ABSTRACT
This chapter factually determines whether there is an association between the Washington Consensus and Shock Therapy as implemented in transition economies, and hence, demystify the relationship between both strategies of economic development. It develops briefly the alternative versions of the Washington Consensus, and develops the Shock Therapy approach implemented in transition economies. The Shock Therapy model was firstly initiated in a transition economy in Poland on January 1, 1990. The supporters of the Shock Therapy model argued that the elements of the model would ensure economic growth at full employment with low inflation and stability. Based on the Shock Therapy approach, the state had to remove itself from the productive sphere and concentrate on the provision of social services. The chapter demonstrates that the meaning of the term Washington Consensus changed over time as it was used differently by its intellectual father and by those who identified it as a neoliberal manifesto.
