After the Great Depression in the 1930s, countries adopted the import substitution strategy. The aim was to produce the products locally rather than having to import them. Thereby, they provided many incentives in the form of high level of protection- duty-free access to raw materials, monopoly status, and import restriction measures- to attract foreign producers in host countries. However, the benefits that proponents of the import-substitution strategy expected- high employment rate, reduced imports and favourable exchange rate- never materialised. Instead, foreigners repatriated profits and indulged in capital intensive production entailing depreciation of the local currency and high redundancy.

As the World War II came to an end, there was a global consensus: countries foresaw their benefits only in working together. The General Agreement on Trade and Tariffs 1947 was established to promote free trade and exports were seen as the main drivers of economic growth. In the current era of globalisation, trade is believed to be the tool to a robust economy. Eventually, instead of debating on which strategy commands the most benefits, the importance of export promotion and expansion has been continuously stressed.

The debate on whether export-oriented policies have the ability to spur economic growth has received much attention, although the evidence is mixed and inconclusive (Xu et al. 2009) [1] . Both the theoretical and empirical literature disagrees on the precise relation between exports and growth.

Exports form part of the trade mechanism of an economy. Mercantilists, two centuries ago, have stressed on international trade. The aim of mercantilists was to accumulate gold reserves. Standards of living and economic growth and development were not always their concern. They supported the export promotion strategy as they saw trade surpluses as the only positive outcome of international trade for a country’s economy.

Since the mercantilists, classical economists saw that trade stimulated growth in mainly two ways. To begin with, exports expansion allowed for a more optimal distribution of resources and subsequently improved productivity. Economic growth was, thus, achieved. Furthermore, the classical school believed that through foreign trade, one country could gain raw materials and equipment which it could not produce. Those provided the material basis for economic development. The most famous theories are exports of surplus of Adam Smith, comparative advantage of David Ricardo, and “trade is the engine of economic growth” of D.H. Robert Morrison. All these theories interpreted the relationship to some extent but ignored that the international environment is complex and rule-less.