In public perception, Northern countries accumulate wealth at the costs of Southern countries. Therefore, Fair Trade has been born to abandon the unfairness within the North-South trade relationship due to globalization and to create fair rules for world trade. Coffee is hereby of symbolic character for the global Fair Trade movement and has still the largest share within the Fair Trade market. Furthermore, its origin lies in Ethiopia. Accordingly, it is the largest African coffee producer and still provides the original Arabica coffee bean that shows the greatest genetic pool in the world. Therefore, in the following paper Fair Trade in the Ethiopean coffee market will be analyzed from an economic ethics perspective applying the Ordonomic research approach. This is a rational choice analysis which looks on the interdependency of institutional rules and mind categories within the globalizing context. By using the three-tiered model, answers to three main questions will be given. The first concentrates on which dilemma structures are prevailing in the North-South trade relationship. The second focuses on conflicts which are present in public discourse and finally the third question asks for implications that are given for the rule-setting process and how Fair Trade works hereby as an instrument of New Governance. It will be shown that moral commitments initiated by Fair Trade help to overcome prisoner dilemmas and the deficit rule-framework in the global coffee market. New Governance and Global Corporate Citizenship are thereby complementary. Finally, Fair Trade will be examined with regard to its sustainability according to the three ESG criteria of sustainability. The focus is hereby set on success as well as challenges and deficits FairTrade faces nowadays and in future.
Table of Contents
1. Fair Trade within the coffee market
1.1 Fair Trade development as response to globalization
1.2 The coffee paradox and fair traded coffee in Ethiopia
2. New Governance from an Ordonomic perspective
2.1 New Governance supporting state: Analysis based on the three-tiered model
2.2 New Governance types of commitment
2.2.1 Individual self-binding commitments
2.2.2 Collective commitments
2.2.3 Binding services
3. Fair Trade as an instrument of New Governance: Analysis from an Ordonomic perspective
3.1 Identification of dilemma structures from North to South
3.2 Solution approach through Fair Trade along the whole value chain
3.2.1 Individual self-binding commitments within the coffee market
3.2.2 Collective self-binding commitments within the coffee market
3.2.3 Binding-services within the coffee market
3.3 Properties of Fair Trade: Challenges and deficits in day-to-day application
Research Objectives and Themes
This thesis examines Fair Trade in the Ethiopian coffee sector through an Ordonomic research perspective, utilizing the three-tiered model to analyze how the movement functions as an instrument of New Governance to overcome social dilemmas within the global economy.
- Application of the Ordonomic research approach to global trade
- Identification of dilemma structures in the North-South trade relationship
- Evaluation of Fair Trade commitments (individual, collective, and binding services)
- Analysis of sustainability through the three ESG (Environment, Social, Governance) criteria
- Investigation of challenges and deficits in current Fair Trade implementation in Ethiopia
Excerpt from the Book
1.1 Fair Trade development as response to globalization
Fair trade is originally born by a religious movement in the 1940s in the United States. At the beginning, there were only small alternative trade organizations (ATOs) and third world shops which sold handicraft products in order to support by sales revenue the Southern development. At that time, the Northern and Southern world seemed to develop in different ways. While the Northern wealth accumulation has been increasing enormously, the Southern countries lagged behind this strong industrialization process. With the increase in globalization, the perception has been more and more focused on this opposed development which is represented by the conflict of Northern wealth accumulation at the cost of Southern welfare. This contrarian development driven by global competition is known as a “raise-to the bottom” development which is originally referring to Thomas Malthus. He was convinced that self-guided behavior within competition leads to impairment of others and causes, thereby, a collective self-damage. In contrast, Adam Smith proposed a “raise-to-the top” scenario within competition where win-win potentials can be realized through the agreement upon common interests. Following, ATOs have been founded in the North to create public awareness of inequality and unfairness within global trade. They make use of a direct marketing instrument in order to achieve a closer connection between the producers in the South and the consumers in the North. This is aimed at supporting more ethical consumption and consumer consciousness. Their original idea has been to reframe the trade within the globalizing context and to create more fairness and equality along the value chain by “trade-not-aid”. Greater justice has been the goal within the North-South trade relationship. Therefore, it has not been a social movement completely against globalization and international trade. On the contrary, it has been argued that international trade is beneficial for both, the industrialized as well as the developing countries if the game is embedded in fair rules. The fair treatment through commitments has been thought as the solution for the “raise-to-the bottom” development within the global competition by overcoming the demand for sacrifices and moralizing.
Summary of Chapters
1. Fair Trade within the coffee market: Provides the historical context of Fair Trade development as a reaction to globalization and introduces the unique challenges of the coffee sector in Ethiopia.
2. New Governance from an Ordonomic perspective: Establishes the theoretical framework using the three-tiered model to explain how institutional rules and moral commitments can solve social dilemmas.
3. Fair Trade as an instrument of New Governance: Analysis from an Ordonomic perspective: Applies the theoretical model to analyze specific dilemma structures in the coffee value chain and evaluates the efficacy of different Fair Trade commitment types regarding ESG criteria.
Keywords
Fair Trade, Ordonomics, New Governance, Coffee Paradox, Ethiopia, Three-tiered model, Prisoner Dilemma, Sustainability, Corporate Citizenship, ESG criteria, Value Chain, Social Dilemmas, Institutional Rules, Development, Global Trade
Frequently Asked Questions
What is the fundamental focus of this thesis?
The work focuses on analyzing Fair Trade initiatives in the Ethiopian coffee market using the Ordonomic research approach, specifically examining how Fair Trade functions as a tool for New Governance.
What are the primary themes discussed?
The central themes include the transformation of the global coffee trade, the identification of social dilemma structures, the role of moral commitments, and the application of sustainability criteria (ESG).
What is the primary objective of the research?
The objective is to explain how Fair Trade attempts to overcome Pareto-inferior outcomes (dilemmas) in global trade and to evaluate its current success and future challenges in the context of the Ethiopian coffee industry.
Which scientific methodology is applied?
The paper applies the Ordonomic research approach, which utilizes a rational choice analysis of the interdependency between institutional rules and semantic mind categories, specifically using the "three-tiered model".
What topics are covered in the main body of the work?
The main body identifies dilemma structures along the coffee value chain from North to South, evaluates different commitment types (individual/collective), and assesses Fair Trade's performance using ESG dimensions.
Which keywords best characterize the study?
Key terms include Fair Trade, Ordonomics, New Governance, Ethiopia, Coffee Paradox, and Sustainable Development.
How does the author define the "Coffee Paradox"?
The author defines it as a situation where producers in the South receive decreasing returns for raw materials, while Northern countries accumulate wealth through symbolic value addition and branding.
What role does the "three-tiered model" play in this analysis?
The model serves as the analytical core, separating the basic economic game, the political rule-setting level, and the public discourse level to explain how incentives and rules can be reframed to create win-win scenarios.
Does the author conclude that Fair Trade has achieved all its goals?
No, the author highlights that while Fair Trade has successfully improved farmer security and transaction stability, it still faces significant challenges regarding environmental protection and the actual fairness of the value chain distribution.
- Quote paper
- Maria Göhring (Author), 2011, Fair Trade Initiatives in the Ethiopean Coffee Market, Munich, GRIN Verlag, https://www.grin.com/document/176134
