Technology transfer and convergence of performance: an economic study of FIFA football ranking

Abstract

The seminal work of Gerschenkron (1962) stated that latecomers borrow advanced technology from their predecessors, resulting in convergence of productivity among nations. Additionally, the diffusion of technology among developing nations has been fulfilled not only directly from developed nations but also from surrounding nations through local spillovers such as learning from others. Recently, the disparity in national football performance among the nations appears to have improved, and it is evident that talented players are mobilized from developing nations to developed ones. The present article attempts to apply the framework of development economics, as introduced earlier, to the case of international football. An empirical examination of FIFA's world ranking points considered as reflecting nations' performances was conducted, applying panel data to control for unobserved nations' specific effects (Baltagi 2005). The results indicate that both technology transfer and the local information spillover play a crucial role in improving the performance of developing nations, but not of developed nations. The presented results are interpreted as implying that developing nations are able to catch up with developed ones due to the effects of technology transfer and local information spillover.

Notes

¹Various works explored its cause (e.g. Schmidt, 2001; Schmidt and Berri, 2005).

²In August 1993, FIFA introduced a ranking system for senior national teams. The method of calculation of world ranking points changed in the beginning of 1999. Additionally, variables such as population, real GDP used for the estimation were collected from the Penn world table that covers only from 1960 to 2000 (http://pwt.econ.upenn.edu/php_site/pwt61_form.php). Therefore, we focus on the period of 1993–1998 in order to maintain consistency of data.

³Schmidt (2002) used the Gini coefficient of team winning percentages as proxy for competitive balance.

Fig. 1 Coefficient of variation of FIFA world ranking points

⁴In the case of Major League Baseball, the expansion of teams in the league increased competitive balance (Schmidt, 2002). The members of FIFA increased from 167 in 1993 to 205 in 2006. Therefore, the expansion effects on competitive balance are also likely to be consistent in the case of international football.

Fig. 2 Kernel distributions of FIFA world ranking points

⁵Categories of Locality are consisted of five areas; Europe, Latin America, Africa, Asia and other areas. Details of the categories are available on request from the author.

⁶The most Prominent and largest professional football leagues are defined as Italy's Serie A, England's Premiership, Germany's Bundesliga and Spain's Primera Division. Although Wilson and Ying (2003) added France's Le Championnat to them, the records of teams belonging to Le Chamionnat are inferior to those from the other leagues in the UEFA Champions League that determines the champion club among European professional leagues. Therefore, I omitted France from the group of the most developed football nations.