The Relationship Between Fair Trade and Economic Development

Abstract

Recent years have witnessed an increasing trend of the utilization of fair trade as a strategy for promoting economic development for marginalized groups. Fair trade endeavors to foster social justice and social transformation by means providing better trading conditions, specialized infrastructure, and medical and environmental support, while enhancing consumer consciousness. The Fair Trade movement seeks to challenge the currently-dominant patterns of (un)fair trade practices by enabling marginalized producers to achieve better terms of trade through emphasizing ethical consumerism and promoting the ethos of reciprocity. In reality, while increasing the financial resources of producers is a main claim of fair trade organizations, the Fair Trade market is only able to secure better terms of trade and higher prices for a limited share of fair trade producers. Notwithstanding this insignificant in percentage, a growing number of households in the Global South relies extensively on fair trade market outlets and has succeeded ameliorate livelihoods of millions of marginalized producers. How far the Fair Trade market is able to influence price levels at the wider economy, encapsulate the focal point of the extensive examination. In fact, the price dynamics of the Fair Trade market has generated controversial arguments and perceptions among academics, policy makers and public thoughts. The intricate relationships between the price dynamics of fair trade markets, their creation of the wider economy are a subject that has attracted little academic exploration. This commentary provides an overview to address the above issues. The following section offers a brief review of the essential facts and implications of fair trade coffee and the attributes and goals of certification schemes. In the third section, the views on the relationship between the price dynamics of fair trade coffee markets and how it affects the economic conditions of fair trade and non-fair trade producers are examined. Conclusions are drawn in the final section.

Keywords fair trade, economic development, marginalized producers, ethical consumerism, social justice, price dynamics, market access, Global South.