Economy Is Becoming Increasingly Interconnected.

¶ … economy is becoming increasingly interconnected. If you have any doubts, look at the label on your clothing. "Buy a T-shirt at Wal-Mart fleece at J.C.

Penny or Hanes panties anywhere in the United States, and there's a halfway decent chance that they were stitched together" in Africa, "in an acre-size garment factory crammed with thousands of frantically clacking sewing machines." (Wines, 2005) in one such factory in Lesotho, virtually the entire output of the factory or "25,000 items of clothing daily, is America-bound." (Wines, 2005) but it is often said that when America sneezes, the rest of the world gets an economic cold -- and this is particularly true of the young, developing economies of the world.

According to a March 12, 2005 article in the New York Times, entitled, "Dollar's Fall Silences Africa's Garment Factories," one African factory owner mourned, "Two thousand people work here, and unfortunately last week I had to retrench 500 people, because there are no orders." (Wines, 2005) Although one garment union official complained that "the American buyer is not coming to Lesotho to buy," Michael Wines suggests the problem of the decline in the African garment industry is not so much that buyers from America are not coming to buy, rather it is the devalued American dollar, and its headlong plunge in value in contrast to the Euro and other world currencies.

It is simply no longer as economically advantageous for American producers to go to Africa to exploit the lower wages African workers, because of the currency exchange rate between the two nations. "Three years ago, Lesotho's garment factories had to sell only $56 worth of clothes to stores in the United States to cover the monthly wage of 650 maloti [the local currency] for a sewing-machine operator.

Today, that same salary consumes $109 in sales." (Wines, 2005) Nothing has changed, other than the fact that the dollar is less highly valued, resulting in nearly double the labor costs in Africa. Today, the weak dollar fetches less than 6 maloti in contrast to 8.5 as before.

In contrast to Africa's variable exchange rates over the wide continent, with its many nations, China, "keeps its currency tightly pegged to the dollar," and has begun to pursue the American market much more avidly, especially since it has been freed from the "so-called multifiber arrangement, which for decades set nation-by-nation quotas and capped its garment exports to the developed world." (Wines, 2005) This comparison also highlights how different nation's currency policies can cause developing nations to be at war, rather than at harmony with one another in terms of competing for United States dollars.

"And for good reason: garment makers represent as many as 9 in 10 manufacturing jobs" in many impoverished African nations. (Wines, 2005) Yet the American consumer may seem to be above this trade war fray between developing nations, no pun intended, as "American shoppers may register the dollar's fall, if at all, as an irritating uptick in the prices of imported goods." (Wines, 2005) With a progressive government and extremely low tax rates, Lesotho used to be one of the biggest winners. But the weak dollar is particularly.