In four years, Friedman and Kamarck recruited over 200 social scientists, mainly Ph.D. economists, and sought additionally to have economic analysis carried out within area departments as well as the Economics Department. This practice was also followed after the reorganization of 1971 and is ongoing today. Friedman was not only Director of the Economic Research Department, but also Economic Adviser to the President—indeed he was George Woods’ principal adviser—and these have been the combined duties of the Bank’s Chief Economist since that time.

# 3.2 The 1971-1982 Period

In 1970 Friedman was succeeded by Hollis Chenery, a leading Harvard economist who had been assistant administrator for the program of the United States Agency for International Development, and the work of the research economists in the Bank turned more toward quantitative analysis.

Chenery was particularly influential in advising McNamara on how to promote the redistribution of income in developing countries so as to reduce the crushing burden of absolute poverty and that, “in general, Bank economists have become leading contributors to development research, and the Bank is better able on that account to deal with the development priorities of the world.” (Oliver 1975). In particular, writes Oliver, “the work of the Bank today is measured more in terms of the successful development of member countries than of the number of projects approved, the lack of defaults on past loans, or the rate of return on equity. And development itself is measured not only in terms of rising real gross national product but in improved public health, more equitable income distribution, declining rates of population growth, and greater political stability.” The Bank’s current approach to research began in the early 1970s when the Bank’s central research program was formally established—around the time when President McNamara sharpened the Bank’s focus on poverty reduction. In his 1970 speech to the Board of Governors in Copenhagen, the President of the Bank addressed the question of what needed to be known to be able to do good lending and advisory work in developing countries:<sup>11</sup> We do not want simply to say that rising unemployment is a “bad thing,” and something must be done about it. We want to know its scale, its causes, its impact and the range of policies and options which are open to governments, international agencies and the private sector to deal with it. We do not want simply to sense that the “green revolution” requires a comparable social revolution in the organization and education of the smaller farmer. We want to know what evidence or working models are available on methods of cooperative enterprise, of decentralized credit systems, of smaller-scale technology, and of price and market guarantees. We do not want simply to deplore over-rapid urbanization in the primary cities. We want the most accurate and careful studies of internal migration, townformation, decentralized urbanism and regional balance.

said, “I don't think you can have a development agency unless it has as its fuselage the loans which are being made, but one wing has to be project work and the other wing has to be economics.”

> 11 As recorded in Mason and Asher (1973), p. 476-477.

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