Front Matter

Front Matter Page

FINANCE & DEVELOPMENT is published quarterly in English, Arabic, Chinese, French, German, Portuguese, and Spanish by the International Monetary Fund and the International Bank for Reconstruction and Development, Washington, DC 20431, USA.

Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect Fund or Bank policy.

Second class postage is paid at Washington, DC and at additional mailing offices. English edition printed at Lancaster Press, Lancaster, PA. Postmaster: please send change of address to Finance & Development, 700 19th Street, NW, Washington, DC 20431. English edition ISSN 0015-1947.

Telephone: (202) 623-8300 • Fax Number: (202) 623-4738.

Shuja Nawaz


Laura Wallace


Gita Bhatt


Richard Stoddard



Nancy Birdsall

Peter Clark

K. Burke Dillon

Stephen Eccles

Richard Haas

Javed Hamid

Gregory Ingram

Anthony Lanyi

Johannes Linn

Claudio Loser

Gobind Nankani

Alan Tait

Looking Back…

External assistance for the developing countries was a major topic of the 1960s.

In March 1965 we published an article “Rich Lands, Poor Lands: Recollections and Reflections” by Escott Reid, then Director, Department of Operations—South Asia and the Middle East, of the World Bank.

Here are excerpts from that article:

In giving their aid to poor countries, the governments and peoples of rich countries are constantly faced with the necessity of deciding between hard and soft ways. They can provide aid for hard projects or for soft projects. A hard project is one which a careful, expert investigation has shown to be well-conceived, well-designed, and well-engineered and which is likely to result in increases in production in the poor country that are commensurate with its real economic cost to that country.

A soft project may serve better in the short run the prestige of the government that gives it and of the government that receives it, but its real benefit to the economy of the poor country can be low. A typical soft project is the monumental large dam for irrigation which will not result in much increase in production because it is not accompanied by adequate subsidiary irrigation channels, by adequate grass-roots research on what crops should be grown on the newly irrigated land and what particular variety of seeds should be used, or on how much water should be used at various times of the year for each type of crop on each type of land in the area, or by setting up effective methods of teaching the farmers how to use the water.

…A great Western European statesman was talking to me a few years ago about the economic development program of a poor country whose president had just been visiting him. He said: “This country has a very sensible development program.” He paused. “No steel plant.” His simplification was the simplification of the political realist. For that country at that time to include a steel plant in its development program would have been to demonstrate that it was not serious in its efforts to raise the standards of living of its people.

The governments of rich countries can make the very hard decision to give their aid to poor countries not just in the form of grants and loans but also by opening their markets to the goods of the poor countries. They can give a reasonably large proportion of their aid through international agencies, or they can give almost all of their aid bilaterally and tie it to the purchase of their own goods and services. When their aid is tied to the purchase of their own goods and services they can turn a blind eye when their contractors and suppliers, not having to meet international competition, charge prices higher than they would on contracts subject to international competitive bidding. Or they can make the hard choice of deciding that, though their bilateral aid will be tied, the prices charged for such tied goods and services must not greatly exceed world levels.



September 1990 • Volume 27 • Number 3

Front Matter Page

  • Combating Poverty: Experience and Prospects

  • Michael Walton

  • Policies for Reducing Poverty

  • Dominique van de Walle

  • Foreign Aid and Poverty Reduction

  • Robert Ayres

  • Aiming for “High Quality Growth”

  • Michel Camdessus

  • Poverty Concerns in Fund-Supported Programs

  • Sanjeev Gupta & Karim Nashashibi

  • Adjustment and the Poor

  • Helena Ribe & Soniya Carvalho

  • Tackling the Social Dimensions of Adjustment in Africa

  • Ismail Serageldin & Michel Noël

  • Increase in Fund Quotas Approved

  • Mexico’s Experience with Adjustment

  • Eliot Kalter & Hoe Ee Khor

  • Mexico’s Commercial Bank Financing Package

  • Mohamed El-Erian

  • Whither Comecon?

  • Martin Schrenk

  • Heading for Currency Convertibility

  • Martin Gilman

  • International Currencies: The Rise of the Deutsche Mark

  • George Tavlas

  • Adjustment in Major Oil Exporting Countries

  • Jitendra Borpujari & Melhem Melhem

  • Oil and a Changing OPEC

  • Jahangir Amuzegar

  • Agroforestry in Sub-Saharan Africa

  • Cynthia Cook & Mikael Grut

  • Prospects for the Automotive Industry in LDCs

  • loannis Karmokolias

  • Books

  • The European Payments Union by Jacob Kaplan and Gunther Schleiminger

  • J. J. Polak

  • The International Debt Crisis in Historical Perspective edited by Barry Eichengreen and Peter Lindert, and Debt and Crisis in Latin America by Robert Devlin

  • Mohamed El-Erian

  • Trade and Investment Relations among the United States, Canada, and Japan edited by Robert Stern

  • Paul Masson

  • Income Taxation and International Mobility edited by Jagdish Bhagwati and John Douglas Wilson

  • Leif Mutén

  • The Foreign Exchange Market by Richard Baillie and Patrick McMahon

  • Timothy Lane

  • Books in Brief

The Editor welcomes views and comments from readers on the contents of the journal.

The contents of Finance & Development may be quoted or reproduced without further permission. Due acknowledgement is requested.

Finance & Development, September 1990
Author: International Monetary Fund. External Relations Dept.