Beyond certifications: Questioning the design and economic effects of the canadian ethical diamond policy

This paper investigates the design, signaling effectiveness, and economic impacts of the Government of the Northwest Territories’ ethical diamond certification. Employing a sequential exploratory mixed-methods approach, the study combines a longitudinal institutional analysis with a macro-panel econometric evaluation of value-chain upgrading across key diamond-producing and processing countries. Qualitative evidence shows that compliance burdens, rigid chain-of-custody protocols, and subsequent policy relaxations undermined both the industrial feasibility and the credibility of the territorial signal. Quantitative findings indicate that the certification is linked to a significant negative effect on downstream value retention. By contextualizing the Canadian case within broader debates on resource-based industrialization, global value-chain governance, and credence-goods signaling, the paper reveals how ethical certifications can inadvertently reinforce structural constraints instead of promoting upgrading. These results underscore the need for certification architectures that balance credibility with operational feasibility in globally fragmented and cost-sensitive industries.