Since 1978, the World Bank’s annual World Development Report (WDR) has provided in-depth analysis and policy recommendations on a specific and important aspect of international development from agriculture, the role of the state, economic growth, and labor to infrastructure, health, the environment, and poverty. In the process, it has become a highly influential publication that is consulted by international organizations, national governments, scholars, and civil society networks to inform their decision-making processes.
In this essay, Shahid Yusuf examines the last 30 years of development economics, viewed through the WDRs. The essay begins with a brief background on the circumstances of newly independent developing countries and summarizes some of the main strands of the emerging field of development economics. It then provides a sweeping examination of the coverage of the WDRs, reflecting on the key development themes synthesized by these reports and assessing how the research they present has contributed to policy making and development thought. The book then looks ahead and points to some of the big challenges that the World Bank may explore through future WDRs. The essay is followed by five commentaries, each written by a distinguished economist or development practitioner, which further explore this terrain from different perspectives.
Together, the contents of this volume provide an extraordinary and remarkably compact tour of development economics through, around, and beyond the WDR. It will be invaluable to anyone interested in the evolution of development economics over the past three decades as well as for students, scholars, and policy makers in the field of development.

From the mid 1970s onward, poverty alleviation was much debated at the Bank, and the current of opinion began to run against the passive approach that assumes that as long as there is growth, it will eventually trickle down to the poor. How rapidly and to what degree this process would occur was unknown.
The 1979 WDR enumerated pathways to increased agricultural productivity such as availability of credit, use of fertilizers, research into new varieties, extension, improved infrastructure, pricing policies, and—where feasible—land reform. The WDR pointed to star performers such as the Republic of Korea and Taiwan, China. The authors of the WDR expressed the wish that a prospering agriculture would partially quench the hunger for urban “bright lights,” but if cities continued to grow, the WDR exhorted municipalities to strengthen their finances, provide mass transport, increase the housing stock and upgrade slums (as Jakarta was doing), and perfect a system for delivering services at low cost. With energy prices on the rise once again in the late 1970s, the WDR also added a pitch for energy efficiency and for alternative sources of energy. All of this advice was as sound then as it is now. Singapore appeared to be on the road to success, and we know that it traveled far. Other cities, such as Karachi, Lagos, and Manila, were struggling then and continue to struggle with problems that have multiplied...

Shahid Yusuf’s review of the World Development Reports (WDRs) is elegant and insightful, but also wistful and nostalgic. He clearly believes that the WDRs have known better days, and I agree with him. He is positive about the future, but I am not sure I agree; I think the problems that afflict the WDRs have deep causes that will not soon go away.
In my comments, I shall follow the same general outline as does Yusuf. I will begin with my understanding of the function of the reports, and I will review some of the most influential reports—and their possible influence on development thinking—as well as the general tone and content of recent reports. Like Yusuf, I shall not be afraid to use the exercise as an excuse to think about economic development more generally and about the role of the World Bank in particular.

Shahid Yusuf’s essay on 30 years of World Development Reports (WDRs) is a masterful overview of what has at the same time been 30 years of development economics at the World Bank. I will first focus on one key aspect of the overview: the evolution of the political economy of development economics at the World Bank, influenced, of course, by my own perceptions of the 1980s and 1990s, two decades I spent at the World Bank. I will then turn to the future and to one key dimension that I think has been missing in the WDRs.
There is no doubt that development economics at the World Bank, and with it the WDRs, have been and will continue to be influenced by the political and intellectual environment of the times. The Executive Board does influence the management and the staff, not only because it has some “decision powers” over policies and strategies but also, and perhaps even more, because positive recognition by the board is a sought-after prize, and criticism is perceived as a big setback. Positive recognition by the president of the institution and by the chief economist is also something very valuable, influencing careers and promotions. The ideological and intellectual orientations of the president and of the chief economist clearly influence the work of economists at the World Bank.

The intellectual tragedy of 30 years of World Development Reports (WDRs) is that they never accepted the reality of the great unpredictability and uncertainty of economic growth in the short to medium run. The WDRs keep trying to fi nd ways to raise growth in the short to medium run when the economics profession does not have this knowledge. They seek to explain short-term fl uctuations in growth when there is no evidence base for such explanations. As a result, they fall prey to many of the classic heuristic biases about randomness (à la Kahneman and Tversky), including frequent use of circular reasoning, and they lose the opportunity to carry on a fruitful debate about the best way to handle this uncertainty and to make development more likely in the long run (Gilovich, Griffi n, and Kahneman 2002; Kahneman, Slovic, and Tversky 1982).

Yusuf concludes the summary of his 30-year history by noting three shifts over the years:
1. From state directed to market guided
2. From structural issues to sectoral issues
3. From macroeconomic concerns to microeconomic concerns
This summary succinctly captures the changes of emphasis over three decades quite well. They all seem reasonable, but again the balance is important. In this connection, it is commonly believed that a division of labor exists between the International Monetary Fund (IMF) and the World Bank. The IMF is in charge of macroeconomics and sectoral issues rather than microeconomics and structural issues. From this point of view, the shift in emphasis from macro to micro in the World Bank makes sense. This shift may be viewed as a welcome retreat from “mission creep.” But in terms of the second shift, shouldn’t the World Bank continue to address structural issues as well as sectoral issues?

One of the hardest struggles—and I was only partially successful— was to change the concept of the WDR. Traditionally, it has summarized “received wisdom.” The goal was to summarize the received wisdom in a few, easily understood “messages.” The messages, in turn, were intended to set the policy agenda: they were messages that World Bank staff could bring to developing countries around the world. I was worried about this approach for several reasons. It smacked too much of a “one-size-fits-all” cookie-cutter approach—unless the messages were so anodyne as to be almost meaningless. And I was very much of the view that the role of outside advisers was to share experiences and general principles. Democratic development required that each country make its own decisions—in the simple way we put it, “the country was in the driver’s seat.” Our role was to help the country think through these decisions.
In this perspective, the objective of the WDR was to begin a global dialogue, a democratic conversation about some of the most contentious issues in development. It did not bother me that we might not know the right answer. Indeed, it bothered me more that we sometimes pretended to know more than we did. To me, the role of an outside adviser was more to ask the right questions—or to help those in the developing countries ask those questions—than to give the right answer.

Figures

• Figure 1.1: - Growth Rates of Developing and Developed Countries, 1961–74
• Figure 1.2: - Growth Rates of Six Developing Countries, 1956–71
• Figure 1.3: - Average Growth Rates of Five Industrial Countries, 1871–1970
• Figure 1.4: - Per Capita Average Growth Rates of Five Industrial Countries, 1871–1970
• Figure 1.5: - Growth Rates of Developing Countries, 1972–90
• Figure 3.1: - Net foreign direct investment in South Asia and Sub-Saharan Africa, 2000–06
• Figure 4.1: - Per capita GDP Growth of the United States, 1870–2003
• Figure 4.2: - Per capita GDP Growth of Korea, 1960–2003
• Figure C.1: - The Transition to a High-Growth Path

• Table 2.1 - Total Rain-Fed and Irrigated Land in 12 Agriculture-Dependent Countries with High Population Growth Rates, 2000 and 2050
• Table 3.1 - Net Foreign Direct Investment in South Asia and Sub-Saharan Africa, 2000-06
• Table 3.2 - Average Investment of Slow-Growing South Asian and Sub-Saharan Africa Countries and India, 1990-2006