Links between international trade, local food production, and household living standards: Empirical insights from West Africa

Abstract

Sustainable food production, responsible consumption, poverty reduction, and decent living standards are important global objectives reflected in the United Nations' Sustainable Development Goals (SDGs). In achieving these goals, agricultural trade plays a major role.Research has shown that benefits from trade liberalization include poverty alleviation, decreasing food prices due to production advantages and competition, and an increased variety of and access to food products. In the light of continuing poverty and food insecurity in low-and middle-income countries, imports and exports are crucial as they offer income gains for producers and improved access to affordable and nutritious foods for consumers.Trade bans or protectionist policies on the other hand can lead to income losses and higher food prices. However, not all population segments necessarily benefit from trade. A large share of the population in developing countries relies on agricultural production for their income, meaning that they may potentially benefit from higher food prices associated with trade restrictions. Results in the existing literature on the overall impact of agricultural trade on low-and middle-income countries are predominantly positive, but the existing trade-offs between liberalization and protectionism and the important distributional effects in different population segments are not yet sufficiently brought into the equation. This dissertation contributes to the literature by examining the links between international agricultural trade, local food production, household consumption, and living standards using three case studies in West Africa. The dissertation addresses gaps in the literature regarding measures to improve the conditions of trade, as well as consequences of market-distorting trade barriers on production, consumption, and welfare in developing countries.The first essay of this dissertation takes a look at the effects of Fairtrade certification on poor and non-poor farm households' food security and living standards in Côte d'Ivoire.Sustainability standards like Fairtrade aim to improve conditions of trade and production by empowering producers of export crops in low-and middle-income countries. By providing better working conditions and offering higher market prices, certification should improve the living standards of participating farmers. While previous research found that Fairtrade has positive effects on farmers' sales prices and incomes, this analysis further explores the effects on food security and other dimensions of household living standards that have not ii been subject to research before. Based on data from a survey of cocoa farmers in Côte d'Ivoire, the study looks at how Fairtrade certification affects aggregate household consumption expenditures and the consumption of specific types of consumer goods and services using regression models with instrumental variables. We find that Fairtrade increases aggregate and non-food consumption expenditures but does not have significant effects on food consump...