4How MNEs Help Mobilize Rural Labor for Industrialization, Alleviating Poverty (as have done across East Asia):Is the “America First” Policy a Threat?Terutomo Ozawa At the same time, this continuously ample supply of poor people at low wages enables industry to extract profits, which in turn are reinvested into business expansion, further accumulating capital and powering labor-driven industrialization. For a while, industrial wages are not likely rise until an existing reservoir of rural labor is sufficiently tapped. This phenomenon of a labor shift from the (non-marketized) subsistence sector to the (marketized) modern sector as the vital driver of growth is posited in Arthur Lewis’s well-known “unlimited labor supply” theory of development (Lewis, 1954). This takeoff growth is actually made even stronger when it is export-driven--i.e., comparative advantage-fueled (though not examined in Lewis’ model), since export prices are naturally higher than pre-trade domestic prices--hence, an incentive to sell overseas and earn extra profits (as investable capital). In fact, takeoff itself can be initiated by export-driven manufacturing. Furthermore, an expansion of labor-intensive industries spurred by exports makes a return on labor (i.e., wages) higher and that on capital lower, as revealed in the so-called “Stolper-Samuelson theorem” (Stolper and Samuelson, 1941).4 This is because successful exports result in more specialization in, and more expansion of, comparatively advantaged industries--hence, more output of labor-intensive goods and even further poverty reduction. In this sense, the Lewis model also can be reinterpreted as a theory of market-driven poverty alleviation during an export-led takeoff, even though Lewis himself was concerned solely with a process of capital accumulation in a closed economy as the engine of industrialization under capitalism and did not pay attention to the poverty issue, particularly in terms of international trade and MNEs’ investment.5 Also, noteworthy is that the shift of labor from rural to industrial areas involves females as well as males. In fact, the former may often exceed the latter in number, since the start of industrialization creates more jobs suitable for young females. In general, female workers are more disciplined and more patient--and above all, more dexterous with their fingers and hands for manual works than their male counterparts in such industries as apparel, textiles, toys and other sundries. These industries represent the most common, labor-intensive production activities in which labor-abundant emerging countries can have strong comparative advantages in the initial phase of catch-4 This theorem says when any factor is used most intensively to produce a good for export, its price rises more proportionately than the price of the good for which the factor is used as an input. 5 In contrast to friction-less migration to cities from farms in the Lewis model, moreover, the reality is that it costs laborers to move, thereby constraining the migration. An interesting experiment on such migration has recently been carried out by Mushfig Mobarak of Yale University, as reported in the Economist (Jan. 27, 2018). Despite abundant job opportunities in the cities, jobless laborers in Bangladesh during the period known as monga (between rice planting and harvesting) are unwilling to spend on a bus ticket and remain idle in the villages. Mobarak’s project offered cash to poor households on the condition that somebody in the household moves to a city for work. The main result is: “Village life is profoundly affected, and not just because more men are sending money home. With so many workers absent, agricultural wages rise. Oddly, households that are encouraged to send somebody to a city end up earning slightly more from rural work than households [with no migrant]... Fully 140,000 villagers were helped to move in 2017” (p.67).