Fair Trade organic coffee production in Nicaragua — Sustainable development or a poverty trap?

This article assesses the impact of Fair Trade organic coffee production on the well-being of small-scale farmers in Nicaragua. Studying the results of organic management is crucial for evaluating the advantages of Fair Trade because approximately half of all Fair Trade coffee is also organically certified. A wide range of farmers, representatives of cooperatives and export companies in Nicaragua were interviewed during seven months of field work between 2005 and 2008. Fair Trade organic production raises farmer income when low-intensity organic farming is an alternative to low-intensity conventional farming. However, low-intensity farming produces very little coffee in the case of the most marginalized farmers, keeping these farmers in poverty. With higher intensities of management, the economic advantages of Fair Trade organic production largely depend on prices in the mainstream market.     

Credibility of propensity score matching estimates. An example from Fair Trade certification of coffee producers

Propensity score matching (PSM) is an increasingly popular method for evaluation studies in agricultural and development economics. However, statisticians and econometricians have stressed that results rely on untestable assumptions, and therefore, guidelines for researchers on how to improve credibility have been developed. We follow one of these guidelines with a data set analysed by other authors to evaluate the impact of Fair Trade certification on the income of coffee producers. We provide thereby a best practice example of how to evaluate the credibility of PSM estimates. We find that a thorough assessment of the assumptions made renders the data we use not suitable for a credible PSM estimation of the effects of treatment. We conclude that the debate about the impact of Fair Trade certification would greatly benefit from a detailed reporting of credibility checking.     

Book Reviews

Books reviewed: J. N. Bhagwati and R. E. Hudec: Fair Trade and Harmonization: Prerequisites for Free Trade? Volume I, Economic Analysis; Volume 2, Legal Analysis. The Japan Commission on Industrial Performance:Made in Japan: Revitalizing Japanese Manufacturing for Economic Growth     

ANTECEDENTS TO MARKET ORIENTATION IN THE WORKER COOPERATIVE ORGANIZATION: THE MONDRAGON GROUP

Given the socio‐economic importance of cooperative firms and in the light of evidence that they are an effective option for competing in complex environments, an intensive examination of their organizational model is required. It is significant that some of the most consolidated worker cooperative organizations have focused on Market Orientation. The central purpose of this research is therefore to examine the influence of a set of internal antecedents of market orientation found in cooperatives. We shall then verify the possible benefits of market orientation on their business performance. The subject of this analysis will be the worker‐owned businesses that make up the Mondragon cooperative group, a global pioneer in democratic business practice.     

How do Migrants Choose Their Destination Country? An Analysis of Institutional Determinants

We analyze the effects of socio‐economic and institutional determinants, especially labor‐market institutions and features of social protection systems, on migrants’ location choices. Based on micro‐data for France, Germany, the UK, and the USA, we study migration to one of these four countries using a multinomial choice framework. Our estimates confirm conventional results regarding wages, networks, and unemployment rates. In addition, we find that there are indications of “insider–outsider effects” for union coverage and unemployment benefits, while employment protection does not have a clear‐cut impact on migration. Good education and health systems tend to attract migrants, while generous pension systems deter them.     

Trade and the Recognition of Commercial Lingua Francas: Russian Language Laws in Post‐Soviet Countries

Trade has the potential to influence a wide range of political and social outcomes. Using the post‐Soviet context, we examine how language policies – vital components for how minorities are treated with far‐reaching economic consequences – are influenced by trade. We argue that while ethnic politics and colonial legacies are both important in shaping language laws, it is important to recognize that the Russian language remains a significant commercial lingua franca in the region. When economic exchanges between Russia and other post‐Soviet republics are frequent, governments are more likely to adopt pro‐Russian language laws as a practicality and to maintain favor with the Russian government and Russian‐speaking businesses. Using an original dataset covering all Russian language‐related laws in the former Soviet states from 1992 to 2009, we find a significant and positive relationship between trade and pro‐Russian language laws. These results are robust even when we (1) instrument for Russian import levels and (2) consider the Baltic effect, spillovers from cultural affinity, and the uniqueness of fuel exports.     

Fair trade certification as oversight: an analysis of fair trade international and the small producers' symbol

In this article we analyse Fair Trade as a form of non-state regulation, building on the literature on the internal politics and governance of Fair Trade International (FTI) certification. We focus on recent developments in the FTI certification system, including the split of Fair Trade USA from FTI and the emergence of the Small Producer's Symbol (SPP) as an alternative to FTI certification. We highlight the role of the three regional Producer Networks, in particular the Latin American Producer Network, the CLAC, in the politics and governance of the FTI system. In order to analyse these issues we employ an alternative reading of Karl Polanyi's work in relation to Fair Trade. We problematise the claim made by some in the literature that FTI certification is an example of Polanyi's concept of re-embedding. Instead, we draw on Polanyi's concept of oversight to analyse Fair Trade certification. We argue that the emergence of the SPP out of the CLAC shows promise for being a mechanism of oversight more reflective of Polanyian re-embedding than FTI certification. We also emphasise how the growth of the SPP and the pressure from the Producer Networks have prompted governance reform within the FTI system.     

COMMENTS ON MARVEL: HOW FAIR IS FAIR TRADE?

Each of the papers in this symposium concludes with policy recommendations regarding the legality of resale price maintenance (RPM). The legal standard used to judge RPM affects the entire universe of manufacturer control over resale prices. Therefore, policy recommendations are valid only to the extent that the proffered economic theory applies to a substantial portion of that universe. My comments focus primarily on how much of the RPM universe is addressed by Marvel's (1985) explanations in “How Fair is Fair Trade?” If an economic theory, no matter how interesting academically, describes only a small minority of RPM instances, it should not form the basis for public policy.     

Can neighbourhoods change the decisions of youth on the margins of university participation?

Abstract This paper uses the Youth in Transition Survey (YITS) to estimate the relationship between neighbourhoods and university participation among Canadian youth. Neighbourhood quality is proxied by the fraction of neighbourhood adults with a Bachelor's degree. The estimated effect is identified using neighbourhood variation within high schools. The paper also tests whether the effects differ by family background and children’s reading skills. Neighbourhoods do not affect university participation among youth drawn from the tails of the socio‐economic distribution. Neighbourhoods have the largest effect on youth drawn from the middle of the socio‐economic distribution who also have above median reading skills.     

Poverty,inequality and growth in Albania

This article studies the distribution of well‐being and, specifically, the degree of poverty and deprivation in Albania, in the years 2002 and 2005, using Living Standard Measurement Surveys (LSMS). The distribution analysis is performed by applying both one‐dimensional and multidimensional approaches, in particular to better examine the link between economic growth, inequality and poverty in Albania. Furthermore, by estimating a non‐monetary indicator, as proposed by Bossert et al. ( 2007 ), and a nonlinear principal component model together with a probit model, the paper focuses on the multidimensional measures of poverty to address the relationship between poverty and socio‐economic factors. Our evidence shows that absolute poverty decreased from 2002 to 2005 while national relative poverty increased; economic growth reduced poverty in Albania over the observed period; and living in rural and mountain areas, being female, poorly educated and with a large family increased the probability of suffering from deprivation.     

SOCIAL COOPERATIVES IN ITALY: ECONOMIC ANTECEDENTS AND REGIONAL DISTRIBUTION

Social cooperatives represent the most notable form of non‐profit organizations operating in Italy in the social services field, the birth and development of which has been strongly linked to, and conditioned by, the needs and resources of territories and communities. This paper intends to demonstrate how certain socio‐economic factors, recognized in economic literature as antecedents of the development of social enterprises, may account for the spread of social cooperatives in different Italian regions. Furthermore, the research results demonstrate an inter‐regional differentiation of the shape social cooperation has entered into in Italy.     

A Socio‐Economic Profile of Families in the First Wave of the Longitudinal Study of Indigenous Children

‘Footprints in time’, the Longitudinal Study of Indigenous Children (LSIC), has been developed to provide insights into how Indigenous children's early years affect their development. Socio‐economic factors are at the core of many analyses of child development and well‐being and this article provides a socio‐economic profile of Indigenous families in the first wave of the LSIC. Utilising 12 indicators that are organised into three groups—primary carer, family income and financial stress—the article provides an extensive overview of the full range of socio‐economic data available in the LSIC. The article examines whether, when taken together, the different indicators tell a consistent story. It finds that, broadly, they do. The article raises some issues about the reporting of certain government payments and highlights the importance of family size when looking at family income. The article concludes by pointing to the potential for future research that these data present.     

The Mercantilist Index of Trade Policy*

We introduce an index of trade policy restrictiveness defined as the uniform tariff that maintains the same trade volume as a given tariff/quota structure. Our index overcomes the problems of the trade‐weighted average tariff: It avoids substitution bias, correctly accounts for general equilibrium transfers, and takes import volume instead of welfare as benchmark. Empirical applications to international cross section and time‐series comparisons of trade policy confirm our theoretical results: Trade‐weighted average tariffs generally underestimate the true height of tariffs as measured by the trade‐volume‐equivalent index; this in turn always underestimates the welfare‐equivalent index.     

THE SIZE OF FISCAL MULTIPLIERS AND THE STANCE OF MONETARY POLICY IN DEVELOPING ECONOMIES

Implementing fiscal programs during monetary policy expansions seems to improve significantly their economic stimulus. We find this result by estimating the effect of government consumption shocks on gross domestic product (GDP) using a panel of 23 developing economies. Our goal is to better understand the reasons for the low fiscal multipliers found in the literature by performing estimations for alternative exchange rate regimes, business‐cycle phases, and monetary policy stances. In addition, we perform counterfactual simulations to analyze the possible gains from fiscal‐monetary policy coordination. Our results also show lower multipliers in developing economies with flexible regimes, especially during economic slowdowns. (JEL E62, E63, F32)     

Économie sociale et nouveaux pays industrialisés: Le cas de la Corée du sud

For more than 30 years, South Korea has experienced exceptional economic growth. In the context of such an accomplishment, is any room left for the social economy organizations? The analysis of available legal and economic data shows that whereas these organizations have a nonnegligible place in the Korean economy, on the one hand their role is limited in comparison with their western counterparts, and on the other hand the boundaries between public, capitalist and social economy sectors are blurred. The family in Korea is the most natural factor of socio‐economic integration; in many areas the family substitutes for intermediaries like the social economy organizations. The economic crisis that touched Korea at the end of 1997 contributed to the weakening of the traditional model of family solidarity and offered new prospects for the Korean social economy, especially in the field of social protection and social services. This is similar to what seems to be evolving in Europe.     

ECONOMIC INTEGRATION AND TRADE PROTECTION: POLICY ISSUES FOR SOUTH ASIAN COUNTRIES

This article shows that economic integration acts as a viable instrument of protection for individual countries, when benefits of discriminatory protectionist policies like the multifiber arrangement are withdrawn. Using United Nations Conference on Trade and Development statistics for 1995–2013 and applying an extended version of the augmented gravity model, we show that the formation of a trade bloc like the South Asian Free Trade Area unambiguously promotes member countries' exports of textile and clothing at both intra‐bloc and extra‐bloc levels. The expansion of south‐south trade is facilitated by the growing intraregional trade in intermediate goods. The creation of a regional value chain can shield the smaller countries in the context of enhanced global competition. (JEL F14, F15, F13)     

Classifying and valuing ecosystem services for urban planning

While technological progress has fostered the conception of an urban society that is increasingly decoupled from ecosystems, demands on natural capital and ecosystem services keep increasing steadily in our urbanized planet. Decoupling of cities from ecological systems can only occur locally and partially, thanks to the appropriation of vast areas of ecosystem services provision beyond the city boundaries. Conserving and restoring ecosystem services in urban areas can reduce the ecological footprints and the ecological debts of cities while enhancing resilience, health, and quality of life for their inhabitants. In this paper we synthesize knowledge and methods to classify and value ecosystem services for urban planning. First, we categorize important ecosystem services and disservices in urban areas. Second, we describe valuation languages (economic costs, socio‐cultural values, resilience) that capture distinct value dimensions of urban ecosystem services. Third, we identify analytical challenges for valuation to inform urban planning in the face of high heterogeneity and fragmentation characterizing urban ecosystems. The paper discusses various ways through which urban ecosystems services can enhance resilience and quality of life in cities and identifies a range of economic costs and socio‐cultural impacts that can derive from their loss. We conclude by identifying knowledge gaps and challenges for the research agenda on ecosystem services provided in urban areas.     

ASIA'S ROLE IN THE GLOBAL ECONOMIC ARCHITECTURE

The global economic and financial landscape has been transformed over the past decade by the growing economic size and financial power of emerging economies. The new Group of Twenty summit process, which includes the largest emerging economies, has established high‐level international policy cooperation in this new setting. This article argues that effective global economic governance will also require changes in key global organizations—such as the International Monetary Fund, World Bank, World Trade Organization, and the Financial Stability Board—and closer collaboration between global and regional organizations. We suggest that federalism be introduced on a global scale by creating hierarchies of global and regional organizations with overlapping ownership structures in various functional areas (as is already the case with the World Bank and regional development banks in the area of development finance). Asia could contribute to this transformation by building effective institutions to promote macroeconomic and financial stability and deepen regional trade and investment integration. Similar logic could be applied to a broader issue of providing international public goods, such as environmental and climate protection, communicable disease control, and disaster risk management. (JEL F02, F13, F33, F55, O59)     

The effect of fair trade affiliation on child schooling: evidence from a sample of Chilean honey producers

We evaluate the impact of Fair Trade (FT) affiliation on child schooling within a sample of Chilean honey producers with a retrospective panel data approach. From a theoretical point of view, we argue that FT should have a positive effect on child schooling since it generates a short-run pure income effect together with a medium-run productivity effect on both adult and child wages. On the other hand, because of the higher productivity generated by the medium-run effect, the opportunity cost of child education increases if they work with their parents. The direction of the impact of FT affiliation on child schooling is therefore uncertain and requires empirical testing. Our econometric findings document a positive and significant impact of affiliation years on child schooling after controlling for endogeneity and heterogeneity between the treatment and control sample.     

Resisting Protectionism after the Crisis: Strategic Economic Discourse and the EU–Korea Free Trade Agreement

In 2006 the European Commission announced its Global Europe strategy, which proposed pursuing a series of ambitious Free Trade Agreements (FTAs) premised on exchanging the EU's remaining ‘pockets of protection’ for market access. The first of these agreements was signed with South Korea in October 2010. This article asks how the Commission's Directorate-General (DG) for Trade could successfully conclude this agreement in the aftermath of the Financial Crisis. Given a strong mobilisation of protectionists with access to policy-makers, this liberal policy outcome cannot be explained purely in terms of institutional insulation, as in much of the literature on EU trade policy, nor be simply ‘read off’ from the material interests of societal actors. This article, therefore, develops a constructivist framework which broadens our understanding of the power of strategically invoked economic discourses. By developing a novel analytical strategy to determine the intentional invocation of such discourses, it is able to show how DG Trade constructed an ideational imperative for liberalisation in Global Europe, enabling it to overcome opposition to the EU–Korea FTA. Beyond its contribution to constructivist scholarship, this article draws attention to the neglected dimension of ideas in trade policy and highlights the continued purchase of neoliberalism after the crisis.