chapter  2
26 Pages

The Political Dimension of Economic Reform

The "Western approach," a term we use to identify core features of the economic reform strategy advocated for Russia by prominent advisers and political leaders in the West and generally supported by key financial institutions, has much in common with the perspective that John Williamson describes as a "Washington consensus": a set of economic policy reforms "that Washington urges on the rest of the world." Williamson highlights ten priorities that are central to this orientation, including fiscal discipline, a negative view of subsidies for state enterprises, an "outward oriented" economic policy that emphasizes a competitive real exchange rate and import liberalization, a nonrestrictive policy regarding the entry of foreign direct investment, and the privatization of state enterprises.2 Added to this list, in the Russian

case, was a strong emphasis on price liberalization-one feature that Williamson explicitly excludes from the "Washington consensus" about reform in Latin American countries.3