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A Survey of the Economics of Fair Trade

Author

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  • Dammert, Ana C.

    (Carleton University)

  • Mohan, Sarah

    (Carleton University)

Abstract

Fair Trade has spread in developing countries as an initiative aimed at lifting poor smallholder farmers out of poverty by providing them with premium prices, availability of credit, and improved community development and social goods. Fair Trade is also viewed as a niche market for high value products in a context of globalization and trade liberalization policies that affect smallholder farmers in developing countries. The question of whether Fair Trade affects the welfare of rural farmers, however, is particularly contentious. This paper provides a review of the Fair Trade literature, both theoretical and empirical, with a specific focus on the analysis of small-scale producer's welfare in developing countries. Our review shows that while most empirical papers have focused on the impacts of Fair Trade on prices and income, our review highlights the importance of limited market access and changes in productivity. Likewise, little is known about the impacts of Fair Trade on labor markets and human capital investments. Persistent methodological challenges make it challenging, however, to assess the causal impact of this certification and labelling initiative.

Suggested Citation

  • Dammert, Ana C. & Mohan, Sarah, 2014. "A Survey of the Economics of Fair Trade," IZA Discussion Papers 8167, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8167
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    References listed on IDEAS

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    Cited by:

    1. Friedrichsen, Jana & Engelmann, Dirk, 2018. "Who cares about social image?," European Economic Review, Elsevier, vol. 110(C), pages 61-77.
    2. Bosbach, Moritz & Maietta, Ornella Wanda, 2019. "The Implicit Price for Fair Trade Coffee: Does Social Capital Matter?," Ecological Economics, Elsevier, vol. 158(C), pages 34-41.
    3. Joachim J. Schouteten & Xavier Gellynck & Hendrik Slabbinck, 2021. "Do Fair Trade Labels Bias Consumers’ Perceptions of Food Products? A Comparison between a Central Location Test and Home-Use Test," Sustainability, MDPI, Open Access Journal, vol. 13(3), pages 1-17, January.
    4. Sylvaine Poret, 2019. "Corporate–NGO Partnerships through Sustainability Labeling Schemes: Motives and Risks," Sustainability, MDPI, Open Access Journal, vol. 11(9), pages 1-19, May.
    5. Dick Durevall, 2020. "Fairtrade and Market Efficiency: Fairtrade-Labeled Coffee in the Swedish Coffee Market," Economies, MDPI, Open Access Journal, vol. 8(2), pages 1-17, April.

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    More about this item

    Keywords

    developing countries; market efficiency; Fair Trade;
    All these keywords.

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • P46 - Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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