Is Fair Trade Worth Its Cost? – Claar and Haight – The Association of Christian Economists

Is Fair Trade Worth Its Cost?

Victor V. Claar
Henderson State University

Colleen E. Haight
San Jose State University

Abstract: This paper extends the existing literature on fair trade by incorporating the latest empirical analyses as well as responding to recent claims that even if fair trade is deemed to be an inefficient or ineffective tool toward poverty alleviation, there may nevertheless be other compelling reasons to retain either the fair trade model or the fair trade label. The analysis contrasts the alternative trade organization (ATO) model of fair trade with the commodity-based Fairtrade International (FLO) model, and also discusses the recent departure of Fair Trade USA from the FLO. We conclude that commodity-based fair trade initiatives are simply not worth their opportunity cost.

JEL: F13, I38, O15, O19.

Keywords: fair trade, economic development, poverty, trade, exports

The Association of Christian Economists

An Academic Society for Christians in the Economics Profession

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