The past half century has witnessed an unprecedented rate of world economic development. One stylized fact found by many empirical studies is that most high growth episodes are usually characterized by high export growth, which leads many people to the conclusion that the export sector has played a leading role in the growth process. For example, Balassa (1978) and Ram (1985) found that exports played an important role in promoting economic growth by conducting cross-country comparison or regressing GDP growth on different export variables. Especially after the very success of the Asian Tigers (Hong Kong Special Administrative Region, The Republic of Korea, Taiwan Province of China, and Singapore) in pursuing an export-driven model of economic development, many countries followed their pattern and directed, as a result, a great deal of attention to the exportable sector when designing economic policies. Successful growth episodes exhibiting high export growth are therefore usually labeled “export-led growth”. If “export-led growth” was the true explanation for those high GDP growth episodes accompanied by high export growth, we should have been able to observe real exchange rate appreciation in all such episodes (due to the influx of foreign exchange) as a result of booming exports. The data show, however, that this real exchange rate appreciation has only occurred in around half of those so-called “export-led growth” episodes. The real exchange rate actually depreciated in many episodes characterized by high economic growth together with high export growth, which leads to doubts as to how safely such episodes can be claimed as “export-led growth”. This further leads to the question whether some forces other than booming exports can generate high growth of both exports and GDP.

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