The 1990s have seen radical changes in thinking about development policy, as compared with the ideas inherited from the 1980s. At the end of that decade an approach to development emerged which became known as the ‘Washington consensus’: its aim was, roughly, ‘to promote sound money and free trade, to free up domestic markets, and to encourage policy-makers to go home early and stop interfering with markets’. The experience in the 1990s of both the Asian miracle and the Asian crisis has shown without a doubt the inadequacy of this approach as a guide to development policy.

During the ‘Asian miracle’ period, the governments of Asian high-growth economies had clear priorities and did not hesitate to intervene (through subsidies, trade restrictions, administrative guidance, public enterprises, or credit allocation) (see World Bank, 1993; Stiglitz. 1996). More than this, the successful high-growth economies systematically sub-sidised investment; ‘[t]he … realistic presumption is that a range of market failures kept investment at a level below what would have been socially sub-optimal’ (Rodrik, 1999: 55). And it is now widely agreed that the crisis of 1997–8 was largely created by the liberalisation of credit markets in the absence of adequate regulatory frameworks (Furman and Stiglitz, 1998; Stiglitz, 1999b). Both of these events–Asia's miracle boom and its unprecedented crash – have brought home the inadequacy of the simplistic Washington consensus as a framework for thinking about development policy.

Thinking on the Bank's role in delivering good development policy advice and assistance in this new ‘post-Washington-consensus’ climate is still in its infancy.