Investigating the Effect of Geographical Distances and Cultural Proximity on the Hungarian Wine Trade

Jeremias Mate Balogh ()

Society and Economy, 2015, vol. 37, issue 4, 513-529

Abstract: 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 sizes 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 liberalization have a positive impact, while geographical distance, landlockedness, and contiguity have a negative impact on Hungarian wine exports.

Keywords: wine trade; Hungary; cultural and geographical proximity; gravity model (search for similar items in EconPapers)
JEL-codes: F13 F14 Q17 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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