The Wall Street Consensus

Daniela Gabor

No wab8m, SocArXiv from Center for Open Science

Abstract: The Wall Street Consensus (WSC) is an elaborate effort to reorganize development interventions around selling development finance to the market. The Billions to Trillions agenda, the World Bank 'Maximizing Finance for Development' or the G20 'Infrastructure as an Asset Class' all call on international development institutions and governments of poor countries to ‘escort capital’ – the trillions of institutional investors – into ‘investable development bonds’, preferably in local currency. For this, the 10 WSC commandments aim to simultaneously reorganize local financial systems around bond market-based finance and forge the de-risking state. The state derisks bond finance for institutional investors by extending guarantees and subsidies to cover (i) demand risks attached to user-fees for (PPP) infrastructure, (ii) political risk attached to policies such as nationalization, higher minimum wages and climate regulation, (iii) climate risks that may become part of regulatory frameworks as material credit risks and (iv) bond market (liquidity) risks that complicate foreign investors’ exit from development assets. The WSC narrows the scope for a green developmental state that could design a just transition to low- carbon economies.

Date: 2020-07-02
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:wab8m

DOI: 10.31219/osf.io/wab8m

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