On the efficiency of fair trade

The first part of this paper reviews five major theoretical approaches that describe the fundamental causes of poverty, with particular attention to what these theories imply about government policy towards markets and the need for immediate poverty alleviation. Different causal theories have very different policy implications; it is difficult to recommend specific anti-poverty policies with making assumptions about the nature of economic markets and of individual behavior. The paper ends with comments about how to make these choices, arguing that the greater moral onus one associates with poverty, the more willing one should be to adopt less efficient strategies that do more to raise incomes among the poor. The interconnections between markets and social and political systems—which often disadvantage poor populations—suggests that some market regulations and targeted programs may be necessary to reduce poverty, especially if these can be implemented with minimal corruption and monitored for effectiveness.