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Developmental Economics
Lesotho is like other developing countries with respect to some of its characteristics which are common to most developing nations. For one foreign firm tend to have dominance in whichever sector they enter. For example even though Pakistan and India are known for their food, the local chains have been massively pressurized into submission by foreign chains like Pizza Hut, Burger King Etc. The same thing is happening with the textile industry of Lesotho. Secondly Lesotho is also faced with issues like political instability and disease and this is happening in most developing countries as their political environment is never stable and health is not a priority for government. World Bank and IMF can play an important role by offering loans for industry development...
It is instead subsistence agriculture where 86% of Lesotho's 1.9 million populations is employed. Textile sector has more women workers than men. Mining and agriculture are other important sectors in the economy. Mining used to be a heavy employer with more than 112,000 people employed in that industry but when South Africa decided to replace half of the workforce with its own people, the employment contribution of mining industry was reduced significantly. Other major export of the country has been water and…
Textile even though a sizeable sector of the economy doesn't account for much of the employment in the country. It is instead subsistence agriculture where 86% of Lesotho's 1.9 million populations is employed. Textile sector has more women workers than men. Mining and agriculture are other important sectors in the economy. Mining used to be a heavy employer with more than 112,000 people employed in that industry but when South Africa decided to replace half of the workforce with its own people, the employment contribution of mining industry was reduced significantly. Other major export of the country has been water and South Africa annually pays 180 million rand to get water from Lesotho. The country should invest more in upgrading its agriculture sector because that is an important part of the economy and it should also focus on development of mining industry. The country can gain competitive advantage in agriculture if it employs latest technology while it can also focus on improvement of hydropower stations and building dams that would allow for higher water exports and also take care of the electricity problems in the country.
Trade Barriers
Lesotho initially gained duty free access to European markets under the Lome convention which also helped expand its garment industry as many companies moves from South Africa to Lesotho to avail this access. During the 1980s and early 1990s, the country enjoyed access to U.S. market due to quota system under MFA and ATC however it came with a heavy 17% tariff. For this reason Lesotho was more interested in exporting to European countries than America. By the end of 1990s however the country had no duty-free access to any major destination of the world. That is when AGOA came to save Lesotho's textile industry in 2000. It is scheduled to last till 2015 and the purpose of this legislation was to allow African countries duty free access to U.S. markets instead of giving them aid. Lesotho has however benefited largely from the Special Rule of AGOA which allows it duty free and quota free access to U.S. markets.
The significant natural deposits in rural areas are water, wildlife, woodlands and the environment as a whole. Rural areas like Bulilima-mangwe in Matabeleland, Mutoko and Kariba have actually had effective ecological plans that have actually brought to life the Communal Areas Management Program for Indigenous Resources (CAMPFIRE) which has concentrated on the development of neighborhood organizations particularly in rural areas for the management and sustainable usage of communal wildlife