In their work, economists are sometimes inspired by the hard sciences and in particular physics. One of the most telling examples comes from the application of Newton’s gravitational model to international trade. The principle is simple. Trade flows between two countries are determined mainly by the mass of these countries (measured by GDP) and the distance (in kilometers) that separates them. The higher the mass of the trading partner and the lower the distance to it, the greater the export flow will be. It is therefore a law of economic attraction, central to the empirical analysis of international trade.
This economic gravity equation seems unshakable, like Newtonian physics from the late 17th century.e at the beginning of the XXe century. It is enriched by the addition of historical variables reflecting particular links between trading partners (common language, common border, etc.) or institutional, political and economic variables (membership of a political and customs union, presence of bilateral trade agreements, the amounts of customs duties, etc.).
These variables make it possible to refine the accuracy of gravity models for predicting trade flows. However, geographic distance continues to play too important a role in these models, despite years of declining transport cost trends.
We can push the analogy with the developments of physics in the XXe century which, under the impetus of Albert Einstein, showed the limits of Newtonian laws. The famous dark matter (dark matter), often mentioned to illustrate these limits, finds its counterpart in economics with the dark trade costsof the hidden costs holding back global trade.
These costs are identified by the discrepancies between trade intensity as predicted by gravity models and actual export levels. These dark factors, by nature difficult to identify, are interpreted among other things as cultural differences limiting the possibilities of trade between peoples. These trade barriers may precisely explain the overestimation of the geographical distance factor.
In reality, these implicit barriers to international trade are not entirely elusive. It is possible to measure some of them, in particular the long-term cultural and biological differences which explain part of the differences in taste between nations.
In a article published in the summer of 2022 in theAmerican Journal of Agricultural Economicswe try to approximate these factors by the distance genetic between peoples. This distance is associated with the time elapsed since the last common ancestors of two populations. We then use genetic distance in a gravity model applied to French wine exports to test this theory.
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Our results show a strong effect of genetic distance on the international trade of wine French. This effect cannot be subsumed by geographical distance, the role of which tends to decrease sharply compared to traditional models when genetic distance is taken into account.
Specifically, genetic distance would explain between 20% and 40% of the effects previously attributed to geographic distance. Our main interpretation is that genetic distance captures factors associated with differences in tastes and preferences between countries.
Taste cultural proximity
We rule out other interpretations by a series of tests mobilizing complementary data. On the cultural side, we show that genetic distance is not just a measure of the distance between nations in terms of trust (trust being an important factor in trade). Nor is it just a consideration of general cultural dimensions such as language, values or religion.
In other words, even if “non-taste” cultural distance may play a role in the intensity of international trade in general, we show here that a strong residual effect may correspond to taste cultural proximity.
The other side of this “genetic effect” is the biological distance linked to the taste. A large literature describes the influence of genetics on the molecular receptors responsible for food and drink preferences.
Several studies emphasize the differences in apprehension of certain tastes (bitterness, for example) and the resulting disparities in appreciation of coffee or alcoholic beverages. According to their biological baggage, two different people do not experience bitterness, acidity or sweetness in the same way. Several studies on wine have also identified profound differences in appreciation between people, even identifying the gene responsible for preference for red wine or white wine.
Genetic distance can therefore be seen as an indicator of differences in taste resulting from both culture and biology. This approach makes it possible to quantify the role of this double factor in relation to other crucial determinants such as those mentioned above (costs of transport, customs barriers, etc.).
The exception of the high end
The economic implication of this result is interesting. In particular, it may be unproductive to concentrate commercial efforts in markets that are far away in the sense of taste. Except to be able to quickly change the tastes of a population, under the effect of a fashion phenomenon for example. But then beware of the market reversal…
The boom in Chinese wine consumption in the mid-2000s and which has been collapsing since 2018 undoubtedly offers the typical example of such a phenomenon. This reversal takes many French wine exporters by surprise, who are heavily exposed to this market. Could we anticipate it? Perhaps not, but our certainty that the world would appreciate French wines as much as we do is fading and giving way to the observation that the initial Chinese enthusiasm for wine was undoubtedly a fashionable character – even a political choice to fight against the consumption of rice alcohol, which is much stronger – more than a real gustatory appetite.
Finally, a deepening of our results shows that the higher the range level, the less the gravitational laws are exerted. In other words, the high end escapes gravity. Another departure from the economic law of gravity – but good news for exporters of fine wines!
We also show that the fine wine trade is just as little affected by genetic distance. The interpretation follows the thread of the previous reasoning: prestigious wines belong to the universe of luxury and are not bought to be tasted but for the social status they confer on the purchaser, even for investment purposes. Specialization towards the top of the range is therefore a profitable strategy to continue to reap the benefits of globalization and take advantage of the high growth rates of emerging economies.
As in physics, the exploration of dark matter is progressing in economics. In any case, it reminds us that no law, whether physical or economic, is permanently engraved in stone.
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The original version of this article was été published on The conversation, a news site à dédié to the sharing of ideas between academic experts and the general public.
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