An empirical study on fair trade : how effective is it on export values?

Abstract

This thesis analyzes an ambitious attempt in the history of trade, Fair Trade --an initiative that aims at benefiting producers from developing countries through setting minimum prices, paying producer premiums, allowing them to enter developed markets, and taking measures for improving productivity. Although Fair Trade is of increasing importance in both practical and academic areas, the current study is the first one that formally studies its effects. This thesis studies empirically, using a unique dataset, whether participation in Fair Trade helps countries increase their agricultural exports. The empirical results show that the effect exists only in some cases: participation in Fair Trade can be associated with an increase in the agricultural exports of middle-income and Latin American countries, but not of other participating countries. Such a differential effect might be attributed to Latin American countries’ importance in Fair Trade products, Fair Trade products’ importance to Latin American countries’ exports, and differences in countries’ absorptive capacities.