Argentina’s GDP may be impacted after winning the World Cup, says survey

When the Argentina national team led by Lionel Messi won the World Cup in Qatar, on Sunday (19), it also ended up giving a boost to the economy of the South American country. Economic victory is more modest and punctual than sporting victory, but it is not nonexistent, according to a study carried out by Marco Mello, a postdoctoral researcher at the University of Surrey, in the United Kingdom.

In an email interview with Broadcast (Grupo Estado’s real-time news system), Mello says that there are conditions for Argentina to have a “small and short-lived” economic return with the victory.

He believes that the conclusions of the research on the impulse to exports with the victory in the World Cup, thanks to the greater visibility of national products and services in the global market, may come back now. “This can also apply to the Argentine economy, characterized by a sizeable export sector”, he comments. In addition, the high inflation currently faced by the country boosts exports more, he also recalls.

Mello used data from the Organization for Economic Cooperation and Development (OECD) from 1961 and developed an econometric model, to conclude that winning the FIFA World Cup leads to growth of “at least 0.25 percentage points in the two subsequent quarters ” in the Gross Domestic Product (GDP) of the country of the winning team. The result is driven primarily by exports, which according to the author is consistent with a greater appeal for that country’s products and services in the global market, after winning a major sporting event.

The investigation concludes, on the other hand, that organizing a World Cup does not generate significant GDP growth effects for the host country, “at least in the short and medium terms”. The study argues that this can bring “some light” to the debate on the formulation of public policies, especially at a time when FIFA is considering making the World Cup a more recurring event, eventually holding it every two years.

Winning on the field and the economy

Mello says in his study that there are several references in the economic literature on the economic boost with the World Cup victory, through channels such as consumer and investor confidence in the country, but considers that there was little evidence on this point. Now, the researcher claims to have brought the first causal evidence of the mentioned impulse in the economy.

The model developed by him shows that hosting the Cup does not have a clear economic impact on GDP growth, but establishes this correlation for the winner of the dispute.

The researcher points out in the study that the effect is short term. In any case, a boost for the Argentine economy is welcome, at a time when the country is facing a slowdown in activity, with high inflation and the risk of further fiscal problems, while it continues to renegotiate its debt with its creditors.

Source: CNN Brasil

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