1. Introduction
Geographical indications are special intellectual property rights based on the long-term practices and uniqueness in a certain region. Europe first used AGIs (agricultural geographical indicators) to protect and differentiate local agricultural products [
1]. Since 1995, the World Trade Organization (WTO) has formally recognized AGIs as intellectual property and AGIs have received widespread attention worldwide [
2]. The WTO defines AGIs as goods produced in specific regions, locations, or territories of member countries. Commodities with AGIs typically have specific qualities, reputations, or other characteristics, largely attributed to their geographical origins [
3,
4]. Considering the effects of AGIs on economic development, Europe, the United States, and Australia have established leading positions in AGI certification in recent years. However, AGI certification is relative backward in Asian countries. Faced with this situation, in 2008, the Chinese Ministry of Agriculture prioritized AGIs as a key means of promoting regional economic development. In China, how do AGIs affect aggregated economic development? What are the corresponding mechanisms? Few studies have provided rich knowledge related to these questions, which encouraged this article.
Previous studies have mostly analyzed how AGIs affected agricultural products from the standpoints of international trade, market welfare, and legal conflicts [
4,
5,
6]. However, few studies have discussed the effects of AGIs on regional economic development from a macro-perspective.
Firstly, AGIs have an impact on legal conflicts. AGIs are a means of protecting intellectual property rights, and are an important tool for encouraging the development of agricultural products. The recognition of GIs for agricultural products must meet the following conditions: the goods and products must come from a specific area, and the reputation, quality, and characteristics of the goods should mainly be attributed to their geographical environmental factors [
4]. However, AGI certification in cultural and service products in rural areas has often has some difficulties. On the one hand, the geographical attribution of some cultural services often has a wide range, and their specific attribution is controversial. On the other hand, the formation of cultural services often cannot be directly linked to geographical factors and requires strong historical evidence to prove this. This makes the recognition of GIs (geographical indicators) cumbersome. Moreover, although the WTO has provided certain explanations for the recognition of GIs, there are subtle differences in the recognition standards of GIs in different countries, which may lead to international trade conflicts.
Secondly, AGIs have an impact on market welfare. As a representation of brand and quality, AGIs have a tremendous impact on both market customers and manufacturers. Moschini’s theoretical model implies that GI recognition has an impact on both producers and consumers, with consumers benefiting the most [
5]. However, if AGIs cause a spike in equilibrium prices, they greatly enhance producers’ marginal profits [
6]. Consumers have a stronger sense of trust and readiness to buy agricultural products with AGIs because of their distinct flavor, color, texture, and other qualities [
7], and they are willing to pay higher prices for them [
8]. GIs for wine in Spain, France, and Italy encourage customers to pay higher prices, while simultaneously reducing adverse competition for growers [
9]. AGIs for coffee in Kenya and Colombia enable producers to increase their revenue [
10]. Of course, some research indicates that GIs have little impact on farmers.
Thirdly, AGIs have an impact on trade. Agricultural products with AGIs often undergo strict scrutiny and are generally considered high-quality products [
11]. Because of this attribute, GIs are often seen as tools to promote trade [
12,
13]. By analyzing bilateral wine export data from France, Italy, and Spain during the period 2010–2013 [
14], it was found that AGIs were beneficial for price premiums of products and promoted wine trade [
15] and that AGIs in France could help products penetrate overseas markets. Additionally, mutual recognition of GIs between countries can effectively improve the export quality of agricultural products [
16]. Of course, the impact of AGIs on international trade is also constrained by consumer preferences for products [
17].
In summary, previous studies have mostly discussed the legal recognition of AGIs or their impact on market welfare, with few works concerned with their economic contribution. Therefore, we collected the data on agricultural products with AGIs in China from 2000 to 2018, and matched them with country-level statistical data, to investigate the impact and mechanism of GIs of agricultural products on country-level economic development.
The rest of the article is organized as follows: the second part is the policy background and theoretical hypotheses; the third part is the research design; the fourth part is the results; and the final part is the conclusions, discussions, policy implications, and limitations.
2. Policy Background and Theoretical Hypotheses
2.1. Policy Background
In addition to the Trademark Law, in 2000, the Agricultural Law of China formally introduced the criteria for identifying GIs for agricultural products. Subsequently, China promulgated the “Regulations on the Protection of Geographical Indication Products”, specifically aimed at regulating and protecting intellectual property rights related to agricultural products. But, differently from other commodities, there are specific regulations governing the application, registration, and supervision of the use of GIs for agricultural products, and the supervision of the two departments of industry and commerce and quality inspection is often not entirely effective. Therefore, depending on the advantages of familiarity and convenience in the process of agricultural management, such as the special qualities of specific products in certain geographical areas, delineation of the geographical scope of products, and monitoring of the production process, the department believes that it is relatively efficient and less controversial to carry out the certification and management of GIs for agricultural products.
In 2007, to systematically regulate the registration and use of GIs for agricultural products, ensure the quality and characteristics of geographical indication agricultural products, and enhance the market competitiveness of agricultural products, the former Ministry of Agriculture issued the Management Measures for AGIs of Agricultural Products, which stipulated the requirements and procedures for the registration of GIs of agricultural products. Subsequently, the Ministry of Agriculture began to accept applications, and issue several specialized AGIs for agricultural products. According to this method, the applicant for the registration of AGIs of agricultural products is a farmer’s professional cooperative economic organization, industry association, or other organizations selected by the local people’s government at or above the county level and based on specific conditions. In July 2008, the first batch of 28 geographical indication products for agricultural products was promulgated. On 8 August 2008, Announcement No. 1071 of the Ministry of Agriculture of the People’s Republic of China was issued, which stipulated the registration procedures and usage standards for GIs of agricultural products. From 2008 to 2020, the geographical indication registration system for agricultural products in China was gradually improved, and many agricultural products that met the registration system obtained geographical indication registration. As of January 2021, the Ministry of Agriculture and Rural Affairs had registered 3125 AGIs for agricultural products.
2.2. Theory Hypothesis
2.2.1. The Direct Impact of GIs on the Economy
AGIs have a direct impact on economic value-added. AGIs, as an important market signal, can reduce the degree of information asymmetry between buyers and sellers [
18]. Firstly, as an effective marketing management tool [
19], AGIs can increase consumer willingness to pay. Agostino and Trivieri found that GIs for wine can make consumers more willing to pay higher prices [
9]. Secondly, AGIs are beneficial in motivating farmers and enterprises to produce according to quality standards, improving product quality [
20], and achieving market premiums [
21]. Barjolle et al. argued that AGIs in Kenya and Colombia not only improve coffee quality, but also provide producers with additional benefits [
10]. Thirdly, AGIs have obvious cultural attributes, which are conducive to driving the development of regional culture, tourism, and catering industries. For example, special food routes have become important tourism projects [
22]. Based on AGIs, regions develop various specialty products and dishes in food stores, grocery stores, and restaurants [
23] to attract tourists [
24]. Based on this, we can propose the first hypothesis.
H1: AGIs can drive regional economic growth.
2.2.2. The Mechanism of GIs Affecting Economic Growth
AGIs mainly affect regional economic growth through two paths: industrial value-added and factor agglomeration. Firstly, with respect to the industrial value-added effect of AGIs, agricultural products with AGIs are generally more likely to form regional brands [
25,
26], creating added value for retailers and consumers [
27]. AGIs link products, places of origin, and consumption, reducing consumer-choice costs and increasing consumer willingness to pay [
28]. Moreover, high-quality geographical-indication products have expanded consumer demand for products and improved the bargaining power of manufacturers [
29]. Creating AGIs is conducive to establishing agricultural brands, building up product reputation, achieving brand premiums [
30], promoting regional agricultural product production, processing, and exports [
9,
29], and driving farmers to work and improve regional income levels [
30,
31,
32]. The geographical symbols of AGIs are conducive to achieving an emotional premium. Geographical indications of agricultural products are often important carriers of hometown emotions [
33]. During people’s lives, products with hometown imprints are often prone to emotional resonance [
34,
35], as their daily consumption often shows loyalty to the AGIs of their home town [
36,
37]. Based on this, we can propose the second hypothesis.
H2: AGIs drive regional economic growth through industrial value-added.
Secondly, with respect to the economic agglomeration effect of AGIs, the two major characteristics of AGIs determine their economic agglomeration effect. One is the siphoning effect caused by the irreplaceable regional characteristics of agricultural products. Unlike other commodities, geographical indication agricultural products must be produced in specific regions [
11], and various types of production and services related to AGIs are also subject to regional restrictions [
38,
39]. This irreplaceable characteristic determines that industrial development must be centered around geography. The recognition of AGIs will significantly drive the aggregation of funds, talents, and technology to specific regions, promote agricultural industrial clusters, and improve the efficiency of agricultural production factor allocation. Hilal et al. argue that the recognition and development of AGIs can offset the trend of urban migration in rural areas and help preserve local economic and social capital [
40]. The second is the industrial correlation effect generated by AGIs. The identification of GIs alleviates the asymmetry of market information, which is beneficial for the formation of stable contractual relationships between farmers, enterprises, and enterprises. Relying on the word-of-mouth effect of the previous stage, this attracts factor agglomeration and forms a complete upstream industrial chain [
41,
42]. At the same time, it also relies on the advantages of upstream industries to form quality effects and achieve the convergence of downstream industrial chains [
43]. Depending on the correlation between upstream and downstream industries, the identification of AGIs for agricultural products is beneficial for reducing production costs, improving production efficiency [
44], and achieving economic spillovers.
H3: AGIs drive regional economic growth through economic agglomeration.
5. Conclusions, Discussions, Policy Implications & Limitations
5.1. Discussions
A variety of studies have demonstrated the effects of AGIs on market welfare [
18], consumer surplus [
19], and producer surplus [
9]. Most modern countries take AGIs as an essential means of improving product quality [
20] and promoting prosperity in the cultural, tourism, and culinary industries [
23]. A healthy market is essential for validating these conclusions. In underdeveloped countries, the market is imperfect, making these results confusing. However, this study draws similar conclusions in China, a developing country. Although AGIs only contribute 0.2–0.4% to per capita economic growth, this influence grows over time. Furthermore, AGIs not only improve the quality and quantity of agricultural products, but also seem to activate the agglomeration of market factors such as population, capital, and enterprises. We believe that with the support of the central government, AGIs can become an important force in promoting economic growth in developing countries.
5.2. Conclusions
AGIs benefit agricultural product circulation, promote high-quality development in the agricultural sector, and develop and expand the comprehensive functions of agriculture.
In this paper, we investigated the effects of AGIs on county-level economic development and corresponding mechanisms. The results show that AGIs can accelerate China’s per capita GDP at a higher rate. Agricultural value-adding, population, capital, and enterprise agglomerating are potential channels for these effects. In the western area, the main grain-producing area, and other-nations-settled areas, the effects of AGIs are more salient. Moreover, AGIs related to aquatic environments, animal husbandry, and planting products are more beneficial for local economic development.
5.3. Policy Implications
Based on the conclusions in this paper, three suggestions can be provided for policymakers.
Firstly, keep accelerating AGI identification. Policymakers should understand facts related to AGIs and assess the effectiveness and issues of AGIs. They also should strictly set product standards and technical specifications of AGIs to ensure high-quality development. Further, they could use media to encourage farmers to propagate AGIs and comprehensively investigate and punish the criminal activities of AGIs.
Secondly, encourage the integrated development of industrial chains. Policymakers should promote deep joint development of agriculture, industry, and tourism. They can promote the smooth flow of factor resources such as scientific and technological innovation, modern finance, and human resources. This way, information, technology, knowledge, talent, and other elements can agglomerate effectively and the spillover effect of AGI’s brand value can be guaranteed.
Thirdly, improve AGI support policies in certain regions. For the western region, non-grain main producing areas, and national-minority-settling areas, policymakers must strengthen support for fiscal, investment, finance, technology, and other policies on AGIs, as well as encourage financial institutions such as banks and insurance companies to develop AGI-specific financial products and financing models.
5.4. Limitations
Although this article indicates a positive impact of AGIs on aggregate GDP, we still need to pay attention to the impact of AGIs on different participants (such as farmers, government, and enterprises). Can farmers receive more returns from AGIs? Who can better benefit from AGIs between upstream and downstream enterprises? For AGIs, does the Government receive more tax revenue or consume more fiscal expenditure? These questions also need to be discussed by followers using more microscopic data.