Investigating the effect of geographical distances and cultural proximity on the Hungarian wine trade

Wine is a very special product from an economic, cultural, and sociological point of view. Wine culture and wine trade play an important role in Hungary. The effect of cultural and geographical proximity on international trade has already been proven in the international trade literature. The size of bilateral trade flows between any two countries can be approximated by the gravity theory of trade. The gravity model provides empirical evidence of the relationship between the size of the economies, the distances between them, and their trade. This paper seeks to analyse the effect of cultural and geographical proximity on Hungary’s bilateral wine trade between 2000 and 2012, employing the gravity equation. The analysis is based on data from the World Bank WITS, WDI, as well as CEPII, and WTO databases. I apply OLS, Random Effects, Poisson, Pseudo-Poisson-Maximum-Likelihood and Heckman two stage estimators to calculate the gravity regression. The results show that in the case of Hungary, cultural similarity and trade liberalisation have a positive impact, while geographical distance, landlockedness, and contiguity have a negative impact on Hungarian wine exports.

A földrajzi távolság, a kulturális hasonlóság és a szabadkereskedelem hatása a borkereskedelemre = Effects on the global wine trade of geographical distance, cultural and linguistic similarity, and free trade

A globalizálódó világgazdaságban a vezető bortermelő országok egyre jelentősebb borkereskedelmet bonyolítanak le egymás között. Míg Európában a fogyasztók egyre kevesebb bort vásárolnak, addig Amerikában és Ázsiában a bor iránti kereslet folyamatosan bővül: a borkereskedelem földrajzi átrendeződése zajlik. A kulturális hasonlóság és a földrajzi távolság kereskedelemre gyakorolt hatását gyakran a kereskedelemelméletek gravitációs modelljével elemzik. E tanulmány azt vizsgálja, hogy a fő borexportáló országok közötti földrajzi távolság, kulturális hasonlóság és szabadkereskedelem milyen hatással van a nemzetközi borkereskedelemre, annak költségeire. A regressziós becslés eredményei alátámasztják, hogy a borkereskedelem költségei alacsonyabbak, ha a kereskedelmi partnerek kulturálisan hasonlók, földrajzilag közel helyezkednek el egymáshoz, vagy van tengeri kikötőjük, tagjai a WTO-nak, illetve ha kötöttek egymással regionális kereskedelmi megállapodást. Ezenkívül megállapítható, hogy az angolszász, a latin-amerikai és az európai kulturális klaszterek elsősorban egymással kereskednek. A kutatás számos kulturális változó alkalmazásával és több ökonometriai modell, illetve becslési eljárás nagymintás tesztelésével gazdagítja a szakirodalmat. ____ In a globalizing world, major wine-producing countries export considerable quantities to the global wine market and turn over a notable trade, but in what happens European wine regions differ markedly from the New World. Here major wine producers suffered a remarkable fall in domestic wine consumption in recent decades, while New World wine producers increased their production potential and generated new foreign demand. The changes have been joined by geographical relocation of wine consumption and exports. The gravity equation can be derived from demand-side or supply-side theory-consistent estimation methods that suggest relationships between the size of the economies, geographical distances, cultural similarities, and size of their trade. The paper analyses the effects of cultural and geographical proximity, free trade, and linguistic similarity on bilateral trade in the main wine-producing countries, using a cross-section gravity model for 2012. The results suggest that larger countries export more wine, while transport costs rise in line with geographical distance and are higher for landlocked trading partners. Wine export costs are lower if trading partners are culturally similar, share a dominant religion, or are both WTO members with regional trade agreements. Anglo-Saxon, Germanic, Latin American and Latin European countries mainly trade wines within their groups. The paper looks to extend the number of trading partners, investigate the effect of language clusters, and confirm that the results are robust by different econometric methodologies.