The Applicability of ‘Orthodox Monetary Remedies’ to Developed and Under-Developed Countries

Abstract

At the 1958 annual meeting of the International Monetary Fund, a representative of one of the less developed countries delivered a vigorous attack on the Fund’s policies with respect to such countries. In dealing with the under-developed countries, he contended that the Fund was quite wrong in insisting ‘on the prescription of orthodox monetary remedies found highly effective in developed countries. Most advice to the under-developed countries and the pressure exerted upon them,’ he declared, ‘is commonly rationalized in terms of an economic theory obtaining in a fully industrialized economy, unrealistic so far as under-developed countries are concerned.’²

The views expressed in this paper are entirely my own, and may in no sense be taken as reflecting the views of the Board of Governors of the Federal Reserve System. I wish, however, to express my thanks to my colleagues, Messrs. Yves Maroni and Allan F. Rau, for their assistance in assembling and checking some of the data cited.