Labor intensive industries were especially hard hit.

But encouraging labor intensive industries, which create jobs for the poor, must not be at the expense of capital intensive industries.

Labor intensive industries in the tradable sector must be allowed to decline.

These adverse conditions have inadvertently propelled a long delayed restructuring of China s labor intensive industries.

China wants to shift from low value added, labor intensive industries such as textiles to higher value added sectors such as electronics and capital goods.

Moreover, there must be greater balance between capital intensive and labor intensive activities.

The longstanding stagnation in wages for unskilled labor was attributed to low cost, labor intensive imports, ignoring the corollary that Western workers consumption of labor intensive Asian goods offset the effect on real wages.

The signs of the fading miracle became visible when Japanese competitors and other Asian Tigers succeeded in wiping out substantial parts of Germany s labor intensive textile, optical products, and precision engineering industries.

Yet services offer more than just a labor intensive growth path.

For example, China s labor intensive export sectors are losing their competitive edge.

As a result, these labor intensive sectors must release a lot of labor and capital, which push into the capital intensive export sectors that are better able to cope with high wages.

Instead, under the new Plan, China will adopt a more labor intensive services model. It will, one hopes, provide a detailed blueprint for the development of large scale transactions intensive industries such as wholesale and retail trade, domestic transport and supply chain logistics, health care, and leisure and hospitality.

When China s labor intensive industries emerge from their metamorphosis, we should expect to see firms that are larger, that invest more in product innovation and design, and that hold more sway over business and trade policies.

And, while military innovation has been spectacular, it is still very labor intensive.

This is because manufactured exports are typically more labor intensive than investment projects.

Instead, under the new Plan, China will adopt a more labor intensive services model.

As a result, its economic model spawned a labor saving, capital intensive growth dynamic.

Egypt s comparative advantage lies in labor intensive services as opposed to one time products

Now, it is laying the groundwork to become a global power in more sophisticated, technology intensive industries.

Expansion of exports of labor intensive manufactures has nonetheless lifted many Chinese out of poverty.

Moreover, most of the observed growth was generated by capital rather than labor intensive sectors.

The analysis shows how all major economic sectors including many energy intensive industries will grow. For example, energy efficient buildings are a boon to the cement and chemical industries.

Early high growth economies Japan, South Korea, Taiwan initially exported labor intensive products, then graduated to more capital intensive goods like motor vehicles, and then to human capital intensive activities like design and technology development.

The service industries that have absorbed the labor released from manufacturing are a mixed bag.

This type of government spending can create labor intensive jobs that will help to stem rising unemployment.

In consumer electronics, for example, low income countries became a natural location for labor intensive assembly processes.

Over time, labor intensive components of value added chains will move away from China s higher income areas.

Developing countries also need access for the unskilled labor intensive services in which they have a comparative advantage.

As a result, China s innovative capacity remains relatively low, with its high tech and knowledge intensive industries unable to compete globally.

This has led energy intensive European industries including producers of glass, steel, chemicals, and pharmaceuticals to invest heavily in the US.

Yet these five industries combined employ only 14 million people out of a total labor force of 770 million and fewer people than they did a decade ago. For a country in an employment crisis, investing in energy intensive industry is a losing strategy.

Competitive currencies promote and protect modern tradable industries that employ a substantial share of the labor force.

German firms reacted by outsourcing the labor intensive parts of their production chains and curtailing their investment in Germany.

The zones could combine integrated rural development for domestic consumption and labor intensive manufacturing and agro businesses for export.

Their political freedom was secured by Athens reliance on labor intensive naval warfare against the Persians and other enemies.

While the manufacturing approach served China well for 30 years, its dependence on capital intensive, labor saving productivity enhancement makes it incapable of absorbing the country s massive labor surplus.

Legal requirements that significantly increase the costs of hiring and firing labor discourage employment creation in new industries.

Finally, flexible labor market policies seem to be important, too. Legal requirements that significantly increase the costs of hiring and firing labor discourage employment creation in new industries.

Cheap energy provides a powerful incentive for energy intensive industries from steel and glass to chemicals and pharmaceuticals to locate in the US.

This turnaround comes despite South Africa s protection of its labor intensive sectors, such as clothing and textiles, through high tariffs.

But the form of agriculture that they practice, which relies less on external inputs and mechanization, is highly labor intensive.

These countries had already lost export market shares to China and other low value added and labor intensive Asian economies.

Industries such as oil, banks, tobacco, (and companies like General Electric), along with labor, formed the New Deal Coalition.

In the long run, as labor shortages become acute, China will need to relinquish some low end, labor intensive manufacturing activities, which will translate into decelerating export performance and lower economic growth.

Once skilled labor, training programs, and technical institutions in specific industries are gone, it is difficult to get them back.