Could Soccer Be the Magic Boost to Israel's Economy?

Swedish economist finds that countries whose national teams play each other on the pitch see an increase in bilateral trade – a win-win situation

Ghana's Asamoah Gyan (R) shoots to score against the United States during a 2010 World Cup second round match at Royal Bafokeng stadium in Rustenburg June 26, 2010.
Ghana's Asamoah Gyan (R) shoots to score against the United States during a 2010 World Cup second round match at Royal Bafokeng stadium in Rustenburg June 26, 2010. Reuters / Brian Snyder

Take a guy, any guy, anywhere in the world and ask what he knows about Israel. Ten to one he’ll mumble something about the Israeli-Palestinian conflict or Israel’s terrible security situation and throw a camel into the mix.

Israel is constantly in the news cycle, yet ignorance about it, outside the country, is rife. Could the real reason for that be that Israel hasn’t reached a World Cup or Euro finals since 1970?

Sports championships, especially in the popular areas of soccer and basketball, boost any country’s exposure. Fans visiting from other countries gain exposure to a new culture. Even those who cannot afford to visit gain new knowledge through television. Around a billion people watched the 2014 World Cup soccer finals in Brazil.

Trust and knowledge lower barriers to international trading, studies have shown. That is one logic behind Israel’s outreach through economic attachés at its embassies around the world, and inviting delegations to visit the country. But more can be done: “Sport could also help to infuse trust into cross-country business relationships,” writes Andreas Hatzigeorgiou, an economist at the Stockholm Chamber of Commerce and member of the Swedish research institute The Ratio, after testing the relationship between sports and economic ties, as he reports in his paper “Can Sports Promote Exports? The Role of Soccer Matches in International Trade.”

Hatzigeorgiou used the so-called “beautiful game” as an example, it being the most popular.
 His empirical strategy, Hatzigeorgiou explains, is that many soccer matches between national teams of different countries stem from a random drawing procedure, and therefore create “exogenous variation.”

His sample was not small. Hatzigeorgiou tested trade relations between 209 countries that had played 4,860 soccer matches between themselves over six years, between 1995 and 2001. He also adjusted the results to neutralize other variables that could affect bilateral trade, such as shared language (or lack of it), and whether the two countries had a free-trade agreement.
Soccer games between two countries boosted trade between them by 19%, a statistically significant degree, he concluded, though phrasing it with typical scientific caution: “The results are indicative of the hypothesis that countries that engage in sporting activities with each other enhance their bilateral trade.”

Unless you’re American

Americans are a certain exception to the rule, in the sense that they don’t care for soccer, relatively speaking. Thus, as he continued to study the soccer-trade relationship after the sample period, Hatzigeorgiou reached the conclusion that America’s disdain for the game led to knowledge barriers between it and other nations, especially geographically or culturally distant ones.

Proving a negative is impossible, but Hatzigeorgiou points to the example of the 2006 game between the United States and Ghana, which was watched by millions of people. Americans learned more about Ghana, or at least heard of it for the first time. The upshot: Before the game, Ghana-U.S. trade had been small but steady. After the game it ramped up, growing almost fivefold in the span of six years. There was a shorter-lived spike in bilateral trading after another soccer game between the two countries in 2010. Similar trends followed a game between the U.S. and Slovenia. Exports from the U.S. to Slovenia doubled after the game, though the boost only lasted two years.

Actually, all this is news mainly to politicians. Big business got there a long time ago, and as we know they will pay stunning sums of money to sponsor major games, or show ads at half-time. 
“These results could have potentially interesting policy implications,” Hatzigeorgiou says, possibly understating the case, and adds: “Governments may want to consider actively promoting sporting activities together with countries with which they want to enhance their trade.”