The legendary manager of Liverpool, Bill Shankly, once said, “Some people believe football is a matter of life and death… I can assure you it is much, much more important than that.” I’m tempted to agree, but sadly I get paid to analyse economics, not football. As countries start to compete on the football fields of Brazil, I thought it would be fun to see how they are competing against one another economically. So who will win the World Economic Cup in 2014? Based on analysis by the ING Economics team, I would say the USA.
To get to this momentous result, we took a range of indicators to assess how twenty of the leading nations competing in this year’s World Cup have performed since the last competition in 2010. How fast did they grow? Did they reduce unemployment? Did they improve their competitiveness and exports? Did they reduce their unit labour costs? .
Ranking their performance on the basis of these five economic criteria ( based on data from the IMF, EIU and World Economic Forum), and then combining them into a single index, we came up with a league table. The USA came out on top, alongside Mexico. Interestingly, two more countries from the Americas, Chile and Brazil, feature in the top five. For football aficionados, this is a pleasing result, because in each of the seven occasions that the real World Cup has been held in the Americas, a team from the Americas has won (for the record, the winners were Uruguay, Brazil and Argentina).
In fact, the only European team to feature in the top eight is, you’ve guessed it, Germany, at number three. The Netherlands and Spain, two great footballing nations, barely scrape into the top ten, alongside Russia. England, represented in the World Economic Cup by the UK, comes in at number 13. This puts it just ahead of the remaining European competitors, who dominate the bottom of the table, which is propped up by Nigeria. Clearly the Eurozone crisis has weighed on the economic performance of Europe in the past four years.
To see how these economic rankings would look when translated into the knock-out format of the real World Cup, we put each country into the Groups drawn for this year’s competition. Sadly, on this basis, The neither the Netherlands nor Spain make it out of Group B, because they have the misfortunate of being in the same Group as the more highly economically ranked Chile and Australia.
In the table below, each game is won by the team with the higher economic ranking. As a result, hosts Brazil lose out narrowly to Chile in the second round. Chile then beat England in the quarter final, but then go on to defeat against Germany in the semi-final. The other semi final is between the USA and Mexico. Since they have identical rankings, we decided to have a ‘penalty shootout’ based on the performance of their stock markets since 2010. The USA emerges as the winner, and then goes on to beat Germany in the final to win the World Economic Cup.
Now you may be wondering, where would China fit into this story? Well, China is not in our World Economic Cup because it failed to qualify for the real thing. But, despite its rapid growth, China would not have won the Cup, even if it had qualified: its economic ranking is let down by its scores on competitiveness and unit labour costs. Indeed, it would have lost to Mexico in the quarter final.
With all due respect to Bill Shankly, like football itself, our exercise is hardly a matter of life and death. But there are still some important lessons. The performance of countries in Asia and the Americas show how rapidly the list of winners and losers can change. Meanwhile, it is clear that Europe’s economies are paying the price of the Eurozone crisis. Yet despite this, Germany’s economy, like its footballers, can never be counted out. This is something to emulate. But, thankfully for the rest of us, whether in business or in football, Germany can still be beaten.
(With thanks to Anke Martens)