Bristol MBA
Management Information from the West of England
  Login / Password:

Potential of Fair Trade for Developing Countries
Author: Iņaki Recondo

Free Trade agreements rather than encouraging prosperity and democracy have dramatically increased economical differences between developed and developing countries. It is not clear that such agreements as NAFTA and the future FTAA have delivered or will deliver the promises of increasing wealth, creating jobs or giving strength to democracy.

Fair Trade has its origin in responding to the unfair sides of Free Trade. Unfair techniques such as tariffs, quotas, subsidies and dumping policies are trade barriers which developed countries impose on developing countries to make the export of their goods and products even more difficult.

Traditionally, Fair Trade was focused on the agricultural industry, bringing the benefits of fair-trade to local communities of developing countries and helping these small-scale producers to gain direct access to international markets as well as to develop the necessary business capacity to compete in the global market.

However, although Fair Trade organizations sell their products successfully in the industrialised world, they need to look at other areas, apart from agriculture. In this way, there are some attempts of applying fair-trade principles to other areas such as the tourism industry. The long term success of Fair Trade will depend on these new initiatives that will make Fair Trade grow even more globally and deliver more benefits to poor people.

The scaling up of fair trade will only be successful if it achieves to incorporate itself into the mainstream businesses by making its supply chains more efficient and reducing costs.

Although Fair Trade was born out of politics, it has the chance to influence the development of some government policies on international trade and development issues. In fact, some fair-trade organizations collaborate in an advocate role with the Parliament of the European Union. Today WTO is more aware of fair-trade principles, nevertheless there are a number of critical issues such as the access to markets, quota agreements and product labelling that need to be addressed.

Fair trade is not the only ethical movement that is aware of the conditions and rights of the marginalized people. Other ethical approaches such as ethical trade and sustainable development have similar aims as Fair Trade has, so they could combine forces together to enhance the required minimum standards for the poorest.

In conclusion, Fair Trade is not the answer to the problems that developing countries have with trade and it needs actively and effectively to work for and encourage consumers to push for changes in trade rules that deal with the macro economic issues. Beyond all criticisms of its achievements, Fair Trade was the wake up call we all needed in the industrialised world, to understand that our consumer behaviour can influence the welfare of the poorest countries.

Search for MBA programmes right here from this page:

Home | Life in B-School | Meet the People | MBA Events | Life and beyond | Global Economics | Technology Corner | Dissertations / Research | Resource Center | about us / FAQ | Literature DB