Understanding the dynamics of such success offers instructive lessons for contemporary developing nations and their own efforts to alleviate poverty. Our research over the past two years has highlighted a compelling trend: nations whose economies are open are, by definition, more competitive, more productive, and experience faster rates of GDP per capita growth. Furthermore, it highlights how these dynamics of open economies, formalised in one of the three domains of the Legatum Prosperity Index, follow a familiar if somewhat unfashionable pattern: those laid out in the Washington Consensus.
First coined by John Williamson in his 1990 book, Latin American adjustment: How much has happened?, the Consensus comprised ten policies which Williamson observed were used as conditionalities for countries accepting structural adjustment agreements from the International Monetary Fund (IMF) throughout the 1980s. To this day, it remains arguably amongst the most cogent attempts to codify a formula for sustained economic growth; recent research indicates that such policies do indeed raise standards of living, with nations persisting with the prescribed structural reforms found to increase GDP per capita by as much as sixteen per cent within a decade.