I learned my economics when economic development was an active, and an activist field. It was also a popular field of economics that provided excitement – and fun – for its practitioners. Part of the excitement came from an agenda that was big. After World War II, economic development became a universal nostrum, an overriding objective of poor and rich nations alike. The new nations, in particular, came to see development as a continuation of the political struggle that brought their independence. In the all-consuming fire for development, new policy tools were forged and governments wielded them, as the case might be, with care or abandon. Import substitution industrialization, to mention just one, was at the heart of development strategy. It was backed by fixed exchange rates, foreign exchange restrictions, and controls on trade. The fun part came because things were happening. For at least 25 years, to the middle of the 1970s, the world experienced an unprecedented spurt of economic growth that was spread to most corners of the earth.

There was a profound development-paradigm shift in the early 1980s. The mainstream view on development became free markets and sound money. In an economic development setting, the ultimate test of sound money is placing the domestic currency in direct competition with other contries' currencies, especially the world's reserve currencies, by liberalization of the foreign exchange market. Again in a development setting, floating exchange rates are a prerequisite for extending the free-market idea to its logical conclusion – across national borders. Free-market, free-trade, laissez-faire is thus relied upon for the optimal allocation of resources. “Setting the prices right” weeds out inefficiency and yields an efficiency dividend for a growing economy.