Abstract

This was the intervention of the author at the closing Panel of a Conference in
Honor of Albert Hirschman on Development Strategies for Latin America. It draws attention
to some shortcomings of the so-called “Washington Consensus”, John Williamson’s apt
expression to describe the view that better policies lead to better results, worse policies to
worse results. This is true but trite, trivial and tautological. The author suggests that there
are three types of policies to be addressed: the first is related to the quest for macroeconomic
stability; the second to much-needed microeconomic reforms; the third is the missing link
in the Washington Consensus and has to do with the resumption of growth and investment
with technological change in an increasingly competitive world economy. This requires, in
addition to macro- stability and micro-reforms, some visions of the future and a much more
effective pattern of interactions between the private sector and a modernized and active
public sector, given the interdependence of investment decisions in the presence of economywide
externalities.

JEL Classification: B22; O11; O43.