is the new wine world more efficient factors influencing technical efficiency of wine production

• DOI: 10.22004/ag.econ.183183
• Publication Date: 2014-08-01
• Authors: Tóth, József; Gál, Péter; Tóth, József; Gál, Péter
• Keywords: Marketing; efficiency gap, wine production, New World, Old World, macroeconomic drivers, Agribusiness, Crop Production/Industries, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, International Relations/Trade, Marketing, Production Economics,; Production Economics; International Relations/Trade; 05 social sciences; Demand and Price Analysis; efficiency gap; Old World; New World; Crop Production/Industries; FOS: Economics and business; macroeconomic drivers; 8. Economic growth; 0502 economics and business; Agribusiness; wine production; Food Consumption/Nutrition/Food Safety

We have experienced the emergence of New World wine producing countries (the Americas, South Africa and Oceania) in the last 10-15 years as they have successfully increased their market share in European markets. In this paper we perform a two stage model on a panel of most of the major wine producing countries over the period 1995-2007. We estimate a Cobb-Douglas production function and technical inefficiency using stochastic frontier analysis. We show that there is a significant difference between the major Old and New World countries in terms of technical efficiency in favour of the latter group. The analysis supports our hypothesis that the more efficient functioning of the sector in the New Wine World can be one of the drivers of their success. Moreover, inefficiency is related to some macroeconomic factors such as the development of the financial system, the quality of human capital and per capita wine consumption.<br/>http://dx.doi.org/10.7896/j.1411<br/>