Jun 16, 2010

South African wine exports are booming

Andrew Rose knows economists just wanna be entertained by research. This is probably what he had in mind when he wrote "The Olympic effect", in which he claims that hosting the Olympics or World Cup has a positive impact on national exports (see his Vox Column ). According to his results, hosting a World Cup could boost exports by as much as 34%. No one believed his paper, but many talked about it.

But something seems at play. As it is hosting the World Cup, South African wine exports are booming. What's more, CNN reports  a spike in sales to countries competing in the tournament! How is this happening? Not only are soccer fans all of a sudden more curious about SA wines but wine retailers around the world, from Kansas City to Jamaica, are organizing tastings and offering special deals on SA wines, using the World Cup as an excuse.

So, rather than being a trade liberalization signalling mechanism, as suggested by Rose and his co-author, it could be an informational effect that has lasting consequnces on the extensive margin of trade. Worth a new paper!

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