Globalization, football and goals

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Branko Milanovic looks towards the world’s most globalized sport for possible lessons on how poor countries can harness globalization for their benefit.

Soccer (football in the non-American terminology) is the most globalized sport. Free circulation of players has markedly increased during the last ten to fifteen years as limits on the number of foreign players in the European leagues have been lifted, and clubs have become more commercially-minded. On the other hand, the rules governing national team competition have remained restrictive: players can play only for the country where they were born. We show that, in a model where there is free circulation of labor, increasing returns to scale, and endogeneity of skills, this produces on the one hand, higher overall quality of the game and increasing inequality of results among clubs, and on the other hand, lower inequality in the national teams’ performances.

The empirical examples from the history of the European Champions’ League and the World Cup support the implications of the model. We argue in the conclusions, that soccer’s global rules allow poor countries to capture some of their “leg drain”, that is the improved skills which their players have acquired playing for better foreign clubs. This provides an example as how forces of efficiency but also inequality unleashed by globalization can be harnessed by the existence of global institutions to help improve the outcome for the poor countries.

The paper is old, but Branko rehashed some of these ideas in a recent op-ed.

Also see Franklin Foer's 'How Soccer Explains the World,' a previous post on soccernomics, and a workshop on the economics and psychology of football.

Update: Sunil Gulati, Columbia econ professor and former World Banker, is the new president of the US Soccer Federation. (via The Sports Economist)

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