Stanford Social Innovation Review : Informing and inspiring leaders of social change

SUBSCRIBE | HELP

Socially Responsible Business

How Fair Trade Grew

Variances in the experience of producer countries strongly affect how fair trade markets have evolved.

 
fair_trade_stamp

(Illustration by Ben Wiseman)

Editor’s Note: In June 2014, the Stanford Center on Philanthropy and Civil Society hosted its inaugural Junior Scholars Forum. The following article covers a not-yet-published research paper that was presented at the forum. To learn more about the paper, please .(JavaScript must be enabled to view this email address).

From coffee shops to grocery aisles, products that feature a Fair Trade logo are now ubiquitous in developing countries. But that’s a relatively recent development. Although the fair trade movement emerged in the 1950s, the current system—one that is built around certification and labeling—didn’t come along until 1987. Before labeling, only people who had connections to a direct sales network could buy fair trade goods.

Kristen Shorette, an assistant professor of sociology at Stony Brook University, has studied the factors that have constrained or enabled the fair trade movement. During the direct-sales era, she has found, one factor that determined the amount of fair trade production in a given country was its experience of being colonized by a European power. A legacy of British colonization tended to enable fair trade markets, whereas a legacy of French or Portuguese colonization tended to constrain fair trade. “A lot of the decolonization processes happened after World War II, when fair trade was just getting under way,” says Shorette. “The British worked to set up economic and political institutions so that their colonies would be successful following independence. The French and Portuguese really didn’t. They fought wars to keep those colonial relationships, and when [those wars] ultimately ended, they more or less severed ties with their colonies.” Another factor that correlated strongly with fair trade activity during the direct sales era was the presence of the US Peace Corps: The more Peace Corps activity there was in a country, the more robust its fair trade market was likely to be.

The advent of certification changed all that. “After the market got reorganized around the labeling system, colonization and Peace Corps ties no longer mattered,” says Shorette. “Even if you have a million Peace Corps volunteers in a country, it doesn’t predict any more or less fair trade activity.” Instead, what now predicts a high level of fair trade production is whether a country has ties to international NGOs—particularly those that promote human rights and environmental conservation. That’s because certification systems have become an increasingly common way to advance those goals. “The move to labeling negates the effect of international political ties, but it heightens the effect of being connected to world society,” says Shorette. Links to INGOs “don’t cause fair trade,” she explains. “But they are an indicator that a country is more in tune with global culture.”

Shorette located a list of all producer associations that belong to the World Fair Trade Organization, determined when each of them was founded, and compiled data on how many of them were present in 113 countries from 1970 to 2010. She then used a complex statistical regression to model changes in the level of fair trade activity in each country. “I expected the transition from a direct sales network to labeling to be important, but I didn’t expect it to have such a profound effect,” Shorette says. “[Labeling] doesn’t just enable the market; it changes how everything else affects the market.”

A hallmark of Shorette’s research is that it focuses not so much on the consumption of fair trade products as on their production. “What I really like about her paper is that it fills in the back story about what’s necessary for people to produce fair trade goods,” says Emily Barman, an associate professor of sociology at Boston University, who studies market-based efforts to improve social welfare. That information is crucial, Barman notes, for those who are “trying to figure out how to grow these types of markets, and how to grow other market-based solutions—such as impact investing or microfinance—to social problems.”

Kristen Shorette, “Institutional Foundations of Global Markets: The Uneven Emergence and Expansion of Fair Trade Production, 1970-2010.”

 
Tracker Pixel for Entry
 

Leave a Comment

 
 
 
 
 

Please enter the word you see in the image below: