## **Box 4.  Research Reform under Anne Krueger**

“The reorganization of research in the Bank [which was ongoing in March 1982] is taking place in a broader context of the realignment of economic analysis, research and policy activities. The Managing Committee recommended a 15 percent reduction in the volume of resources allocated to research, and a major shift in the locus of management of research. Prior to the reorganization by far the largest share of research was conducted within DPS [i.e., the “economics department”]. [...] The DPS accounted for about 70 percent of total Bank research expenditures during FY81, with the remaining 30 percent being in Operations. The reorganization will change this balance radically: after the reorganization, over one half of Bank research will be located in and managed by departments in Operations.” By fiscal 1983, research resources were shifted toward operations: research resources controlled by ERS dropped to slightly below 50 percent.

The March 1983 report states that “...there are three main considerations underlying the present reassessment of research priorities. The first is that which motivated the reorganization: the need to adjust the portfolio of research towards applied research containing more research projects which have relatively rapid applications to policy and operations. The second consideration underlying reassessment is a growing perception of the importance of a better understanding of the context within which development and economic activity occur. This leads in turn to increased emphasis on research on the international economy as the context for domestic economic policy, to increased emphasis on sectoral and national economy interactions, and to the study of sectoral policies which provide the setting for efficient project operations. A third consideration is that the Bank’s comparative advantage in multi-country comparative studies of development policy [...] has not been fully exploited.” Sources: World Bank 1982 (p.21) and World Bank 1983 (p.11)

# _3.3.2 New Research Priorities_

Under Ms. Krueger, new mechanisms were developed to set research priorities and to carry out research in the selected areas. To set research priorities for the Bank Ms. Krueger established the Research Policy Council (RPC), a vice-presidential level committee which she chaired. The RPC met several times each year to decide on the general direction and guidelines for Bank research and to recommend research on specific topics.

To help in the task of providing guidance to the Bank’s research program, Krueger commissioned another assessment of Bank research, this one undertaken by Assar Lindbeck, Director of the Institute of International Economics in Stockholm. Professor Lindbeck’s report, presented to the Board as part of the 1984 Annual Report on the World Bank Research Program, recommended a change in the basic approach and philosophy underlying Bank research. In particular, Professor Lindbeck recommended a move away from what he characterized as “engineering economics” with its emphasis on large-scale quantitative forecasting and planning models, toward studies that emphasized “factual behavioral patterns.” Krueger and the RPC endorsed this recommendation and its adoption is evident in much of the research funded through the Research Support Budget between 1983 and 1986.

This shift in orientation mirrored the evolving understanding of the development process that took place in the 1980’s more broadly with a heightening sensitivity among policymakers regarding implications of government failures faced under highly interventionist regimes, and a resulting trend towards policy prescriptions favoring unregulated markets. In FY84, the Research Policy Council, under Ms. Krueger’s chairmanship, recommended that research be encouraged in five areas: 20