Determining the lessons to be derived from the successes of the East Asian “miracle” economies has become a minor growth industry in the economics profession. Not only have these economies achieved extremely rapid and relatively equitable growth, but they have also by and large avoided major macroeconomic crises along the way, even when the world economic environment proved inhospitable. Among the many lessons that observers have derived from this experience is that outward orientation is a successful development strategy. While the term “outward orientation” is not well defined, and economists differ in particular with respect to how much encouragement to exports it implies, one feature of an outward-oriented policy package has clearly been the avoidance of prolonged real exchange rate overvaluation. This is an aspect of the East Asian macroeconomic experience that many observers had begun to emphasize by the mid-1980s. Maintaining real exchange rates close to their equilibrium values was credited with helping East Asian countries both to continue to compete successfully in world markets and to avoid the episodes of massive capital flight that aggravated debt problems and destabilized macroeconomic performance in Latin America and else-where during the late 1970s and early 1980s.