Summary
Fair Trade has spread in developing countries as an initiative aimed at lifting poor smallholder farmers out of poverty by providing them with premium prices, availability of credit, and improved community development and social goods. Fair Trade is also viewed as a niche market for high value products in a context of globalization and trade liberalization policies that affect smallholder farmers in developing countries. This paper provides an overview of the potential effects of Fair Trade, both theoretical and empirical, on small-scale producers in developing countries. Our review discusses the empirical evidence on prices and income, as well as the importance of limited market access and productivity. We discuss evidence on labor markets and human capital investments as well.