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Why Germany wins and lessons from the Champions League final

Wolfgang Fengler's picture
Gary Lineker, the British footballer, is not only known for his talent on the pitch, but also for this memorable quote: “Football is a simple game; 22 men chase a ball for 90 minutes and at the end the Germans win”.  Last weekend his theory proved correct. For the first time ever, two German teams contested in the Champions League Final. Bayern Munich (winner in 2001) played Borussia Dortmund (winner in 1997). As many Kenyans watched this true Fussball Fest, which ended 2:1 for my home team, it is a good time to reflect on its broader lessons for development, with a German lens.
 
What made it possible for both teams to become so successful? Surely, it’s not just skills, fitness and tactics—in ample supply worldwide—although they are needed ingredients. The full recipe involves global positioning and integration of the best talents, no matter where they come from, especially for these two cities which are medium-sized by international standards (Munich has 1.3 million residents and Dortmund only 580,000 residents). Today, football is as much a business as any other service industry. Enterprises are successful if they attract the best talents and connect them successfully to the local culture.
 
German football is an interesting reflection of how the country managed to adapt in a rapidly changing world. With a growing shortage of local skilled labor, German teams attracted international talent, and integrated them successfully with local players. Other parts of the economy are following the example albeit slowly. It will be vital for the economy to learn from the example that football is setting, because Germany is shrinking. After reaching a peak of 82.5 million in 2005, the total population began to decline. If current trends continue and immigration does not increase dramatically, Germany will be home to “only” 71 million people by 2050. More importantly, the decline is expected to be fastest among the working age population, falling from 55 million today, to below 40 million in 2050. This is the exact mirror image of Kenya, where young adults are driving demographic growth: by 2035, the size of Kenya’s workforce is expected to overtake Germany’s. Sadly, Germany’s demographic decline is particularly steep among the 20-30 year olds—the prime ages for footballers.


So how do you remain competitive with a shrinking workforce? This is how the clubs did it.
First, you invest in early success and capitalize on it to build a brand. Second, you provide a great environment to work and live in. Think of Bayern Munich. Among the squad that played in the final, you had a number of key national team players (Neuer, Boateng, Lahm, Schweinsteiger, Mueller and Gomez) two of whom are first or second generation immigrants. You also had Austria’s new superstar Alaba (whose mother comes from the Philippines and father from Nigeria), Brazilian national player Dante, as well as the French, Dutch, Spanish and Croatian internationals Ribery, Robben, Martinez and Mandžukić.

That successful model is being replicated beyond football, although slowly, in the economy as a whole. Attracting highly qualified immigrants is a win-win proposition. It keeps the home economy competitive producing growth and welfare; more often than not, sending countries are also benefitting via remittances and knowledge transfers, when migrants eventually return home.  By the way, Kenya just hit a new record in remittance flows, which exceeded US $1.2 billion officially in 2012 (most likely underestimating the real amount by at least 50 percent).

But Kenya itself has the potential to attract talent. The 2010 Constitution opens opportunities for dual nationality, and for obtaining citizenship after seven years of permanent residence, signaling new openness to the region and the world. As I will be leaving Kenya after four years this July, I can attest to Kenya’s openness and remarkable generosity to residents who come from other countries.

My sincere hope is that Kenya will further nurture this openness to international influence, positioning the country as a vibrant, modern and confident regional force, which doesn’t feel threatened by the outside world, but is willing to embrace it. Kenya can attract the best international talent and businesses, while positioning its own businesses to compete successfully in the world economy. If Kenya continues on this path of openness, it will eventually also play in the Economic Champions’ League.

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NOTE: Wolfgang Fengler is the World Bank’s Lead Economist for Kenya, Rwanda and Eritrea. He is a passionate footballer and organized the “Nairobi Mini World Cup for Children” as the football commissioner in the International School of Kenya. He just published “Realizing the Kenyan Dream” which is available in all major outlets.
Follow Wolfgang Fengler on Twitter @wolfgangfengler

Comments

Submitted by Martin Luis Alton on

A bit ironic you published this after yesterday's friendly.....Also,as far as football is concerned, there seems nothing particularly "German" about taking the best international talent and integrating it with local players. What strikes me as more noteworthy is the long-term planning and outlook found in German football, as well as the wider economy. Isn't that where the most intersting lessons for others lie in this age of short-termisms, including for the bank where the (rather short)project-cycle determines so much of what we do and how we do it?

I agree with Luis here. Attracting international talent and integrating this talent in with local labor? This is the story of all of the top leagues, not only the Bundesliga. (The story of 'lesser' leagues is often to develop labor -- sourced locally, or from still 'lesser' leagues -- for export.) What is noteworthy to me about recent German footballing success (and, as everyone knows, success can be notably shortlived on the pitch) is the extent to which it is, in part, a consequence of a move away from short-termism. The decision of German authorities after the disaster of Euro 2000 to invest in academies to develop young talent, as well as the requirement for fan ownership of clubs (the 50+1 rule), are both evidence of, and have contributed to, this longer-term thinking. Short-termism wins prizes in football as well, of course (as it does at the Bank, some critics might argue). Chelsea is the obvious counter-example in this regard. It develops almost no players on its own (its best youngsters -- e.g. McEachran -- go out on seemingly perpetual loan to other clubs, and even the young foreigners it brings in -- e.g. the three young Belgians -- can't, for the most part, get in the club either, and so also go out on loan) and yet it won the Champions League last year (and the Europa League this year). Who knows what 2014 will bring? That said, the fact that England is now explicitly seeking to learn from German experience with player development over the last decade (fan ownership is, as a practical matter, simply not up for discussion there, although it is, rather wisftully, touted by many fan groups and some journalists) suggests that this long-termism is a more unique lesson and experience from Germany worth considering. So, while Kenya may perhaps find some useful lessons from Germany related to the successful integration of international and local labor, another lesson from Germany football would be about developing practical systems for human capacity development and investment in youth.

Submitted by Wolfgang on

Dear Martin,

Thanks for your insights. At least the US has a German coach!
I agree with your emphasis on having a long-term perspective, not just for development but also in business. I just published an article about M-PESA with Pauline Vaughn and Michael Joseph. The fact that Safaricom wanted to build a brand for the long-term not just to make money in the short-term is one of our main messages.

Best

Wolfgang

Submitted by Caesar on

Wish you good luck on your next assignment Mr Fengler, Thank you for sharing your talent, perspective, and passion for the causes you believe in with Kenyans. I have always looked forward to read your blogs.

Submitted by CAA on

I'm not really a fußball fan, though I watched this particular game. What I can draw from the blog post though, is the analogy. The Kenyan demographics are indeed the mirror image of Germany's. The Jubilee Government seems to realise the importance of the youth and how they could take Kenya to middle income status by the year 2030. However, the previous Government adopted some policies that seem to be very short term. While dual citizenship is now available, to even get dual citizenship you need to live and work in Kenya for seven years. However, work permits are only granted to people over the age of 35. This poses two problems. First, while I acknowledge that this policy was implemented in good faith, so that the majority youth population have in the first instance a chance at very scarce formal labour jobs, it is only by allowing outside influence that innovation floruishes in the formal sector, so the benefits from openness here would not be realised. But this policy locks out young innovative minds! Second, in 50 years Kenya will face the exact same problem as Germany is facing now - this points to the short term policies/preparation. What happens then? Is simply changing the policy going to be enough? Perhaps research to determine if the benefits of the no-work-permit-below-35 policy outweighs the benefits of innovation and externalities from loss of this group of immigrants into Kenya could tell us if the policy works. However, I think past evidence, as well as the very nicely put football analogy, says that in the long run openness is good for an economy.
Gruße aus Mainz

I don't think attracting talent from the whole world is the reason German teams did so well in this years champions league. I think investing in youth coaching was the reason they did so well. I read in BBC sports, German FA pumps 100 million euros annually on youth coaching every years. This has resulted in a situation where the country is filled with an abundance of highly accomplished footballers. You can have all the talent from around the world, but if that talent is not polished, you will get average results.

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