When the Federation of Malaya gained independence from the UK in 1957, economic conditions were ripe for rapid and sustained growth, and the new country’s primary export sector showed immense potential for expansion. A legacy of its colonial past, primary commodities—particularly tin ore and natural rubber—accounted for a third of Malaysia’s gross domestic product (GDP) and over 75% of exports by 1970. Manufactured exports accounted for less than 10%, raising concerns that heavy reliance on a few commodities left it vulnerable to terms-of-trade shocks from swings in commodity prices. There was little economic diversification up to the 1980s, with undersized manufacturing focused on little more than processing agricultural and mining output. In fact, several terms-of-trade shocks in the early 1980s—followed by global recession a few years later—ballooned fiscal and current account deficits, setting the stage for radical reform... — blogs.adb.org/blog