Wednesday, July 15, 2009

How Soccer Illustrates Globalization

. Wednesday, July 15, 2009

One of William Easterly's students guest-posts on globalization and soccer:

Some “soccer economists” argue that nations that are worse at soccer have benefited from exporting their players to world-class foreign clubs, where they gain valuable skills and experience before returning to play for their home country This is similar to recent literature that questions the traditional Brain Drain fear, with the Brain Circulation alternative – skilled emigrants bring home skills and connections that could be as valuable to their home country as the skills brought back by exported soccer players.

But there is also a homegrown story. As Dani Rodrik points out, the Egyptian team that beat Italy had a majority of players with experience playing in domestic, rather than foreign clubs. The USA team that similarly surpassed expectations has key players from both domestic and foreign clubs. So taking advantage of globalization perhaps requires BOTH strong domestic capabilities and international links.

One nation’s strategy for developing a strong domestic soccer league will be very different from the next. American kids who play under the supervision of soccer moms are different from the street kids in a Brazilian favela. Perhaps the venerable theory of comparative advantage needs to become more complex as each country learns to play to its strengths and use more of whatever are its most abundant resources to compete globally.

If I had known that there was such a job as "soccer economist" I would have stopped worrying about international financial regulatory policies a long time ago. Alas and alack, it's too late for me.

More seriously, the last paragraph is true and under-discussed. In introductory courses and textbooks we often talk about "comparative advantage" as if it were a general, exogenously-given thing. In truth, comparative advantages can be quite specific, change over time, and can sometimes be engineered through public investment. We don't often think about this in terms of sports, but the U.S.S.R. certainly spent a lot of money training Olympic athletes, especially in high-profile sports like gymnastics, basketball, hockey, swimming, and weight-lifting. I recall reading somewhere (can't find the link right now) that China invested a lot of money in "soft" Olympic events in which they were not typically competitive in order to pick up a higher metal count.

But back to soccer and whether it really does explain the world: social scientists don't have only to look at the implications of soccer on trade, brain drain, or immigration; several political scientists recently studied [pdf] national cultures of violence by looking at the behavior of soccer players. And nationalist forces have instituted the new "6+5" rule for UEFA club matches, mandating a certain percentage of "native" players on professional teams. These quotas serve the same political function in soccer as they do in other types of trade: local workers who face new international competition seek some protection from that competition in the form of regulatory rents.

Can the FA take UEFA to the WTO Dispute Settlement Court?

And what are the geopolitical implications of one nation's central bank sponsoring another nation's championship team?


Christopher Dittmeier said...

Interesting perspective. I too want to see if I can transfer to become a soccer economist.

Re: "Brain circulation", it occurs in soccer in part because one of the most high-profile activities is the national squad. Players can go overseas to learn the ropes, but then return home for "national service" and--in the case of the US and smaller countries--rarely for the money. In this case I see a similar dynamic to militaries, which have deployments of promising officers to liaise with larger allies before promotion to higher posts back home.

This kind of dynamic doesn't work in the regular economy: comparative advantage gives workers incentives to leave home for the abroad, but where are the incentives to come back home afterward?

How Soccer Illustrates Globalization
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