor B. Fernandes & Eduardo Fernández-Huerga, 2021. "When Land Meets Finance in Latin America: Some Intersections between Financialization and Land Grabbing in Argentina and Brazil," Sustainability, MDPI, vol. 13(14), pages 1-37, July.
    4. Ilias Alami, 2019. "Taming Foreign Exchange Derivatives Markets? Speculative Finance and Class Relations in Brazil," Development and Change, International Institute of Social Studies, vol. 50(5), pages 1310-1341, September.
    5. Reda Cherif & Fuad Hasanov, 2019. "The Return of the Policy That Shall Not Be Named: Principles of Industrial Policy," IMF Working Papers 2019/074, International Monetary Fund.
    6. Gabor, Daniela & Braun, Benjamin, 2023. "Green macrofinancial regimes," SocArXiv 4pkv8, Center for Open Science.
    7. Sam Ashman & Ben Fine & Ewa Karwowski, 2021. "The Relevance of Financialization for African Economies: Lessons from South Africa," Working Papers 245, Department of Economics, SOAS University of London, UK.
    8. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95.
    9. Benjamin Braun & Brett Christophers, 2024. "Asset manager capitalism: An introduction to its political economy and economic geography," Environment and Planning A, , vol. 56(2), pages 546-557, March.
    10. Isaac Khambule, 2021. "Capturing South Africa's developmental state: State‐society relations and responses to state capture," Public Administration & Development, Blackwell Publishing, vol. 41(4), pages 169-179, October.
    11. Amr Hosny, 2020. "Nonresident holdings of domestic debt in Nigeria: Internal or external driven?," African Development Review, African Development Bank, vol. 32(3), pages 472-485, September.
    12. Valentina Bruno & Hyun Song Shin, 2014. "Assessing Macroprudential Policies: Case of South Korea," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(1), pages 128-157, January.
    13. Norring, Anni, 2022. "Taming the tides of capital: Review of capital controls and macroprudential policy in emerging economies," BoF Economics Review 1/2022, Bank of Finland.
    14. Eugenio Cerutti & Stijn Claessens & Andrew K. Rose, 2019. "How Important is the Global Financial Cycle? Evidence from Capital Flows," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(1), pages 24-60, March.
    15. Simplice Asongu & Oludele Folarin & Nicholas Biekpe, 2019. "The stability of demand for money in the proposed Southern African Monetary Union," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 15(2), pages 222-244, August.
    16. Schüler, Yves S. & Hiebert, Paul P. & Peltonen, Tuomas A., 2020. "Financial cycles: Characterisation and real-time measurement," Journal of International Money and Finance, Elsevier, vol. 100(C).
    17. Ashima Goyal & Akhilesh K. Verma & Rajeswari Sengupta, 2022. "External shocks, cross-border flows and macroeconomic risks in emerging market economies," Empirical Economics, Springer, vol. 62(5), pages 2111-2148, May.
    18. Fong, Tom Pak Wing & Li, Ka-Fai & Fu, John, 2018. "Accounting for sovereign tail risk in emerging economies: The role of global and domestic risk factors," Emerging Markets Review, Elsevier, vol. 34(C), pages 98-110.
    19. Hossfeld, Oliver & Pramor, Marcus, 2018. "Global liquidity and exchange market pressure in emerging market economies," Discussion Papers 05/2018, Deutsche Bundesbank.
    20. Bouvatier, Vincent & Delatte, Anne-Laure, 2015. "Waves of international banking integration: A tale of regional differences," European Economic Review, Elsevier, vol. 80(C), pages 354-373.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:devchg:v:52:y:2021:i:3:p:429-459. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0012-155X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.