Will Fair Trade Coffee Stunt Your (Economic) Growth?: Response

Abstract

Today fair trade follows two approaches. One approach, pioneered a half century ago by organizations such as Ten Thousand Villages, works with artisans to share their unique handiwork with potential buyers with whom they otherwise would not connect. Laura Raynolds and Douglas Murray refer to this as the alternative-trade-organization approach (ATO). The second approach — currently surging in popularity — does not involve uncommon goods. This newer approach focuses instead on a large and growing array of products and commodities that are relatively common in both quantity and quality, such as coffee, tea, rice, honey, bananas, and soccer balls — to name a mere few. Trade in these goods is controlled worldwide by an umbrella organization called the Fairtrade Labelling Organizations International (FLO).

Keywords: fair trade, poverty, economic growth

JEL Classification: F13, F14, I38, O15, O19