First, I need to point out that this is a really quick post, I haven't done much research as it is late in the night and I don't have much time on this one. So if there is anything you think is unfairly biased or plainly wrong please do point it out in comments, I would really appreciate that.
This article begins as a quick thought during one of the tutorial group discussions of which I am in charge. We were discussing about the globalisation of production and the topic shifted to Fairtrade and their practices in developing economies. I asked one of my tutees that why Fairtrade does not set up factories in the area where they grow coffee and bananas etc., to better help local farmers? Her guess was that this may introduce unwanted environmental impact and damage to local culture as well. I was not totally content with this answer although I think this is a brilliant enough answer for a first year student. Environmental impacts can be assessed and controlled; cultural invasion and mingling is happening anyway; but local people have the rights to have better life and more opportunities in international competitions. This calls for better institutions and infrastructure, which does not happen merely by sending in more money like Fairtrade does, as proved by Chinese experience in our poverty reduction campaigns.
The current world production pattern of extracting raw materials from developing economies, produce them in countries with cheap labour, under the command of offices from developed countries, and sold worldwide is determined to a quite large extent by colonism history and capitalism world economy. Comparing developing economies in Asia and Africa or South America, especially between countries like South Korea, Singapore and countries like Bolivia and Ghana. They were all exploited in 19th and early 20th century, and reached independence at about the same time, why the Asian countries are walking into modernization with established legal and political institutions and greatly improved livelihood while their African and Latin American counterparts are stilled bogged by corruption, lack of education and low industry output? One of my tutees brilliantly suggest that these continents are being exploited in different manners. In Asia, for some reason the labour resources are what the colonizers seek about, while in Africa it is largely natural resources. Thus Asia enjoys establishment of manufacture industries while only resource extraction industry was available in Africa and South America when they reach independence. On such different base, the different paths of development and continued being exploited were determined.
Although not sounding political correct, I think this is an interesting theory, I don't know if scholars mentioned it in their works already. In the following discussion we identified more factors contributing to different development levels: skill of workers, education, social institutions, technology, and transportation. The role of the last is pronounced in the difference between North Africa and central African countries, thanks to the former's developed transportation system and advantage of Mediterranean Sea. In a word, these things are one thing all development workers seek to build: capacity to develop further. Pay more to coffee-picking farmers is good, but without another forces to build capacity, the farmers would have no place good to invest their income, and further change won't take place.
Yes, I believe by setting up local factories by Fairtrade and export to Europe chocolate bars instead of fermented chocolate seeds will help local people better. Technology can be spread to these economies, and local people won't have to buy from, say, Nescafe, and be exploited for a second time (the first when Nescafe buys from local warehouses). Why this did not happen? Again I think it is the almighty economy at play here. One reason I can think of is that the chocolate has to be exported to areas with sufficient purchase power, say Europe, yet the strict standard used to protect its people from bad food would make the cost of setting a factory in the Fairtrade partner country so prohibitive that it is simply not feasible economically.
How to deal with this problem? Again quick but surely far from perfect answer: as part of the international or multinational firms' social responsibility, they need to invest a portion of their sales income in helping the country of source and Fairtrade develop infrastructure and education of workers. When the condition is met a local factory should be established, meeting environmental requirements and managed by local staff. Firms like Nescafe do [set factories](http://www.nescafe.com/NR/rdonlyres/CA26CACB-CE8A-4F5A-BCFF-8C908DF55B77/67164/whatcanbedone1.pdf) in ``developing countries'', however to what extent this has helped knowledge and skill transfer is absent from their report.
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