Date of Award

Spring 5-17-2026

Document Type

Thesis (Master's)

Department or Program

Master of Arts in Liberal Studies

First Advisor

Peter DeShazo

Second Advisor

David Rezvani

Third Advisor

Regine Rosenthal

Abstract

The Washington Consensus emerged in the late 1980s as a practical policy

framework in response to the prolonged economic crisis faced by Latin American

countries. The Washington Consensus is a central factor in the modern economic history

of Latin America due to its influence on the region. This list of policy actions was

deemed desirable for Latin American countries, mostly agreed upon by economists from

the IMF, the World Bank, and the U.S. Treasury in Washington. As a result, many

countries in the region accepted the Washington Consensus as a stabilizing mechanism,

while others rejected it. This thesis discusses the Washington Consensus only on the

terms that John Williamson defined in 1990 and 2004: a mechanism to achieve

microeconomic stabilization, trade and investment liberalization, controlled fiscal policy,

privatization under the rule of law, and targeted social protection, to tackle the debt crisis

that characterized the region in the 1980s, a period of time that was labeled as the lost

decade.

This thesis will use Chile as the example of a strongly positive outcome, and

Venezuela as the most inadequate outcome. The thesis merges the core argument that is:

the Washington Consensus, a stabilization framework whose success depended on

institutional implementation and political commitment, not an ideological imposition nor

a comprehensive blueprint for development, with the reasons why Chile and Venezuela

took such radically different paths. The different trajectories and the outcomes of their

chosen paths demonstrate the value of the Washington Consensus.

This thesis analyzes Chile’s and Venezuela’s institutional sequencing since the

collapse of Import-Substitution Industrialization and the Lost Decade of the 1980s,

iifollowed by the reforms of the 1990s, and the positions the two countries found

themselves in in the early 2000s, when the China-led commodity boom boosted copper

and oil prices. The analysis yielded interesting results. Chile, which adopted the

Washington Consensus and coupled its recommendations with institutional discipline,

achieved stabilization, and sustainable development. Venezuela (Chávez) rejected the

Washington Consensus and a market-oriented economy, resulting in a deep economic

crisis, a lack of government credibility, high inflation, high unemployment, and, overall,

a disastrous outcome.

Original Citation

Aray, H., & Vera, D. (2024). A tale of oil production collapse. Resources Policy, 93,

105044.

Autor, D. H., Dorn, D., & Hanson, G. H. (2016). The China shock: Learning from labor-

market adjustment to large changes in trade. Annual review of economics, 8(1), 205-240.

Babb, S. (2013). The Washington Consensus as transnational policy paradigm: Its

origins, trajectory and likely successor. Review of International Political Economy, 20(2),

268–297. http://www.jstor.org.dartmouth.idm.oclc.org/stable/42003294

Banco Central de Chile. (1989). Basic constitutional act: Central Bank of Chile (Law

No.18,840). Banco Central de Chile.

https://www.bcentral.cl/documents/33528/133463/BCA_central_bank_chile.pdf/d984929

2-fc59-dbaa-741a-6a5ccb1bbbf2?t=1634219776803

Barlow, B. H. (1978). Some Basic Problems of the Agrarian Reform in Chile. NS,

NorthSouth, 3(5/6), 53–77. http://www.jstor.org/stable/41803372

Biblioteca del Congreso Nacional de Chile. (2005). Ley N° 20,026: Establece un

impuesto específico a la actividad minera. Ministerio de Hacienda.

https://www.bcn.cl/leychile/navegar?idNorma=239219

Bléjer, M. I., Burton, D., Dunaway, S. V., & Szapary, G. (1991). Overview of reforms. In

China: Economic reform and macroeconomic management (IMF Occasional Paper No.

76, pp. 2–11).

Bulmer-Thomas, V. (2003). The economic history of Latin America since independence.

Cambridge University Press.

Caputo, R., & Saravia, D. (2019). The case of Chile. A Monetary and Fiscal History of

Latin America, 1960–2017.

Cardoso, F. H., & Faletto, E. (1979). Dependency and development in Latin America.

Castaño, A., Lufin, M., & Atienza, M. (2019). A structural path analysis of Chilean

mining linkages between 1995 and 2011. What are the channels through which extractive

activity affects the economy?.

Céspedes, L. F., Parrado, E., & Velasco, A. (2014). Fiscal Rules and the Management of

Natural Resource Revenues: The Case of Chile. Annual Review of Resource

Economics, 6, 105–132. http://www.jstor.org.dartmouth.idm.oclc.org/stable/43202783

107Corbo, V. (1985). Reforms and macroeconomic adjustments in Chile during 1974–

1984. World Development, 13(8), 893-916.

Corrales, J., & Penfold-Becerra, M. (2011). Dragon in the tropics: Hugo Chávez and the

political economy of revolution in Venezuela. Brookings Institution Press.

Corrales, J (2014). 12. Explaining Chavismo: The unexpected alliance of radical leftist

and the military in Venezuela under Hugo Chávez. Venezuela before Chávez

Daguerre, A. (2011). Antipoverty programmes in Venezuela. Journal of Social

Policy, 40(4), 835-852.

de Gregorio Rebeco, J. (2004). Economic growth in Chile: evidence, sources and

prospects. Documentos de Trabajo (Banco Central de Chile), (298), 1.

De la Cuadra, S., & Valdes-Prieto, S. (1993). Myths and Facts about Financial

Liberalization in Chile. If Texas Were Chile.

Di John, J. (2009). From windfall to curse?: Oil and industrialization in Venezuela, 1920

to the present. Penn State Press.

Dornbusch, R., & Edwards, S. (1994). Exchange rate policy and trade strategy. The

Chilean economy: policy lessons and challenges, 81-104.

Edwards, S. (1995). Crisis and reform in Latin America: From despair to hope.

Edwards, S. (2023). The Chile project: the story of the Chicago boys and the downfall of

neoliberalism.

Ffrench-Davis, R. (2002). Economic reforms in Chile. From Dictatorship to Democracy.

Fishlow, A. (1990). The Latin American State. Journal of Economic Perspectives, 4(3),

61-74.

Hausmann, R., & Rodríguez, F. R. (Eds.). (2014). Venezuela before Chávez: Anatomy of

an economic collapse. Penn State Press.

Hirschman, A. O. (1968). The political economy of import-substituting industrialization

in Latin America. The Quarterly Journal of Economics, 82(1), 1-32.

Gates, L. C. (2010). Electing Chávez: The business of anti-neoliberal politics in

Venezuela (Vol. 349). University of Pittsburgh Pre.

International Monetary Fund. (2001). Conditionality in fund supported programs –

overview

108International Monetary Fund. (2024). Government expenditure, percent of GDP-

Venezuela. Public Finances in Modern History Database.

The paradox of plenty: Oil booms and petro-states Karl, T. L. (1997). (Vol. 26). Univ of

California Press.

Larraín, F., & Vergara, R. (Eds.). (2000). La transformación económica de Chile. Centro

de Estudios Públicos

Manzano, O. (2014). Venezuela after a century of oil exploitation. Venezuela before

Chávez

Manzano, O., & Scrofina, J. S. (2013). Resource Revenue Management in Venezuela: A

consumption-based poverty reduction strategy.

Marcel, M. (2013). The structural balance rule in Chile: Ten years, ten lessons.

Maya, M. L. (2004). Hugo Chávez Frías: his movement and his presidency. Venezuelan

politics in the Chávez era: Class, polarization, and conflict, 75-76.

Mommer, B. (2001). Venezuelan Oil Politics at the crossroads (OIES Paper (Oxford

Institute for Energy Studies.

Monaldi, F., & Penfold, M. (2014). 10 institutional collapse: the rise and decline of

democratic governance in venezuela. Venezuela before Chávez

Moreno, M. A., & Shelton, C. A. (2014). Sleeping in the bed one makes: the Venezuelan

fiscal policy response to the oil boom. Venezuela before Chávez: Anatomy of an

economic collapse, 220-43.

Odendaal, M., & Dolo, S. (2018). Chile: National capacity-Codelco: Maximizing mining

revenues for Chile (Case Study: IGF guidance for Government- Levereging local local

content decisions for sustainable development). Intergovernmental Forum On Mining,

Mineral, Metals and Sustainable Development; International Institute for Stutainable

Development.

https://www.iisd.org/sites/default/files/publications/case-study-chile-national-

capacity.pdf

Office of the United States Trade Representative. (n.d.). United States–Chile free trade

agreement. Executive Office of the President of the United States.

Peralta, J. D. (2025). The Political Destruction of Money: Institutional Collapse and

Monetary Breakdown in Venezuela (1999-2024).

109Perotti, R., & Coviello, M.F. (2015). Governance of strategic minerals in Latin America.

The case of lithium.

https://repositorio.cepal.org/server/api/core/bitstreams/4e2dc61a-af31-4009-9a9c-

2f6b00eef82a/content

Petras, J. F., & Morley, M. H. (1983). Petrodollars and the State: The Failure of State

Capitalist Development in Venezuela. Third World Quarterly, 5(1), 7–27.

http://www.jstor.org.dartmouth.idm.oclc.org/stable/3991165

Pineda, J., & Rodríguez, F. (2014). Public investment and productivity growth in the

Venezuelan manufacturing industry. Hausmann, Ricardo/Ders.(Hrsg.): Venezuela before

Chávez: Anatomy of an economic collapse, 91-114.

Puente, J. M., Daza, A., Rios, G., & Rodríguez, A. (2006). The political economy of the

budget process: the case of Venezuela.

Rodríguez, J., Tokman, C., & Vega, A. (2007). Structural balance policy in Chile. OECD

Journal on Budgeting, 7(2), 59-92.

Rodrik, D. (2006). Goodbye Washington Consensus, Hello Washington Confusion? A

Review of the World Bank’s “Economic Growth in the 1990s: Learning from a Decade

of Reform.” Journal of Economic Literature, 44(4), 973–987.

https://doi.org/10.1257/jel.44.4.973

Siavelis, P. M. (Ed.). (2000). Institutional constraints to democratic consolidation. Penn State Press.

President and Congress in postauthoritarian Chile:

communist transition.

Stiglitz, J.E. (2002) Globalization and its discontents.

Stone, R. W. (2002). Lending credibility: The International Monetary Fund and the post-

U.S Department of State, Bureau of Economic, Energu, and Business Affairs. (2008).

2008 Investment climate statement: Chile. U.S. Department of State.

https://2009-2017.state.gov/e/eb/ifd/2008/101854.htm

U.S. Energy Information Administration. (2026). U.S. FOB Costs of Venezuela crude oil

(dollars per barrel). Data set. U.S. Department of Energy.

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=ive0000004&f=m

The Chilean

Velasco, A. (1994). The state and economic policy: Chile 1952-92. economy: Policy lessons and challenges

Velasco, A., & Parrado, E. (2012). The political economy of fiscal policy: the experience

of Chile. In The Oxford Handbook of Latin American Political Economy (pp. 68-99).

Oxford, UK: Oxford Univ. Press.

110Vreeland, J. R. (2003). The IMF and economic development. Cambridge University

Press.

Williamson, J. (2004). The strange history of the Washington consensus. Journal of Post

Keynesian Economics, 27(2), 195-206.

World Bank. (2015). World Development Indicators Database

Xu, C. (2011). The fundamental institutions of China's reforms and development. Journal

of economic literature, 49(4), 1076-1151.

Zhu, X. (2012). Understanding China's growth: Past, present, and future. Journal of

Economic Perspectives, 26(4), 103-124

Download

Share

COinS