World Cup fever is gripping those parts of the globe that have made a religion out of kicking round balls into square nets. But one group is watching the tournament from its own, very particular perspective. For economists, this is about more than on the pitch fireworks or even national pride. The question — admittedly asked with tongues firmly in cheeks — is how will it all affect the global economy?
Football provides a perfect opportunity for proponents of the dismal science to shed their glum reputation and indulge in some light-hearted research. "Is there any link between football and economics, or are we just finding excuses to have some fun?" muses an impressively self-aware Jim O'Neill, head of global economic research at Goldman Sachs, in the introduction to the investment bank's 60-page report on the economics of the World Cup.
"We are convinced that soccer has an impact on the economy and therefore justifies some research effort,"insist Ruben van Leeuwen and Charles Kalshoven, authors of Soccernomics, published by the economics team at ABN Amro, the Netherlands-based bank.
Their research concludes that a World Cup-winning nation enjoys 0.7% more economic growth compared with the previous year, as well as a boost to its stock market. This leads ABN Amro to punt Italy as its "favourite" — that is, the country whose victory would most benefit the world economy. ABN Amro takes as its starting point the threat posed by global trade imbalances. "From the perspective of the need for balanced world economic growth, a European country should win the World Cup," says ABN Amro. "A US victory would further skew the imbalance and an Asian victory could lead to an overheating of the region's already booming economies." A South American victory would not be bad for the world economy — but would not help it much either.
Of the five large European countries in the tournament, the two weakest economic performers in recent years have been Germany and Italy. So ABN Amro's dream final would be between these two nations, with Italy as the winner because of its poorer record. Germany, in any case, enjoys a home advantage as tournament hosts, argues the bank. |
