A single thought runs through one's head upon arrival in South Korea: Football! The place is awash in props, promotions and enthusiasm surrounding Asia's first-ever World Cup soccer tournament.
You could easily go a day in co-host Japan without noticing a major sporting event's about to start, but not in this city -- or elsewhere in this nation of 47 million. Giant soccer-ball sculptures, billboards hanging over the skylines, huge banners draped over buildings, human-sized cutouts of players, you name it. Everyone and everything, it seems, has a piece of the event.
PHOTO: A P
It's not surprising, then, that analysts are wondering what the World Cup will mean for Korea's economy -- already one of the globe's most vibrant. It's already pumped additional life into the economy as stadiums and other infrastructure were built. And the 450,000 visitors expected here next month would boost consumption, and then some.
But what about the long run? Is there a connection between countries that host the World Cup and gross domestic product? Increasingly, yes, says Jim O'Neill, head of global economics at Goldman Sachs Group Inc. He argues that the "evidence is reasonably strong that the world economy and football are moving in the same direction." The biggest economies are getting better at the sport.
One of the more fascinating qualities of soccer is that many of the world's wealthiest nations aren't good at it. Within the Group of Seven industrialized nations, for example, neither the US nor Japan teams have much global influence within the sport.
At their last outing at the World Cup in France '98, Japan finished 31st out of 32 teams, scoring only one goal. The US came last. Within Europe, meanwhile, Switzerland is a relatively unsuccessful soccer nation in terms of its GDP.
Of course, some of the most prosperous nations in Europe -- France, Germany, Italy and England -- are also highly successful soccer countries. Yet the World Cup is an event where even the poorest nation in Sub-Saharan Africa can defeat one whose per capita income is 25 times higher. That phenomenon gives the event what O'Neill calls "intriguing aspects."
In his book Fever Pitch, British author Nick Hornby wrote that, thanks to soccer, "Yorkshire men, Lancastrians, Scots, the Irish, blacks, the rich, the poor, even Americans and Australians have something they can sit in pubs and bars and weep about." An elitist sport, it's not.
Yet O'Neill's research suggests it's the wealthier nations that are becoming more competitive. This year's finals, for example, will include six of the G-7 nations -- all but Canada. With India excluded, that means eight of the world's 10 biggest economies -- representing some 84 percent of global GDP -- will be competing.
O'Neill reckons that's a bigger proportion than ever before.
Moreover, analysts at Goldman Sachs expect the coming decade would see rapid growth in Brazil, China, India and Russia relative to G-7 nations. Among them, Goldman Sachs says, Brazil and Russia are "serious footballing countries." If the folks at Goldman Sachs are right, and the global economy evolves as much, then the correlation between football and GDP would increase.
In the short-term, analysts speak of connections between nations that win the World Cup finals and GDP and stock market performance. A coincidence, perhaps, but the French economy grew at its fastest rate of the 1990s in 1998 -- the year its team won. Analysts at HSBC Securities find that the stock markets of developed countries that have won the World Cup since 1966 have outperformed global indexes by 9 percent.
Of course, if didn't hurt that France, Germany and England won in years in which they were hosting. The construction of new stadiums and other preparations no doubt boosted each, if only temporarily. Still, the phenomenon intrigues economists around the world -- especially ones who are rabid football fans.
By that measure, bookmakers thinking Japan has a greater chance of winning the World Cup than Korea may be wrong. According to UK bookmakers William Hill, odds that Japan will win are 66 to 1. Though Korea's odds are far worse -- 150 to 1 -- its stock market is up 24 percent so far this year. Japan's is up just over 11 percent. Bottom line, if stocks are any guide, Korea may have a better World Cup than Japan.
The fact that the smart money is on Argentina flies in the face of the World Cup as an economic indicator. Still, investors may be putting dollars on them as 4-to-1 joint favorite to try to win back the billions lost on the devalued peso.
In fact, the World Cup may hurt Japan's economy more than help it. Economists' predictions for how much the event will boost GDP in the April-to-June quarter generally fall between 0.1 percent to 0.3 percent. That means GDP -- both in real and nominal terms -- will probably still be negative this year.
A World Cup boost already has come from public works projects related to the event, O'Neill says. Seven new stadiums were built at a cost of roughly US$1.6 billion, much of it financed with debt.
Many are sprawling multi-function sports complexes that cost far more than basic football arenas. After the World Cup, local authorities will find themselves heavily indebted and shackled with massive stadiums that may never be sold out again.
Here in Korea, meanwhile, officials seem to have their eyes on the long-term payoff: Branding. Sure, the 1 percent boost to GDP estimated by the state-run Korea Development Institute will help. But it's the opportunity to showcase the new, vibrant Korea that interests the government. This is, after all, the nation's biggest sporting event since the 1988 Summer Olympics.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2