can a country’s soccer results be used as a preliminary indicator of a country’s economic...
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Can a country’s soccer results be used as a preliminary indicator of a country’s
economic performance?
Introduction
The most accurate measurement of a country’s economic performance is
gross domestic product (GPD) because it measures a country’s total production in a
given time period. GDP can be defined as “the market value of all final goods and
services produced in a country during a period of time, typically one year” (Hubbard
& O'Brien, p. 239). Nonetheless, economists experience difficulties in determining a
country’s current economic situation since final numbers depend on months of data
gathering. The purpose of this research paper is to determine whether soccer can be
used as an indicator of a country’s economic performance.
The sports industry has experienced a steady growth over the past years, and
is expected to reach a number of almost twice of its 2005 total revenue by 2017.1
The effects that the sports industry has on the economy are evident since they
contribute significantly to the media and entertainment, merchandising and retail
industries (Burrow, 2013). Moreover, studies have shown that sports have an
influence over consumers’ purchasing behaviors, moods and health.
Soccer is considered to be the most popular sport in the world, accounting
for more the 40% of the sports industry global market share (Collignon, 2011). This
dominance is depicted in the fact that one billion people watched the FIFA 2014
World Cup Final between Germany and Argentina (Dassanayake, 2014). This sport
is not only big in its viewing audience, but also in the number of people that practice
1 Refer to Appendix 1
it around the world: according to FIFA’s latest report, there are 265 million playing
soccer worldwide (Kunz, 2007).
FIFA/Coca-Cola World Ranking
There are several measures to determine a country’s soccer performance.
One of the most commonly measures used is the FIFA/Coca-Cola World Ranking.
Even though there are several flaws that prevent the ranking from being an accurate
representation of a team’s performance and that some people claim it is
oversimplified, this point-based system is the best approach so far to determine a
country’s relative position to others.
The points are determined by accumulating the points a team makes when
playing international games, over a period of four years. The total of points a team
obtains in a game is calculated using the following formula (Manfred, 2014):
Points=Points formatchresult∗Importance of match∗Strength of opponent∗Strength of confederation
For more details about the formula, refer to Appendix 2.
It is important to notice that the FIFA/Coca-Cola World system does not take
into account goal difference or the home advantage, or the fact that a team might not
be playing with their best players in order to try younger ones. Moreover, the
frequency with which international games are played does not provide enough data
to make an accurate analysis.
First of all, we will compare the national teams’ position in the rankings
before the 2014 World Cup with their performance in the competition, to be able to
determine whether there is certain coherence between this ranking system and
actual results. It is important to note that at this stage we are limiting the results to
the 2014 World Cup, since it is the last significant worldwide tournament that
provides evidence of teams’ relative standings.
Country FIFA/Coca-Cola World
Ranking before World Cup2
World Cup Stage
Algeria 22 Round of 16
Argentina 5 Second place
Australia 61 Group stage
Belgium 11 Quarter-finals
Bosnia and Herzegovina 21 Group stage
Brazil 3 Semi-finals
Cameroon 56 Group stage
Chile 14 Round of 16
Colombia 8 Quarter-finals
Costa Rica 27 Quarter-finals
Croatia 18 Group stage
Ecuador 26 Group stage
England 10 Group stage
France 17 Quarter-finals
2 http://www.telegraph.co.uk/sport/football/world-cup/10835958/World-Cup-2014-countries-Fifa-world-rankings.html
Germany 2 First place
Ghana 37 Group stage
Greece 12 Round of 16
Honduras 31 Group stage
Iran 43 Group stage
Italy 9 Group stage
Ivory Coast 23 Group stage
Japan 46 Group stage
Mexico 20 Round of 16
Netherlands 15 Third place
Nigeria 44 Round of 16
Portugal 4 Group stage
Russia 19 Group stage
South Korea 57 Group stage
Spain 1 Group stage
Switzerland 6 Round of 16
Uruguay 7 Round of 16
United States 13 Round of 16
It is clear that there is a relation between the FIFA/Coca-Cola Ranking and a
team’s results. For the purpose of the research, we have highlighted the top five
teams in the ranking in green, and the lowest ranked in red. Three out of the four
best teams in the World Cup were ranked in the first five standings, and all of the
five weakest teams according to the ranking did not advance from the group stage.
Even though there are some exceptions such as Spain and Portugal who did not
perform well, we can fairly conclude that there is a relation between a country’s
position in the rankings and results.
Is there a relation with economic performance?
In order to compare the economic performance of a country to their position
in the ranking, we will use economic data of the end of the 2014 period, given that
this is the newest data that can be obtained for both variables.
Country FIFA/Coca-Cola World
Ranking end of 2014
2014 GDP (millions of US$)
United States 27 17,416,253
Japan 54 4,769,803
Germany 1 3,820,464
England 13 3,002.947
France 7 2,935.356
Brazil 6 2,244,131
Italy 11 2,129,276
Russia 31 2,057,301
Australia 100 1,482,539
Mexico 20 1,295,860
South Korea 69 1,449,494
Spain 9 1,400,483
Netherlands 5 880,394
Switzerland 12 679,028
Nigeria 43 594,257
Argentina 2 536,155
Belgium 4 527,810
Colombia 3 378,415
Iran 51 367,098
Chile 14 276,971
Greece 24 241,796
Portugal 7 220,062
Algeria 18 212,453
Ecuador 26 93,746
Croatia 19 57,371
Uruguay 10 55,708
Costa Rica 16 49,621
Ghana 37 47,830
Ivory Coast 28 32,061
Cameroon 42 29,267
Honduras 71 18,813
Bosnia and Herzegovina 29 17,828
The data shown above does not provide any clear relationship between a
country’s position in the ranking and its economic performance. Even if we consider
their results in the 2014 World Cup from the first table, we cannot identify a clear
pattern that can allow us to conclude a connection between the two variables.
The lack of evidence cannot lead us to conclude that there is indeed no
connection between a country’s soccer results and economic performance. The data
above is only evidence that we cannot use the rankings to compare countries’
economies, but it does not provide evidence that we cannot use the data to compare
one country’s economy with their previous rankings. In other words, the FIFA/Coca-
Cola World Ranking can be an indicator of a country’s current economic situation
when we compare it with the same country’s performance in the past. In order to
continue with our analysis, we will narrow the research to specific countries that
have experienced great economic changes such as recessions and treat them as
separate case studies.
Case Study: PIIGS
The economic recession that started in 2008 affected tremendously some of
the members of the European Union. The term PIIGS is an acronym that refers to the
five European nations that were considered the weakest during this crisis: Portugal,
Italy, Ireland, Greece and Spain. These countries experienced enormous debts so in
2010, European leaders approved a 750 billion euro stabilization package to
support them (Investopedia). Data showing these countries’ economic performance
is shown below:
Country GDP growth (annual %)3
2007 2008 2009 2010 2011 2012 2013
Portugal 2.5 0.2 -3 1.9 -1.8 -3.3 -1.4
Italy 1.5 -1.0 -5.5 1.7 0.6 -2.3 -1.9
Ireland 4.9 -2.6 -6.4 -0.3 2.8 -0.3 0.2
Greece 3.5 -0.4 -4.4 -5.4 -8.9 -6.6 -3.3
Spain 3.8 1.1 -3.6 0.0 -0.6 -2.1 -1.2
All of these countries had been experienced a significant increase in GDP
levels until 2007, but the Great Recession in late 2008 severed the effects of their
debts. All of these countries did not perform well in the most recent World Cup
(Portugal, Italy and Spain were eliminated in the group stage, Greece in the second
round and Ireland did not even qualify). On the other hand, the most solid European
economies such as Germany and Netherlands ended up in the first and third place
respectively. In this sense, we do find a correlation between annual GDP growth and
results in the World Cup; however, it does not provide evidence of a larger picture
as the World Cup only occurs once every four years. Therefore, we should use this
numbers to evaluate the countries separately.
In the case of Spain, the most recent titles they have won on an international
level are the FIFA World Cup (2010) and the UEFA European Championship (2008
and 2012). In the 2006 World Cup the Spanish national team was eliminated in the
Round of 16. Under the coaching of Vicente Del Bosque, the Spanish national team
3 http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG
was able to conquer the soccer world and is considered one of the best teams in
soccer history. However, this recent success (2008-2012) does not coincide with
their economic downfall in the same time period. “Despite the recession, the
collapse of property values, and unemployment of over 20 percent, Spain has
remained networked with the rest of Europe” (Kuper & Szymanski, 2014, p. 389). In
this case, there is an inverse relation.
Even though the findings show that we cannot generalize certain correlations
between a country’s immediate results and their economic growth, we could
approach the analysis from a different perspective. For instance, China’s current
economic growth is not portrayed in their soccer performance, and maybe for this
reason, the country has recently announced a soccer reform plan that establishes
mandatory soccer classes in elementary and middle school curricula4. The effects of
this reform will not be observed in the near future; the children subject to this
change still need to wait to participate at an international level.
Case Study: Chile vs. Peru - World Cup Qualifier (Santiago, 2011)
In October 2011, Chile beat Peru four to two for the World Cup Qualifiers.
Peru had done a good job on their previous game against Paraguay, defeating them
two to zero in Lima, so after the defeat a question arose: Why was there such a
difference between Chile and Peru? Besides all the aspects related to the athletic
performance, the most concrete conclusion would be to say that Peru was not
playing against a team, but against a country.
4 http://en.yibada.com/articles/20355/20150318/china-s-soccer-reform-plan-aims-hone-young-athletes-schools.htm
Peru’s base team for the qualifiers was built upon players born in the year
1984. In fact, seven players of the starting eleven were born in the years of 1983-84.
This means that the team with which Peru played against Chile was raised in one of
Peru’s most complicated years: the decades of the eighties and nineties were
episodes where the country had to deal with issues of terrorism and hyperinflation.
The effects of the country’s poor economic situation were reflected many
years after the events that lead to them occurred. Therefore, a country’s economic
performance is not entirely reflected immediately; it also contributes in the long
run. For instance, the Peruvian players born in the 80’s experienced poor health and
nutritional programs, since the country’s focus geared towards other issues. This
was reflected on the constant injuries suffered by the players and their decreasing
performance level throughout the game.
Conclusion
The case study studied above provides evidence to support the argument
that we cannot predict a country’s current economic performance by using their
soccer results, since long term causes can have influence on them too. Even though
the GDP has a certain degree of influence over soccer performance as we saw in the
PIIGS case study, there are many other factors that contribute towards a good
soccer performance – both long term and circumstantial factors. As we have seen in
the different examples, in some cases there is a correlation between the two
variables studies in this research paper; however, we cannot assume causation
because the assumptions made in each of the cases are made ceteris paribus (with
everything else held constant).
In the same way, other studies have found that “a country’s FIFA ranking is a good
indicator of its long-term development, as it is significantly correlated with the
permanent (i.e. non-time variant) position of each country” (Gasquez & Royuela,
2012). However, as with economic growth, there are other factors in economic
development that can catalyze effects in a country’s national team performance,
such as the riots in Brazil previous to the World Cup.
The research paper shows that a country’s soccer results cannot be used as a
preliminary indicator to reflect the immediate economic performance of the
country; the effects are seen in the long-term. However, it does not refute the
correlation between the two: a greater GDP “means better health and education
outcomes, better sporting infrastructure and more resources spent for sports”
(Debroy, 2011).
Works CitedBurrow, G. (2013, July 9). Emsi. Retrieved April 13, 2015, from http://www.economicmodeling.com/2013/07/09/not-just-a-game-the-impact-of-sports-on-u-s-economy/Collignon, H. (2011). ATKEARNEY. Retrieved April 13, 2015, from http://www.atkearney.com/documents/10192/6f46b880-f8d1-4909-9960-cc605bb1ff34Dassanayake, D. (2014, July 13). Express. Retrieved April 13, 2015, from http://www.express.co.uk/news/world/488521/World-Cup-2014-Fans-gear-up-for-Germany-v-Argentina-finalDebroy, B. (2011, April 3). Does GDP growth influence sporting performance? Retrieved April 13, 2015, from http://articles.economictimes.indiatimes.com/2011-04-03/news/30149956_1_higher-gdp-population-medalsGasquez, R., & Royuela, V. (2012). Is football an indicator of development at the international level? Hubbard, G., & O'Brien, A. Principles of Macroeconomics. Pearson.Investopedia. (n.d.). Investopedia. Retrieved April 13, 2015, from http://www.investopedia.com/terms/p/piigs.aspKunz, M. (2007, July). FIFA Magazine. Retrieved April 13, 2015, from http://www.fifa.com/mm/document/fifafacts/bcoffsurv/emaga_9384_10704.pdfKuper, S., & Szymanski, S. (2014). Soccernomics. Nation Books.Manfred, T. (2014, June 6). Business Insider. Retrieved April 13, 2015, from http://www.businessinsider.com/fifa-ranking-formula-2014-6
Appendix 1
Appendix 2