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The Wall Street Consensus
Author(s) -
Gabor Daniela
Publication year - 2021
Publication title -
development and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.267
H-Index - 93
eISSN - 1467-7660
pISSN - 0012-155X
DOI - 10.1111/dech.12645
Subject(s) - portfolio , tranche , finance , market liquidity , currency , asset (computer security) , business , economics , financial innovation , monetary economics , computer security , computer science
The Wall Street Consensus is an elaborate effort to reorganize development interventions around partnerships with global finance. The UN's Billions to Trillions agenda, the World Bank's Maximizing Finance for Development or the G20's Infrastructure as an Asset Class update the Washington Consensus for the age of the portfolio glut, to ‘escort’ global (North) institutional investors and the managers of their trillions into development asset classes. Making development investible requires a two‐pronged strategy: enlist the state into risk‐proofing development assets and accelerate the structural transformation of local financial systems towards market‐based finance that better accommodates portfolio investors. Ten policy commandments forge the ‘de‐risking state’. They create a safety net for investors in development assets, protecting their profits from demand risks attached to commodified infrastructure assets; from political risks attached to (progressive) policies that would threaten cash flows, including nationalization, higher minimum wages and, critically, climate regulation; and from liquidity and currency risks. These risks are transferred to the balance sheet of the state. The new ‘development as de‐risking’ paradigm narrows the scope for a green developmental state that could design a just transition to low‐carbon economies.