Introduction

The aim of economic activity is to generate wealth for a country’s citizens through the achievement of relatively high but sustainable economic growth measured by growth in real per capita income. Views on market-oriented policies to achieve this aim have converged recently into a set of policy principles that are termed the ‘Washington Consensus’ and later revised as the ‘Post-Washington Consensus’. According to Rodrik (2007a), the ‘universal’ principles of sound economic policy consist of allocative efficiency, macroeconomic and financial stability and social inclusion. Allocative efficiency requires protection of property rights, contract enforcement, rule of law, market-based competition, appropriate incentives, liberalization of foreign trade and liberalization of foreign direct investment (FDI). Macroeconomic and financial stability require sound money, prudent supervision, fiscal sustainability and current account sustainability. Finally, social inclusion requires social safety nets and targeted poverty-reduction programmes.