Trust-busting. Small exporters in poor nations often lack the marketing networks and brand names to make inroads into rich-country markets. Although transnational retail companies can help them, the margins and fees they charge are often very high. Restrictive business practices by these international middlemen are difficult to prove, but a great deal of circumstantial evidence exists. The international coffee market, for example, is dominated by four companies. In the early 1990s the coffee earnings of exporting countries were about $12 billion, and retail sales were $30 billion. By 2002 retail sales had more than doubled, yet coffee-producing countries received about half their earnings of a decade earlier. The problem is not global markets but impeded access to those markets or depressed prices received by producers, as a result of the near-monopoly power enjoyed by a few retail firms. In certain industries, companies may actively collude to fix prices. Some economists have proposed an international antitrust investigation agency. Even if such an agency did not have much enforcement power, it could mobilize public opinion and strengthen the hands of antitrust agencies in developing countries. In addition, internationally approved quality-certification programs can help poor-country products gain acceptance in global markets.

   
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ABOUT THE AUTHOR(S)
PRANAB BARDHAN is an economics professor at the University of California, Berkeley. He has done theoretical research and field studies on rural institutions in poor countries, on the political economy of development policies, and on international trade. He is perhaps best known for showing that economic efficiency and social justice are not antithetical goals; indeed, they are often complementary. Bardhan was editor in chief of the Journal of Development Economics from 1985 to 2003 and is currently co-chair of a MacArthur Foundation-funded international research network on inequality and economic performance.