Why Some Developing Countries Are Better Placed Than the International Monetary Fund To Develop Policy Responses to the Challenges of Global Capital

Abstract

The International Monetary Fund’s track record on developing policy to govern the
interaction of developing countries and global capital is not strong. Argentina was an IMF poster
child throughout the 1990s. Its economy imploded in 2001. The Brady Plan provided a resolution
for the Latin American debt crisis of the 1980s. Yet the Plan was conceived not by the IMF, but by
Brazil and Mexico. Chile successfully charted its own course through the turbulent 1990s with the
adroit use of home-grown capital controls. Likewise, Malaysia charted its own course out of the
1997 Asian crisis more advantageously than nations that implemented IMF programs and with
policies the IMF vehemently opposed. The lesson is that developing nations need to develop their
own innovative solutions to the challenges of global capital and are often better placed to do so
than the IMF.