Local Embeddedness, Upgrading and Skill Development: Global Value Chains and Foreign Direct Investment in Lesotho's Apparel Industry

The case study compares international and regional foreign direct investment in Lesotho's apparel industry, finding that regional investment from South Africa offers greater potential for sustainable development and production relocation compared to the rent-seeking, labor-exploiting nature of Taiwanese investment focused on US market access via AGOTS.

• Regional FDI from South Africa is more likely to result in deeper investor participation and the relocation of production functions due to proximity, whereas international FDI from Taiwan focused on exploiting cheap labor for US mass-markets, leading to minimal technology transfer or skill development.
• Taiwanese investment in the apparel sector is characterized as rent-seeking, specifically leveraging AGOA trade rents with little incentive for skill development, meaning the foreign investor themselves hinders further development.
• While South African FDI showed a greater incentive for continuous financial and technical investment, its growth was constrained by Lesotho's internal deficiencies, including low productivity, limited local capabilities, and poor institutional and physical infrastructure.

APA

South African Institute of International Affairs (2016). Local Embeddedness, Upgrading and Skill Development: Global Value Chains and Foreign Direct Investment in Lesotho's Apparel Industry. https://saiia.org.za/saiia-toolkit/local-embeddedness-upgrading-and-skill-development-global-value-chains-and-foreign-direct-investment-in-lesotho-s-apparel-industry/

Chicago

South African Institute of International Affairs. Local Embeddedness, Upgrading and Skill Development: Global Value Chains and Foreign Direct Investment in Lesotho's Apparel Industry. 2016. https://saiia.org.za/saiia-toolkit/local-embeddedness-upgrading-and-skill-development-global-value-chains-and-foreign-direct-investment-in-lesotho-s-apparel-industry/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Local Embeddedness, Upgrading and Skill Development: Global Value Chains and Foreign Direct Investment in Lesotho's Apparel Industry |date=2 June 2016 |url=https://saiia.org.za/saiia-toolkit/local-embeddedness-upgrading-and-skill-development-global-value-chains-and-foreign-direct-investment-in-lesotho-s-apparel-industry/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2016local, author = {{South African Institute of International Affairs}}, title = {{Local Embeddedness, Upgrading and Skill Development: Global Value Chains and Foreign Direct Investment in Lesotho's Apparel Industry}}, institution = {South African Institute of International Affairs}, year = {2016}, month = jun, url = {https://saiia.org.za/saiia-toolkit/local-embeddedness-upgrading-and-skill-development-global-value-chains-and-foreign-direct-investment-in-lesotho-s-apparel-industry/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }