Waylaid Dialectic

August 5, 2014

Does Fair Trade Work

Filed under: Trade — terence @ 8:43 am
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An interesting looking new NBER working paper from Raluca E. Dragusanu, Daniele Giovannucci, Nathan Nunn reviewing the economics of fair trade.

From page 11:

In side-by-side comparisons, Fair Trade certified producers do receive higher prices, follow specified work standards, and use environmentally-friendly methods. We review this evidence, but also explore the more difficult questions of interpretation. Are the changes that are correlated with Fair Trade production also caused by certification or is some other factor like the entrepreneurial capacity of the producer affecting both outcomes? What factors make producers more likely to join Fair Trade? What may happen to the advantages of receiving a higher price from being a Fair Trade producer as more producers seek to join? After taking these factors into account, the balance of the evidence does suggest that Fair Trade works—but the evidence is admittedly both mixed and incomplete.

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