The Rise of Market Approaches to Social Problems: The Case of Fair Trade and Its Uneven Expansion Across the Global South

Abstract

Abstract This study examines international market formation and expansion with a focus on the social regulation of economic activity. I use fair trade as a strategic case because of its centrality in the growing field of civil society–based initiatives that address social and environmental problems via market mechanisms as well as its comparatively long history that encompasses a substantial change in organizational structure. Using a comprehensive data set of current and former World Fair Trade Organization members, I conduct a series of fixed effect zero-inflated negative binomial regression analyses. Results reveal the variable significance of macro-historical conditions and organizational structures that underlie the market’s uneven growth across the global South. I find that organizational linkages to world society, a history of British colonization, and the presence of Peace Corps volunteers enable market formation and expansion. By contrast, French and Portuguese colonial ties have a constraining effect. Additionally, I find that the organizational structure of the market itself is both directly and indirectly consequential for its growth. The shift from idiosyncratic direct sales networks to a formalized labeling system facilitates market expansion and amplifies the importance of global institutions but diminishes the impacts of international political domination.