Market and the Mountain Kingdom: Change in Lesotho's Textile Industry

In Maseru, the capital of the Kingdom of Lesotho, the stirrings of industrialization and modernization were promising, and more than 50,000 workers, mostly women, were employed in the textile sector; the figure reflected more than a threefold increase in just a few years. Just outside Maseru, however, life was pastoral. Of Lesotho's 1.9 million citizens, 86% were engaged in subsistence agriculture. The country's hopes for progress rested with the jobs created by Taiwanese and Chinese firms. In early 2006, however, the survival of the nascent industry hung in the balance. The appreciation of Lesotho's currency, the loti, made life difficult for the apparel firm, which exported almost all of their production to the United States. Although the firms enjoyed duty-free access to an otherwise protected U.S. clothing market through the African Growth and Opportunity Act, the provisions that most benefited Lesotho would expire in 2007. A few large buyers would be making sourcing decisions that could make or break Lesotho's industry. Local union leaders were upset with the government's handling of the textile boom and its putatively impending bust. Certainly the government would play an important role in formulating a strategy and adjusting the institutional context, but decisions made by the unions, foreign investors, foreign buyers, and the American government would also be critical. How would posterity judge Lesotho's first encounter with world markets--as a triumph or a disaster?

• Growth strategy
• Government policy and regulation
• Global strategy
• Labor unions
• Business and government relations
• International trade
• Foreign investment