In the late 1980s, the IMF, the World Bank, the US Treasury Department and other organisations came up with a list of economic policy prescriptions for developing countries. These policies, which included tax reform, trade liberalisation, privatisation, deregulation and opening of countries to foreign direct investment, became known as the Washington Consensus. Although the logic behind them appeared sound, these policies have largely not had a positive impact on Africa.
Former World Bank chief economist Joseph Stiglitz is now calling on Africa to abandon the market fundamentalism of the Washington Consensus. He says that some of the deregulation policies pushed on developing countries had exacerbated the effect of the global financial crisis, and the countries most integrated into the global system were the worst affected, whereas those with more regulated systems fared better than others.
Africa needs to seek new markets in Asia, and to seek investment from Asia, while adopting policies which encourage education, industry and technology. According to Stiglitz, globalisation has increased the likelihood of future economic crises, and in responding to the current crisis the industrialised countries have failed to address the fundamental problems. A key objective, therefore, is to be prepared to survive the next crisis.