The World Bank was also undergoing a revolution. F&D reported extensively on the 1973 Nairobi Annual Meetings, at which McNamara stressed the need to tackle absolute poverty directly. The Bank (and the broader development community) was beginning to recognize that gross national product growth “often does not filter down.” But the answer was not handouts: McNamara figured that the only durable solution was raising the productivity of the (mostly rural) poor. F&D explored the types of World Bank projects, writing that they were no longer “the monolithic, engineering projects of the late 1940s and early 1950s” but multifaceted, complex, sophisticated operations. Throughout the 1970s, F&D showcased Bank initiatives to help the small farmer access credit, seeds, and fertilizer, complemented by expanded provision of education, health care, irrigation, and public transportation.
Back at the editorial offices of F&D, the editors experimented with funkier fonts and formats, as seen in the March 1973 issue. More substantively, they began exploring novel topics. A 1969 F&D article first spotlighted weather as “a key variable in economic development to which economic and financial institutions have so far given little attention.” In December 1971, Margaret de Vries—the Fund’s pioneering female division chief—wrote a compelling piece on women’s role in economic development. The magazine also highlighted the benefits of guest workers in Europe, noting the advantages for both migrants and host countries, even as the latter were beginning to grapple with immigration’s social and political impact.
1980s: The lost decade
In advanced economies, the Margaret Thatcher–Ronald Reagan years are remembered for Wall Street’s excesses. But for much of the developing world, the 1980s was a lost decade.
At the end of the 1970s, the Federal Reserve pulled hard on its monetary reins to curb high US inflation. Soaring global interest rates brought the easy-money lending of the previous decade to an abrupt end and sent indebted developing economies into a tailspin. At the IMF, the new watchword was “conditionality.” Not only was meeting certain policy conditions the key to unlocking Fund resources—as F&D’s March 1981 cover made clear—it was also essential to successful adjustment, so that fresh lending did not simply mean piling on more debt.
At the World Bank, there was increasing recognition that investment projects, regardless of their internal rate of return, could never thrive if the macroeconomic environment was in disarray. The answer was a new type of lending: structural adjustment loans providing budget support for economic reforms. Both Bank and Fund programs stressed the need to restore internal and external balance—on the demand side, by cutting budget deficits and imposing monetary discipline, and on the supply side, through devaluation, privatization, and liberalization.
Developing economies resented this new direction. Critics decried the harsh measures and strict conditionality, which they claimed unnecessarily exacerbated economic hardship, especially for the poor. F&D played a crucial role here in explaining that timely and orderly adjustment, despite short-term pain, would lead to longer-term gains, including higher growth, improved living standards, and better income distribution.
Other articles advocated market-oriented reforms, especially trade liberalization over protectionism and import substitution. The East Asian economies were showcased for their successful adjustment and lauded for their trade openness, which—F&D authors claimed—had resulted in faster recovery and growth (although, in reality, these countries were also distinguished by extensive government intervention). F&D also began to take notice of China, which had just embarked on market-oriented reforms; in June 1983, it began to publish in Chinese.
As the debt crisis dragged on and adjustment fatigue set in, it became increasingly clear that aggressive adjustment had a disproportionate impact on the poor. To be politically sustainable, programs would need to do more to protect the most vulnerable. Through the pages of F&D, readers could trace the evolution of the international community’s debt strategy: an initial emphasis on adjustment; the 1985 Baker Plan premised on countries “growing out” of their indebtedness; and finally acceptance, under the 1989 Brady Plan and Paris Club Toronto terms, that only debt relief—from both market and official bilateral creditors—could resolve the crisis.
F&D also covered the World Bank’s growing involvement in environmental concerns, which began with the establishment of a small unit in 1970 and received further impetus during Barber Conable’s presidency (1986–91). Against a backdrop of public criticism of the environmental impact of certain World Bank projects, F&D began publishing articles on the Bank’s shift toward viewing environmental preservation as part of sustainable development.
F&D opened up to external authors, starting with Nicholas Kaldor in June 1983. Guest articles were clearly identified, lest there be any confusion that they represented institutional views, and Kaldor’s piece—questioning IMF orthodoxy about currency devaluations—was published alongside a rejoinder by F&D’s editor-in-chief. Nonetheless, these articles helped introduce an element of debate, paving the way for F&D to become less a vehicle for disseminating Bank and Fund views and more of a platform for discourse.
1990s: Transition
With cover art reminiscent of 1930s Soviet propaganda posters, F&D’s March 1990 issue explored the biggest story of the decade: the fall of communism and seeming triumph of liberalism. The Bank and the Fund—together with the Organisation for Economic Co-operation and Development and the nascent European Bank for Reconstruction and Development—were already at work on A Study of the Soviet Economy, which concluded (as a 1991 F&D article explained) that the required reforms were interconnected: gradualism would not work; “shock-therapy” was needed. Subsequent F&D issues explored various aspects of the transition—fiscal consolidation, monetary reform, privatization, reorientation of industries, corporate governance—occasionally giving voice to those who called for “less shock, more therapy.”
Outside the transition economies, developing economies and emerging markets were also transforming, accepting most of the ideas and broader impetus toward liberalization—while rejecting the rhetoric—of the so-called Washington Consensus. However, as the Bank’s East Asian Miracle report—referenced on the cover of F&D’s March 1994 issue—acknowledged, state intervention could be constructive, provided there was “good governance.”
Optimism about unbridled market capitalism was tested by the 1990s emerging market crises. As part of liberalization efforts, many emerging market economies had dismantled their capital controls, inviting large inflows. Before long, however, the 1994 devaluation by Mexico—followed shortly by Thailand, Korea, Indonesia, Russia, Brazil, Argentina, Uruguay, and Türkiye—demonstrated the devastating consequences of sharp reversals of capital flows. While the roots of individual capital account crises were country-specific, in each case, balance sheet mismatches—such as loans denominated in dollars that had to be paid off from assets that generated local currency—left economies vulnerable to destabilizing events, whether domestic or external, economic or political.
Having unveiled for the first time the dark side of financial globalization, the 1997–98 Asian Crisis and its lessons ushered in numerous IMF reforms, detailed in the June 1998 F&D. Emerging market crises more generally spurred various initiatives (such as standards and codes, the Financial Sector Assessment Program, and early-warning systems) to strengthen the international financial architecture.
