In this context of extreme crisis w

In this context of extreme crisis we find the World Bank’s emphasis changing. The 1983 World Development Report (World Bank 1983: 29) stated that foreign trade enabled developing countries to specialize in production, exploit economies of scale, and increase foreign exchange earnings. The 1984 report (World Bank 1984: Chapter 3) used “growth scenarios” to argue that developing countries could improve their positions by changing their economic policies, specifically by avoiding overvalued exchange rates, reducing public spending commitments, and having an “open trading and payments regime” that encouraged optimal use of investment resources—the case examples at that time were the “outward-oriented” East Asian countries. By the following year (World Bank 1985: 145) the World Bank was warning that a “retreat from liberalization” would slow economic growth. The 1987 World Development Report posed the question: What are the ultimate objectives of development? Generally, the answer was “faster growth of national income, alleviation of poverty, and reduction of income inequalities” (World Bank 1987: 1). The bank itself, stressing “efficient industrialization” as the key economic policy, devised a lending program that supported policy reforms and structural changes in a neoliberal direction across the whole spectrum of economic activities in recipient countries. In doing so, the bank drew directly on Adam Smith’s argument that industrialization would be retarded by a low ability to trade, and on Ricardo and Mill’s perception that trade gave advantages that led to productivity increases. State protection of industry in the past, the bank’s annual report concluded, had led to inefficient industries and poor-quality, expensive goods. So, the idea was to reduce trade barriers, switch the economy’s focus to exports, and compete vigorously in world markets. The bank suggested policy reform in three main areas: trade reform, specifically the adoption of an outward-oriented trade strategy; macroeconomic policies to reduce government budgetary deficits, lower inflation, and ensure competitive exchange rates; and a domestic “competitive environment,” that is, removing price controls, rationalizing investment regulations, and reforming labor market regulations (World Bank 1989, 1990, 1997). These recommendations amounted to essentially a neoliberal Washington Consensus policy regime (Peet 2007).