A pressing challenge for China is determining where to accommodate millions of migrantworkers displaced by the closing of many export-oriented factories.The current globalfinancial crisis has exposed the fragility of the export-led growth strategy China has adoptedover the past 30 years.Is there a better alternative for providing non-agricultural jobs thanthe sweatshops of cheap export production? In the present paper, international experienceis reviewed to shed light on China’s situation.Using pooled regression models, we analyzedata from the World Bank for 209 economies.We investigate the experience of other economiesto answer the following questions: What is the common process of expanding the non-agricultural economy? How is that process affected by the level of the real exchange rate? Isexport production a common way of absorbing surplus rural labor? Finally, what are theways that domestic demand and service employment can be expanded? A pressing challenge for China is determining where to accommodate millions of migrantworkers displaced by the closing of many export-oriented factories. The current global financial crisis has exposed the fragility of the export-led growth strategy China has adopted over the past 30 years.Is there a better alternative for providing non-agricultural jobs thanthe sweatshops of cheap export production? In the present paper, international experienceis reviewed to shed light on China’s situation. Using pooled regression models, we analyzedata from the World Bank for 209 economies. We investigate the experience of other economiesto answer the following questions: What is the common process of expanding the non-agricultural economy? How is that process affected by the level of the real exchange rate? Isexport production a common way of absorbing surplus rural labor? Finally, what are theways that domestic demand and service employment can be expanded?