was deeply committed to a new regime of country programming in support of this. He was determined to tackle poverty far more aggressively than the Bank had ever before done. He would become determined to find ways to do more for smallholder agriculture and the rural poor. Other subjects on his agenda included population policy, the environment, urban development, and education. He understood the importance of macropolicy reform but, because of his other priorities, it became a second-order goal. The net result was that, for most of the decade (until the landmark years of 1978-1981, the oil shocks and the Thatcher and Reagan policies), “most of the Bank's policy-influencing efforts were upstaged and ineffective,” as Kapur, Lewis and Webb (1997, p. 472) put it.

Several factors inhibited the Bank's influence on policy reform. The first was the reorganization of 1972, which created newly empowered regional Vice Presidents. Area managers were told to expand their investment lending radically. The “pressure to lend” was high, managers were burdened with increased lending targets and had strong personal incentives to meet these new goals and little room left for adding policy burdens to their project transactions (Kapur, Lewis and Webb 1997; Weaver 2008). The second were the oil shocks of the 1970s, which had a profound effect on the Bank’s evolving possibilities to influence borrowers’ policies. As developing countries were hit by these external shocks, the Bank tried to help them find ways to avoid a cessation of their access to foreign exchange and a major decline in their living standards. The typical developing country that was not an oil exporter was faced with balanceof-payments difficulties, accelerating inflation, high food prices, corruption and mismanagement of public enterprises, speculation in the private sector, destabilizing demands by workers for wage increases, and a visible increase of poverty. Often political tension and racial strife made domestic resolutions of conflict difficult. Most developing countries experienced a large imbalance between aggregate income (generated by factors of production in the economy or borrowed abroad) and aggregate expenditure in the economy, as reflected in the deficit of the current account of the balance of payments. Many countries then entered in crisis when they ran out of foreign reserves and found themselves unable to secure funds from abroad due to reluctance on the part of foreign commercial banks to increase their lending. Under such difficult circumstances, governments were required to take hard political and economic choices and strong measures to stabilize the economy externally and internally.

Inhibited from pressing a policy-influencing campaign in the 1970s, the Bank nevertheless further readied three components that would contribute to such a campaign in the 1980s: economic and sector work (ESW), country program papers (CPPs), and program lending. With the 1972 reorganization's emphasis on country programming and the augmentation of region and country-specific economic staffs, ESW was stepped up markedly. In retrospect, the Bank gave the activity high marks: Some of IDA's most important contributions to development have been made through the discussions it has with governments on a broad range of policy issues. Considerable time is spent on general economic and sector work before any actual project lending takes place. Economic reports survey macroeconomic conditions and the main sectors—agriculture, industry, and energy. They tend to study the key issues of investment and savings; public finances; the balance of payments, particularly the performance of exports; and overall prospects for growth. They act as the starting point for discussions with governments on the nature and severity of their development constraints, and on the policies and resources needed to overcome them. Sector reports go into more detail on sectoral developments—specific bottlenecks, investment programs, 10