We have talked in class about agricultural labor markets in developing countries. In many places in China, technological advances have really stifled the marginal product of additional agricultural laborers for a given area. While the economy benefits from these workers changing sectors, that shift carries fairly significant transaction costs.
While such a transition is inevitable in the long-run, perhaps some rural infrastructure investments could take advantage of excess labor in the short run. Investments in a distributed solar grid could take advantage of over-supplied agriculture labor markets and strengthen the energy infrastructure of rural China.
Li’s book never really explicitly discussed the impact of large numbers of “agricultural laborers” actually working on infrastructure projects like dikes. However, the use of such labor for other activities besides simply farming could help boost overall productivity in the short-run.