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.
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Shuja Nawaz
EDITOR
Laura Wallace
ASSISTANT EDITOR
Gita Bhatt
EDITORIAL OFFICER
Richard Stoddard
ART EDITOR
ADVISORS TO THE EDITOR
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.
FINANCE & DEVELOPMENT
A QUARTERLY PUBLICATION OF THE INTERNATIONAL MONETARY FUND AND THE WORLD BANK
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.