Dani Rodrik's weblog

More on soccer economics

I had a lot of good feedback on my post on soccer. In particular, there were quite a few suggestions for related material.

Check out Branko Milanovic's paper, which covers closely related ground. I had actually read this paper a while back; I simply forgot to refer to it. Here is the video version.  Chris Dillow has interesting thoughts here.  An interesting paper by Baur and Lehmann asks "Does the Mobility of Football Players Influence the Success of the National Team?" and answers that yes, it improves national teams.  And Alex Edman points me to a recent paper of his on the importance of loyalty to national teams: the paper shows that international soccer losses lead to investor depression and stock market declines; it was published in the August issue of the Journal or Finance.

Where I think we still need work is on the quality of domestic league play in countries which export most of their star players. As some commentators pointed out, Latin America is the right testing ground for this (in view of the pervasiveness of the phenomenon and the better data), and one can look at stadium attendance, value of TV contracts, or ticket prices as indicators of trends in quality.  Whether on balance the average Brazilian or Argentinean soccer fan is better off or not seems to me to be an open question.

Now who else is rooting with me for ManUtd to win against Arsenal this weekend and rise to the top of the table?

A monumental data gathering effort

is being led by Peter Nardulli at the University of Illinois at Urbana-Champaign. As I mentioned in an earlier post, it involves the digitization, classification, and coding of 30 million plus news reports from all over the world going back to 1946.  Called Event Analysis, the project will greatly enrich the quantitative information at social scientists' fingertips. You want to know how frequently labor protests accompany IMF missions to developing countries? Whether governments announce more new programs before or after elections? How quickly economic or political ideas and fashions travel across countries? A few clicks of your mouse, and you will have your answer to these and a million other questions about recent economic and political history. 

Two downsides: it will put a lot of graduate students out of a job (no need to pay them to collect and code information once there is a master data set), and it will probably lead to too much data mining.

Good news on the gender gap front

by Ricardo Hausmann, guest columnist

We are all so affected by bad news on so many fronts – rising global inequality, a looming economic crisis, a warming planet, etc. – that we seldom take the time to savor the good news when they happen.

According to the latest gender related statistics published in the 2007 World Development Indicators (WDI) by the World Bank, the gaps between the sexes are going through a major shift worldwide. In 2006, literacy ratios of young women between the ages of 15 and 25 were higher than young men’s in 54 out of 123 countries.

If we look at secondary school enrollment, in 2004 there were 84 out of 171 countries in which girls outnumbered boys. At college level, this is also true in 83 out of 141 reporting countries.

Tertiary school enrollment in 2004: female vs. male

Note: Countries above the red dots have more women than men in tertiary enrollment

A similar story emerges when we look at labor force participation. In 2005, women represented on average 40.3 percent of the in a sample of 200 countries. The graph below shows the percentage of the labor force composed of women in 2005 in the horizontal axis and the change of this variable the 1990-2005 period. While 78 countries show declines, including Egypt, Turkey, Sudan and Georgia, 122 countries show increases, many of them quite substantial, including Iran and Libya.

Increase in female labor force as a percentage of the total labor force between 1990 and 2005 vs. female labor force in 2005

So, it is not just in the US that the education gender gap has reversed. This signals coming changes in the role of women in the family, the economy and in marriage. There is a growing literature trying to work out what forces this may unleash. Murat Iyigun and co-authors have been thinking about this in a series of papers (see this and this). More couples will have a more educated wife whose income earning capacity will exceed that of their husbands. How this will change power relationships and family roles is a fascinating topic.

Another week, another trip

This time it's off to the University of Illinois at Urbana-Champaign, where I will be giving a talk at the dedication of the University's Cline Center for Democracy.  The Cline Center has a major research project called the Societal Infrastructures and Development (SID) project. It is a very ambitious undertaking devoted to nothing less than answering the question: "How can we enhance the quality of life for people throughout the world?"

Two data-gathering exercises being carried out under the project's umbrella seem particularly interesting:

the Comparative Constitutions Project and the Event Analysis.  The constitutions project involves the systematic collection, translation, digitization and coding of every constitution in the world since 1789.  It provides a wide array of comparative data on the formal institutional designs adopted by nations at different points in time.  It also provides valuable data on national contexts.

The event analysis involves the collection, digitization, classification and analysis of an imposing array of newspaper reports of relevant events for every nation in the SID research design since January 1, 1946.  Currently an archive of over 30,000,000 news reports has been assembled, with thousand of reports being added daily. 

The project's conceptual framework looks, well, comprehensive.  I look forward to learning more about it during my visit.  

Soccer as a window on globalization

Do you want to understand how globalization reshapes wealth and opportunity in the world? Look no further than soccer--the sport that everyone in the world (besides the U.S.) calls football. I know, this is not an original idea. There is at least one best seller on the topic, but while it is a readable one it barely scratches the surface of the interesting issues.

Look in particular at how the globalization of the soccer industry has shaped the African landscape. While Africa always produced individual star players, the loosening of the restrictions on the numbers of foreign players in European leagues had a tremendous impact on the number of African players making the move North. So dominant are African players that the BBC's web site even maintains a page devoted to them alone. It is no exaggeration to say that Europe's soccer scene would not be half as exciting without African players such as the strikers Drogba (of Chelsea) and Eto'o (of Barcelona).

So it is beyond question that the globalization of the industry has increased the quality of play for the top clubs, and presumably has increased the enjoyment of their fans. It is also not in doubt that it has increased the earnings of the best African players and widened the income gap between them and their compatriots back home.

But there are also other interesting questions to which I would love to have answers.

Consider that soccer fans have loyalties not only towards individual clubs but also to their national teams. So one question is what has the presence of foreign players in Europe done to the quality of the national teams. Following the disappointments of the English national team in recent games, some have suggested that the culprit is the dominance of foreign players in the Premier League and have recommended reintroducing quotas.

Or consider the quality of domestic leagues in Africa proper. The complaint that the exodus of players has hurt these leagues has been around since the 1970s. But I do not know of any serious evidence on this, and I would love to know.

In any case, it is likely that the globalization of the industry has (a) increased the quality of African national teams relative to European national teams; and (b) reduced the quality of domestic leagues in African leagues relative to club play in Europe. So how do we evaluate these outcomes in terms of what ultimately counts: the enjoyment of the fans?

And one final question that follows from the previous paragraph: have Africans become more nationalist in sports and Europeans less so as a result of these relative changes in the quality of club versus national teams?   

And while we are on sports, can someone explain to me why Americans call their national baseball championship the World Series? Did I miss all the Japanese and European teams that were eliminated in earlier rounds?

NEUDC 2007

Our Center for International Development is playing host over the next couple of days to this year's Northeast Universities Development Consortium Conference--an annual conference on development economics.  Looking at the variety of sessions and papers being presented, I am once again struck by how strong and fertile the field has become.  Economic Development was once a weak sub-discipline within economics. Clearly no longer.

In my mind, the next big challenge is to integrate the work on macro (mostly growth, trade, and finance) with the work on micro (mostly health, education, and evaluation).  A few people are working in that intersection, but not nearly enough in my view.  The micro economists face the challenge of demonstrating that their work can say something about economy-wide growth patterns and differentials--the strongest determinant of poverty patterns in the world.  Meanwhile, macro types have to develop evidence that passes the microeconomists' more demanding requirements.     

Overheard at the NYT Book Review

Editor A: Doesn't this Krugman guy get on your nerves, always on his high horse about how Republicans and non-economists get their facts and arguments wrong?

Editor B: Yeah, it was a great idea to have his book reviewed by a historian. I love the way Kennedy says Krugman gets his history wrong. Couldn't have worked out better.

Editor A: Serves him right. And what about this Bob Reich book?

Editor B: Remember the days when Krugman was always on Reich's case for not understanding comparative advantage and so on? 

Editor A: Yeah. It's interesting that Reich's book gets praised by an economist.

Editor B: Let's publish it on the page facing the Krugman review. Krugman trashed by historian while Reich gets plaudits from economist. Get it?

Editor A: You are a genius.

Chuckles all around.   

Economists with snake oil

I think I know why "economists" write books like this and this: they sell!  But I don't understand why anyone reads them.

Do you need to take my course?

The answer is no, if you can answer the following questions (drawn from my list of study questions for monday's midterm exam):

1. Discuss why different countries may end up having different levels of openness (measured by shares of trade in GDP) even if they follow free-trade policies.

2. The gains from trade are larger, the larger (i) the difference between autarky and world relative prices; and (ii) the volume of trade under free trade. Discuss and explain.

3. Using the data below, and some “reasonable” elasticities, provide your best guess as to the real income gain that would accrue to each country if their tariffs were eliminated altogether. Interpret your results.

	imports/GDP	average import tariffs
U.S.	0.128	2.1%
India	0.145	21.4%
Mauritius	0.673	13.0%

4. Even if countries have identical preferences and have access to identical, state-of-the art technologies, they will have different patterns of comparative advantage and can gain from trade with each other. Discuss why this sentence is true or false.

5. An economist has written “our country’s exposure to trade (share of trade in GDP) is too small for trade to exert strong effects on our factor prices.” Discuss whether you agree with the logic of this statement, and under what conditions it would be false.

6. Much of South Korea’s industrial subsidies went to industries that were not the best-performing in terms of TFP. Some economists have argued that this is evidence that such policies have not made a positive contribution to the economy’s performance. Discuss whether this conclusion follows from the premise.

7. "A reduction in import tariffs has the same effect on an economy’s real income as an equi-proportionate decline in the transport costs that its importers have to pay." True or false?                                              

8. "It is possible for a country to become worse off when another country liberalizes its trade." True or false?

Well, students in the course learn other stuff too--I hope!

Double standards, edition 6,792

The finance ministers of the world's richest countries want to set up rules to govern the investments of sovereign wealth funds from developing and emerging nations. I wonder if they also intend to apply the rules retroactively to entities such as these.