The impact of fair-trade certifications in social and solidarity economy organizations in Ecuador

Abstract

While fair trade certifications are aimed to improve the socioeconomic conditions of small producers, no conclusive results exist about its effect. This study contributes with a holistic analysis of the effect of fair-trade certifications in Social and Solidarity Economy Organizations (SSEOs) of Ecuador on three impact variables: i. monthly average income, ii. satisfaction level with income increments and iii. Profits. Using the National Survey of Social and Popular Economy Organizations (ENOEPS, acronym in Spanish), four econometric models are estimated: i. Quantile regression, ii. Instrumental variables, iii. Generalized ordered logit model and iv. Probit model. Results suggest that the fair-trade certification is positively associated with income and its effect varies according to the income level, but there is no causal effect. Certified SSEOs are more likely to report a high satisfaction level with income increments and to report profits, compared to non-certified SSEOs. In addition, some factors have a higher effect on small organizations than on big organizations in terms of income, namely, programmed saving actions, training, barter and provincial and national scope.