Geographical indications (GIs) and innovation do not seem to fit well together. A GI system requires applicants to stipulate the product specifications with which each user needs to comply in order to use the GI. Improvements to the GI-protected product require changes to these specifications. This may constitute a hurdle to innovation. This chapter analyses whether and how the GI system stimulates innovation. In particular, incentives to create new or improved products, services or production processes are identified on the basis of the rationales for protecting GIs. These incentives are linked to the different stages of the product development cycle and the relevant actor who is addressed by the incentive. Finally, the role of the State in promoting innovation is discussed.