The return of Soros: revisiting Malaysian \u27facts\u27 about the Asian crisis

Objective evaluation of evidence about Malaysia\u27s experience during the Asian Crisis a decade ago reveals widely held Malaysian perceptions to be misleading if not downright erroneous. Most importantly, while turning its back on the IMF did not bring Malaysia the disaster many predicted, neither could this approach be credited with saving Malaysia\u27s economy. Countries that bit the IMF bullet recovered as quickly as Malaysia did. The similarity of policies adopted by Malaysia and IMF-assisted countries may account for this lack of differentiation. The credit given to capital controls is likewise exaggerated. When it came to proximate cause, blaming speculators may be politically convenient, but makes little sense given that short-term speculation is part and parcel of well functioning capital markets, contributing both to booms as well as busts. Finally, the belief that Malaysia fared better than other Crisis-hit Asians is based on the presumptions that other countries suffered greater collateral damage and that Malaysia\u27s fundamentals were sounder, both of which are not well supported by existing data