Geographical Indications and local development: the strength of territorial embeddedness

Abstract

Can Geographical Indications (GIs) promote local economic development in rural areas? This paper explores the impact of GIs that identify and endorse agri-food products which are strictly embedded within the territory from which they originate. Examining Italian wine protected by GIs through an innovative dataset and by means of propensity score matching and difference-in-differences models make it possible to compare the local economic development trajectories of rural municipalities afforded GIs with the correspondent dynamics of a counterfactual group of similar municipalities without GI status since 1951. Rural municipalities with GIs experience population growth and economic reorganization towards non-farming sectors, which frequently involve higher value-added activities.

Understanding Consumers’ Preferences for Protected Geographical Indications: A Choice Experiment with Hungarian Sausage Consumers

“…It would be interesting to investigate if and how WTP for GIs varies in export markets, and to investigate the effectiveness of strategies for enhancing a GI’s reputation in markets where it is currently little known. The latter is important for the use of GIs as an economic development tool, particularly for territories where the local market is small and with limited purchasing power [ 87 ].…”

Predicting agri-food quality across space: A Machine Learning model for the acknowledgment of Geographical Indications

“…GIs guarantee to consumers that the concerned produce is made in its specific areas of origin according to the product specification, the code of practice that all the producers must follow. On the other, at the territorial level, GIs can trigger several positive socio-economic externalities (Haeck et al, 2019;Meloni and Swinnen, 2018;Charters and Spielmann, 2014),such as supporting rural development (Cei et al, 2018;Crescenzi et al, 2021), contributing to food-safety (De Rosa, 2015;Wirth, 2016), enhancing sustainability and reducing environmental impacts (Vandecandelaere et al, 2018;Belletti et al, 2017). These socio-economic effects have been investigated by a bourgeoning group of studies, and journals themselves have dedicated special issues to provide new evidence on the virtuous role of GIs.…”

“…These socio-economic effects have been investigated by a bourgeoning group of studies, and journals themselves have dedicated special issues to provide new evidence on the virtuous role of GIs. For instance, a recent paper written by Crescenzi et al (2021) has provided, for the first time in the literature, econometric evidence that rural municipalities with GIs experience better performance in terms of local economic development than others by supporting population growth and fostering the economic reorganization towards non-farming sectors, which frequently involve higher value-added activities. Nowadays, particular attention is paid in evaluating the potential contribution of GIs in moving the agri-food sector towards a more resilient and sustainable system Vandecandelaere et al (2021).…”

“…Favourable institutional context, local actors' engagement and co-operation have been highlighted among others. A recent study by Vaquero-Piñeiro (2021), empirically demonstrated that for food GIs ex-ante socio-economic conditions are fundamental for the success (in terms of revenues) of a GI, while in the wine sector socio-cultural elements and tacit knowledge are more relevant. Therefore, while GIs may endogenously stimulate local economy and generate a potential virtuous circle between product and territory, they may also contribute to create a sort of path-dependence in market inefficiencies and rent-seeking.…”

“…In order to design appropriate policy intervention in support of the agri-food sector and rural areas, it would be extremely useful for policy makers to have geo-located information of future GI, on the basis of territorial indicators easily available to them (e.g., agricultural census). In particular, given the on-going debate about the effectiveness of place-based policies (Barca and Rodríguez-Pose, 2012) and the evidence provided by the literature on the GIs effects on local development (Crescenzi et al, 2021;Cei et al, 2018), knowing if the territory has the potential to see their local products acknowledged as a GI, or not, would be particularly relevant for next rural development policy strategies. The advent of GIs require a full-ranging adaptation of the local economy: producers must follow product specifications, new administrative offices (such as Consortia) must be established and services mechanism activated to collectively manage and promote the GI.…”