Washington Consensus vs. Santiago Consensus - Research Paper

Introduction

The Washington consensus is composed of ten economic policy prescriptions which were formulated by the financial institutions based in Washington. They include the international monetary fund, United States Department of the Treasury and the World Bank. The purpose of the ten reform package was to help the developing countries that are in a crisis. The Santiago consensus is a set of guidelines on the best practices when operating the Sovereign Wealth Funds. They were formulated after the investors and regulators doubted the transparency, governance and risk management on the sovereign wealth fund. These two consensuses are different because they address two different circumstances.

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One of the difference is the participators of the consensus. The Washington consensus was composed of officials from the international financial institutions. The government from the developing countries were not included. However, for the Santiago consensus, the investors and regulars of the sovereign fund were involved.

The Santiago consensus came up with twenty-four principles that were supposed to guide the operations of the operations of the fund. The Washington consensus came up with ten policy recommendations. Since they were just recommendation, it was not compulsory for the developing countries to adopt them. However, the guidelines from the Santiago consensus were all adopted because all the stakeholders were present.

The inclusion of the stakeholders has made the Santiago consensus to be free from criticism. However, the Washington consensus has been criticized by various developing countries. The policies are perceived as neoliberal policies that the developing countries were forced to adopt.

Economic Benefits of Reducing Corruption

Corruption is one of the main issues that derail the development of a nation. Corruption reduces the number of foreign investment in the country. Corruption makes the future of doing business in the country to be uncertain, and therefore they shun investing in such countries.

The world bank also allocates limited loans and financial assistance to the countries that are very corrupt. That is because the money that was meant to help the public might end up in the accounts of the few corrupt countries.

Another aspect of corruption is that it drives the productivity of a country slower and the people lose faith in their government. When people get job opportunities through corruption instead of merit, the person may not have the right mantle to handle the position of an organization. As a result, their leadership affects the performance of the organization.

Corruption creates avenues for tax evasion. Tax is required for the development of the country, and therefore the public events are derailed. Such states can also be exploited by foreign investors. There natural resources of a foreign country can be taken and then transported through avenues where the government cannot detect them.

Countries like Somalia have been adversely affected by corruption. The corruption negates power, and therefore, those in the police force and politics are subjected to control by other individuals who have money. The judicial system is also corrupt. As a result, terrorism can thrive in the country.

Conclusion

The Santiago and Washington consensus are guidelines that were formulated to ensure the stakeholders were cushioned against financial crisis. However, they differ regarding participators and acceptance. Corruption is one of the leading economic problems facing developing countries. Corrupt countries like Somalia are unable to continue development because corruption has created an avenue for terrorism to thrive.