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Industrial upgrading and development in Lesotho’s apparel industry: global value chains, foreign direct investment, and market diversification

Mike Morris and Cornelia Staritz

Oxford Development Studies, 2017, vol. 45, issue 3, 303-320

Abstract: Many low-income countries are integrated into apparel global value chains through foreign direct investment (FDI), including Lesotho, which has become the largest Sub-Saharan African apparel exporter to the US under the African Growth and Opportunity Act. More recently, South Africa has emerged as a new apparel export market in Lesotho. The two markets are supplied by different types of FDI firms – affiliates of Taiwanese transnational producers and South African manufacturers – which are part of different value chain variants. The paper assesses the implications for industrial upgrading and development of integration into these two value chain variants in Lesotho, drawing on firm-level and institutional interviews. We show that their different characteristics in terms of investors’ motivation, governance structure, end markets, firm set up and most importantly and causally, ownership and embeddedness have crucial impacts on functional, product and process upgrading, local linkages, and skill development.

Date: 2017
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DOI: 10.1080/13600818.2016.1237624

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