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Resource The Fair Trade movement: an economic perspective
Type Scoping study, Desk study, Survey
Last update: 19/05/2011
Type: Scoping study, Desk study, Survey
Language English
Year of publication: 2011
Authors: Alexander Kadow
Download: www.gla.ac.uk/media/..
Summary Fair Trade (FT) products such as coffee and textiles are becoming increasingly popular with altruistic consumers all over the world. This paper seeks to understand the economic effects of this grassroots movement which directly links ethically-minded consumers in industrialised countries with marginalised producers in developing economies. We extend the Ricardian trade model and introduce a FT sector in developing South that offers a fair wage – the FTpremium. There are indeed positive welfare effects from FT but those comeat the expense of rising inequalities within South which are in turn a rational by-product of FT. The degree of inequalities depends on the specifics of the cooperative structures in the FT sector. Given the rigidities and inequalities FT introduces and rests upon, this form of alternative trade appears to be
only sustainable as niche movement.
Keywords: Fair Trade, comparative advantage, wage premium, inequalities, ethical
consumerism, cooperative.
Role Organisation
Network Organisation organisation details Fair Price and Fair Wages
List Keywords
1.1 Socio- economic Sector (OECD) 331 Trade  
1.2 Institutional dimension Social- livelihood systems/ Gender  
1.4 Target group(s) 2. SMEs/Private sector
6. General public/Opinion makers  
2.2 Production Chain 2. Production & Management
9. Consumption/Product Use
7. Marketing
8. Quality Control