The years immediately following the Second World War were marked by an unprecedented speed of economic recovery from the most devastating conflict in the history of mankind, combined with an equally impressive strength and scale of international cooperation never before witnessed. The first two decades were considered as the “Golden Age of Capitalism”, a period of economic boom and  prosperity .
It was  associated with the emergence of new international institutions such as the International Monetary Fund (IMF) and the World Bank as part of the Bretton Woods monetary system in 1944, the United Nations Conference on Trade and Development (UNCTAD), the United Nations Industrial Development Organisation (UNIDO) and the five UN  Regional Commissions; the birth of many new nations as a result of decolonisation; and the emergence of new mechanisms of international co-operation, such as the Marshall Plan for the reconstruction of Western Europe and in the 1960s, the strategy for the First United Nations Decade of Development.
By the early 1970s, the development movement was running out of steam. The idea that transfers of capital and technical know-how would quickly dispense with gross poverty had proved misconceived. The distribution of  the  Golden Age outcome was uneven and confined to the countries of the North. Throughout the decade of the 1960s, the growth rate in the economically advanced market economies accelerated, and the gap between the per capita incomes of the developing countries and those of the developed countries widened. Two-thirds of the world’s population living in the less developed regions of the world still had less than one-sixth of the world’s income. In 1962, annual per capita income in those regions averaged $136, while that of the economically advanced market economies in North America and Western Europe averaged $2,845 and $1,033, respectively.
In a report issued in 1969, UN secretary-general U Thant noted that the slower progress in development had been accompanied by the emergence or aggravation of major imbalances that imperilled future growth. Without greater progress in food production and the more effective control of communicable diseases, the necessary conditions for steady economic and social development could hardly be said to have been created.
This led to a new climate of development thinking. Since economic growth did not automatically sweep poverty away, development analysts decided that the second Development Decade must also include measures deliberately targeted at the poor -- to help them meet their basic needs for food, water, housing, health and education. In the first development decade, economists and planners had looked upon these rather as forms of ‘consumption’ unconnected to economic productivity. Now their thinking began to change.
In 1972, Robert McNamara, then president of the World Bank, made what was seen as a landmark statement. Governments in developing countries, he said, should redesign their policies so as to meet the needs of the poorest 40% of their people - and relieve their poverty directly.
The cornerstone of the new development strategy was thus an explicit attack on poverty - albeit one so mounted as not to damage economic prospects. Its economic slogans were: ‘redistribution with growth’, and ‘meeting basic needs’.
The early 1970s saw two events of particular significance for international development. One was the Opec oil shock, which sent prices soaring and ended the era of cheap energy and cheap industrialisation - and therefore of cheap development. The other was the global food shortage brought about by two disastrous world harvests in 1972 and 1974.
The UN responded to the atmosphere of crisis with a series of international conferences: on environment (Stockholm, 1972); population (Bucharest, 1974); food (Rome, 1974); women (Mexico City, 1975); human settlements (Vancouver, 1976); employment (Geneva, 1976); water (Mar del Plata, 1977); and desertification (Nairobi, 1977). Meanwhile, the countries of the developing world were growing in confidence. Encouraged by the success of the Opec cartel in 1974, they established a North-South Dialogue demanding a neo international economic order: a change in relationships among the nations to allow the up-and-coming members of the international community to gain access to world trade and financial market.
Such developments started ringing alarming bells in the West. The north-south dialogue rounds were aborted and a market oriented radical policy shift was imposed by president Regan and prime minister Thatcher in the early 1980s to counter such moves by the South. Basic needs development approach were being forced off the agenda by growing neo-liberal perspectives that saw efficient markets as the key mechanisms for satisfying needs.
The rise of monetarism and neo classical economics again in the 1980s has shifted development theory towards the trickle-down proposition. Such paradigm shift towards laissez-faire policies constituted a strong political and academic offensive against the “predatory state.” Development strategies, including basic need that implied an activist state had no more raison d’etre because the magic of the market would bring back national growth and prosperity. The overarching development concept shifted to development without the state at the country level and globalisation without countervailing power at the international level. Blind belief in markets starts enjoying again a great popularity.
Structural Adjustment Policies (SAP) were brought to the fore. They refer to a set of economic policies often introduced as a condition for gaining a loan from the IMF.
SAP was labelled as the “Washington Consensus “ doctrine. To be eligible for a loan from IMF, developing countries often have to implement some or all of the following policies:
(1) Cutting government spending to reduce the budget deficit. Also known as ‘fiscal austerity’,
(2) Raising tax revenues and trying to improve tax collection by clamping down on tax avoidance,
(3) Control of inflation. Usually through monetary policy (higher interest rates) and fiscal austerity – which have the effect of depressing aggregate demand.
(4) Privatisation of state-owned industries. This raises money for the government, but also, in theory, can help improve efficiency and productivity, because private firms have a profit incentive to be more efficient.
(5) De-regulation of markets to encourage competition and more firms to enter the industry.
(6) Opening the economy to free trade – removing tariff barriers which protect domestic industries.
(7) Ending food subsidies. This can distort the market and lead to over-supply and hold back diversification of the economy to a more industrial based economy.
(8) Devaluation of currencies to restore competitiveness and reduce current account deficit. This usually leads to higher import prices.
In the late 1980s and 1990s, the hegemony of the Washington Consensus came under attack with the apparent failure of this strategy, and growing pressure on the World Bank and the International Monetary Fund (IMF) by several country governments, international organisations (including some United Nations agencies), non-governmental organisations (NGOs), universities and social movements. Various aspects of criticisms were raised.
The shift in the interest of international agencies and of the World Bank moved to a Post-Washington Consensus (PWC) approach with a focus on institutions economics, issues of governance and a return to the political economy of growth in general and to the problems of policy implementation in particular.
Evidently, the PWC was welcomed as a huge improvement over the market theology of the 1980s. The state in the new approach is recognised as important, as are investments, and how effectively states and other non-state institutions, like financial institutions, work to create conditions conducive for investment must clearly have a lot to do with explaining growth and in directing policy attention when growth is poor.
Reconsideration of the role of the state in orchestrating the economy was inspired by the notion of the developmental state in the successful East Asian newly industrialising economies (NIEs). In all these cases, it was found that the state had violated the main tenets of the Washington Consensus through long-term planning, protectionism, directed finance and other departures from the free market.
Moreover, the notion of “adjustment with a human face” was emphasised in the new approach. Irrespective of the merits of Washington Consensus in bringing stability and growth, poverty was rising in the “adjusting” countries, and demonstrated the tendency of the adjustment costs to fall on the most vulnerable. The WC stood accused of being at least oblivious to the disproportionate burden on the poor arising from the processes of adjustment and stabilisation.
More importantly, PWC took into consideration that the adjustment  policies are context specific and issues of  good governance and  efficient institutions  are decisive for the success of economic development processes. The efficiency of institutions is largely dependent on specific local circumstances. Policies must therefore be tailored to the particular circumstances of a given country. It follows that no one-size-fits-all structural adjustment policy as was prescribed by the Washington Consensus approach. The successful implementation of growth policies presupposes a thorough grasp of local circumstances.
Inspired by new institutional economics, the PWC can provide a more nuanced understanding of economic development. For example, the PWC acknowledges that at the core of the development process lies a profound shift in social relations, the distribution of property rights, work patterns, urbanisation, family structures, and so on, for which an analysis limited to macroeconomic aggregates is both insufficient and potentially misleading.
In the early 2000  and with the establishment of the Millennium Development Goals by world leaders, the Pro-Poor Policy debates started and the mainstream PWC was compelled to admit that poverty reduction and redistribution were not spontaneous by-products of growth, the correction of macroeconomic imbalances, or improvements in macroeconomic policies and governance. Instead, poverty has to be addressed directly through a dedicated set of economic and social policy tools. The IFIs also had to confront claims that inequality is harmful because it induces political and economic instability and, in extreme cases, political violence and civil war.
The pro-poor growth (PPG) was defined as the increase in the income share of the poor (alternatively, in PPG, the incomes of the poor grow faster than those of the non-poor, in which case poverty falls faster than it would if all incomes had grown at the same rate). Another definition focused on the absolute improvement of the living standards of the poor, regardless of changes in inequality.
The incremental convergence of the participants in the PPG debates has  further supported the development of the inclusive growth (IG) paradigm in the late 2000s. IG stresses the importance of growth for poverty reduction, admits that a wide range of policy combinations can deliver these outcomes, and aims to select the appropriate policies through “growth diagnostics”: Inclusive growth refers both to the pace and pattern of growth, which are considered interlinked, and therefore in need to be addressed together. Traditionally, poverty and growth analyses have been done separately.
In my opinion, the IG paradigm is limited in many ways. It does not address the limitations of previous World Bank strategies, including the contradictions between policy legitimacy, ownership and participation, the cost of the policy shifts, and the absence of self-correcting mechanisms in IFI policies. Under IG, failure will continue to be blamed on the victims, and the remedy will continue to include the demand that they should try again, harder. These limitations cannot be addressed responsibly except through a considerable relaxation of the conditionalities imposed by the IFIs. Conditionality is the enemy of experimentation. Conditionality is also inimical to the contextual links between general principles and local conditions which is, allegedly, at the core of IG.