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Articles
I.
Introduction
It is hard to imagine in the twenty-first-century global wine economy, but in 1960--more than 50 years ago--Algeria was the largest exporter of wine in the world--and by a wide margin: it exported twice as much wine as the other three major exporters (France, Italy, and Spain) combined. Moreover, it was the fourth-largest producer of wine in the world. In the 50-year period between 1880 and 1930, Algerian wine production and exports grew dramatically, turning the industry from nonexistent into the world's largest exporter of wine. 1
What is as spectacular as the rise of Algerian wine production is its decline. The fortunes of Algerian wine have declined dramatically. Today, Algeria no longer produces or exports any wine. In fact, current Algerian wine production reflects the situation at the end of the nineteenth century, when wine production was virtually nonexistent. Hence, over the course of a century, Algeria went from producing almost no wine to the world's largest exporter to again producing very little wine (see Figure 1).
Figure 1
Wine Production in Algeria, 1860-2010 (in million hectoliters)
Sources: Birebent (2007); FAO (2012); Insee (1935, 1966).
An analysis of the causes of growth and decline of such an important economic sector should be of interest to everyone interested in economic history and development. In this paper, we document the rise and the fall of the Algerian wine industry and explain how they were caused by a combination of factors, including technological advances, the spread of vine diseases, and the associated migration of investors and human capital. Developments in the Algerian wine industry were heavily influenced by its impact on the French wine market and French regulations. Free trade with France stimulated the growth of Algerian exports when high import tariffs blocked imports from Spain and Italy in the late nineteenth century. However, beginning in the 1930s, French wine regulations halted the expansion of Algerian wine production. After Algeria achieved independence in 1962, French import restrictions caused a decline in Algerian exports and, in combination with state intervention and poor management in Algeria, caused the collapse of the Algerian wine industry.
However, there is an additional story--and one with major implications for today's wine markets. The...