Introduction: The Scope and Significance of the Study

Widespread and persistent poverty in the majority of developing countries is one of the most serious issues currently facing the world. In order to reduce poverty, ample employment opportunities must be created for the poor. To achieve this, the development of labor-intensive industries is the key, as agriculture can provide only limited employment opportunities and the service sector can only become the leading sector in the later stage of economic development. Indeed, although the Green Revolution in Asia increased grain production dramatically, it had modest effects on labor demand (David and Otsuka, 1994). As a result, it was increased employment opportunities in the non-agricultural sector, rather than in agriculture, that directly contributed to poverty reduction in Asia (Otsuka et al., 2009). In our observation, the service sector cannot be an engine of growth in low-income economies, because major innovations in this sector are knowledge-intensive and labor-saving, which is not appropriate for unskilled labor-abundant low-wage economies. Consequently, the central question is how to promote the development of labor-intensive industries in such countries.