What the World Cup means for the development of the world economy

Jim O’Neill, former Chairman of Goldman Sachs Asset Management and former UK Treasury Secretary, is a member of the Pan-European Commission on Health and Sustainable Development.

The 22nd World Cup is underway, but who would have thought at the start of this century that it could take place in tiny Qatar? But here we are, and the only surprise is that it doesn’t feel all that surprising.

A large part of my professional career has been concerned with the connections between the beautiful game and the global economy. At Goldman Sachs and before that at Swiss Bank Corporation, I indulged my dual obsession by presiding over special releases for each World Cup from 1994 to 2010. After that, I received personal messages from senior central bankers around the world. Some have told me it is the best publication we have produced, which given the frequency with which we publish on economic events and markets, is both amusing and thought-provoking. We’ve persuaded national leaders and football greats to be our guest writers. On one occasion Alex Ferguson, legendary Manchester United manager, chose his best world team ever.

To date, I’ve managed to take part in six World Cups hosted by the United States, France, South Korea and Japan, Germany, South Africa and Brazil. Based on these experiences, I can join those who describe the event as one of the most beautiful inclusive gatherings of many different nationalities and cultures. The emergence of fan zones, which really took off after the 2006 World Cup in Germany, embodied that spirit, although I felt it most intensely in Seoul 2002.

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The link between football and the state of the world economy is evident in the choice of tournament organisers. I think it’s an inescapable fact that FIFA’s selections for South Africa in 2010, Brazil in 2014, Russia in 2018 and now Qatar were based on the steady rise of so-called emerging countries over the first two decades of this century. I have long considered that the other two BRICS countries (a group that includes Brazil, Russia, India, China and South Africa) might well join the small group of hosts in the future.

But are the days of even wanting to host the event numbered considering many major countries have turned inward in recent years? Is it becoming increasingly difficult for aspiring emerging nations to host the world’s most-watched tournament? Or, on the contrary, could the world soon move back towards a more contented, globalizing and inclusive international order? One might even ask a deeper question: is FIFA a leading or lagging indicator of the world economy and the level of globalization?

I suspect that how the competition plays out over the next four weeks, and more importantly how many of us watch the games, could be the clearest early indication of the wider meaning of this year’s World Cup. Competition is the backbone of FIFA revenue. Discussions are already underway – likely motivated by professional clubs’ desire for even greater revenue – to convert the tournament into a biennial event, or to complement the current four-year format with a four-year club competition.

If the future of the global economy is very different from the past 20-30 years, FIFA’s decision-making will reflect that. It’s hard to imagine FIFA getting excited about future competitions in emerging markets when those countries have contributed less to global economic growth than the tournament’s hosts since 2010.

In the 1980s, 1990s, 2000s and 2011-20, global real GDP growth averaged 3.3%, 3.3%, 3.9% and 3.7%, respectively. The acceleration over the past two full decades has clearly been driven by stronger growth in emerging markets and coincides with the period when FIFA began selecting hosts outside of football’s traditional strongholds. For now, it looks like that trend could reverse this decade, although it’s eight years away.

And what about the winners this time? I have learned from the popularity of the publications I have produced in the past to go no further than predicting the four semi-finalists. For one thing, the same realism with which one must approach economic forecasts also applies to the World Cup; Second, the leaders of countries that we hadn’t predicted victory often didn’t take it well.

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I’ll start with the story. Only eight countries have won the World Cup. Brazil are always among the favorites with five wins and this year’s squad looks to be one of the strongest of the tournament. Argentina, Uruguay, France, Germany, Italy, Spain and England are the other previous winners. Even if Italy didn’t qualify this time, the winner will probably be one of the others.

One of those years England will win it again, but it could easily be any of the previous winners. Among the others, Denmark, the Netherlands and Portugal usually rank above their economic and population weight. Whoever wins, I’ll be on the lookout for any signs going forward, as I always have.

This article was published by Project Syndicate


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