Abstract

A major concern about trade is that, while it may accelerate growth, the poor many not benefit (proportionately). An emerging literature on global supply chains adds additional critiques, arguing that increasing standards are trade barriers for developing countries and cause the marginalization of poor households. This paper is the first to quantify income and poverty effects of such high-standards trade and to integrate labor market effects, by using company and household survey data from the vegetable export chain in Senegal. We find that exports have grown sharply despite increasing standards, with important income and poverty effects. Regional poverty is 14 % points lower due to vegetable exports. Tightening food standards induced a shift from smallholder contract-based farming to large-scale integrated estate production, altering the mechanism through which poor households benefit: through labor markets instead of product markets. The impact on poverty reduction is stronger as the poorest benefit relatively more from working on large-scale farms than from contract farming.