Non-Agricultural Fair Trade: An Analysis of Economic and Developmental Benefits and Challenges
Trackman, Louisa C.
- Submitted in partial fulfillment of the degree of Master of Arts in Law and Diplomacy at the Fletcher School of Law and Diplomacy. Abstract: Fair trade has experienced significant growth in the past decade, particularly in the agricultural sector. An expanding body of literature analyzing fair trade reflects this growth; however, this literature overwhelmingly ignores non-agricultural fair trade, ... read moredespite the fact that it makes up a quarter of the fair trade industry. The primary argument of this paper is that the failure to acknowledge or distinguish non-agricultural fair trade from agricultural fair trade results in an incomplete analysis of the benefits and challenges of fair trade because non-agricultural fair trade is characterized by several important features that differentiate it from agricultural fair trade. Some of these differences arise from institutional variations in strategy and structure, while others are a function of the agricultural and non-agricultural markets. These strategic and structural differences are outlined in Section 1, while the market differences are addressed in Sections 2 and 3. Although there is an abundance of literature regarding the benefits of fair trade, there is almost no analysis of fair trade's intended benefits using economic theory. Section 2 develops the economic theory behind the benefits of fair trade and applies this analysis, as well as the developmental benefits of fair trade identified in the literature, to both agricultural and non-agricultural fair trade. In addition it identifies benefits that are particular to non-agricultural fair trade. Section 3 utilizes the existing body of literature on the economic and development challenges of agricultural fair trade as an initial framework and discusses the applicability of these features to non-agricultural fair trade. It also identifies additional challenges that non-agricultural fair trade faces. Sections 2 and 3 demonstrate that not only is fair trade a useful tool for poverty reduction, but non-agricultural fair trade and agricultural fair trade should not mistaken for being the same tool due to differences in the demographics of the population that they reach as well as differences in the supply chain and product design, quality, and uniformity. Section 4 discusses the incomplete analysis regarding the effectiveness of fair trade as compared to other development interventions and the necessary steps and associated challenges of evaluating fair trade programs. This paper concludes that although agricultural and non-agricultural fair trade have the similar underlying goal of improving the livelihood security and well-being of economically disadvantaged producers in developing countries, as a result of the differing strategies and markets, these two varieties of fair trade function differently, affect different populations, and analysis of one should not be assumed to apply to the other.read less