The International Competitiveness of Geographical Indications: Hype or Hope?

The growing international competition has increased the incentive of preserving local expertise by preventing its use by a third party whose product does not conform to the applicable standards. This is one of the main objectives of the Geographical Indication quality scheme. Geographical Indications (GIs) play an increasingly important role in trade negotiations between the EU and other countries. However, to what extent GIs support international trade is not clear. This paper reviews the economic literature on the internalization effects of GIs, discusses data sources and meta-analyses papers estimating the trade effects of the GI policy scheme. Most of the existing studies agree on an average positive effect of GIs on trade. Our meta-analysis shows that the premium is however lower for wines and PDOs, products adopting stricter regulations. Lower effects are estimated by analysis conducted at aggregated spatial levels (country) or limited to specific case studies. By contrast, effects are more consistent when using cross-category data and for studies providing evidence from European GIs.