Why Nations Win (World Cups)

It's not institutions

this was a major 2022 highlight i was not expecting

For the Americans: the soccer/footbal World Cup (I’m gonna use both terms interchangeably for stylistic reasons, not because I respect the term “soccer”) ended Sunday, with an extremely prolonged and tense match between France and Argentina (we won!). What I found interesting is that, of the past 7 World Cup finals, France has made 4 (1998, 2006, 2018, and 2022) and of the past nine, Argentina has made three (1990, 2014, and 2022). Since 1970, only two teams that aren’t Argentina, Brazil, Germany, France, Italy or the Netherlands have made a final: Spain (2010) and Croatia (2018), and only two other teams (England and Uruguay) have ever won the Cup.

So the interesting question here is: why are some countries so dominant at football, considering that it’s not necessary that they are?

The economic geography of the field

Location, Location, Location

A very old book review I wrote asks the question: why is economic activity concentrated in so few places? In the US, the vast majority of output corresponds to cities, and especially to big ones - so, for example, how many houses just three of them (New York, San Francisco, and San Jose) build affects national GDP massively. At the same time, very few countries are actually rich, and most important economic stuff happens in a smaller handful of countries. So the analogy is clearly important.

The central issue here is agglomeration and clusters. A cluster is an interconnected set of “firms” in a single sector, and agglomeration is the force that brings them together - cities dominate all economies because clusters thrive in bigger labor markets, and labor markets tend to grow around clusters. This applies anywhere from cities to drug cartels - clusters rule everything around us. An important caveat is that clusters tend to form nowhere in particular: certain activities, types of shops, or just immigrant communities are usually where they are for reasons, and those are normally completely arbitrary. Of course, figuring out why clusters form is crucial, since you could then figure out the secret sauce for them and make your city (or country) very rich, efforts which so far haven’t been especially fruitful. A major theory in development economics / economic geography / trade is that they just kinda happen and then they rub off on each other.

There are many reasons why clusters might emerge: resources (either natural or human), comparative advantage, the vibes just being right, etc.; but a big uniting one seems to be that especially talented individuals or firms set up shop in one specific location. For instance, Silicon Valley is in Silicon Valley because William Shockley lived there, and Seattle is a tech hub because Bill Gates preferred it to albuquerque. If you get big enough, agglomeration kicks in and the market grows and grows.

Since the major driver of economic growth appears to be ideas, and this theory called endogenous growth theory claims that countries that are rich stay rich, since ideas generate ideas. A specifically controversial prediction in EGT (which is itself a bunch of controversial predictions) is scale effects, i.e. that countries with bigger populations will be richer, since a bigger market produces more ideas. I don’t know if EGT is true or not, but it does predict a few massive centers dominating the global economy (vs a converging free for all), so it seems more relevant.

The actual contenders, and the also-playeds

Which countries tend to dominate soccer? Well, it’s not rich countries, because the “major players” list is half South American, and because there’s major outliers like the US, Canada, Australia, New Zealand, or the Nordics. It’s not really a cultural thing because Europe includes more Hispanic-esque countries like Italy and France (and, recently, Spain) but also the very much Northern European nations of Germany, the Netherlands, and also the rest of France. And it’s definitely not population because the US, India, Mexico, Indonesia, China, etc. barely ever make it into the Cup to begin with. The factors I think are the most important are “soccer culture”, a competitive league structure and the presence of major players and coaches.

Soccer culture is easy: all of the “good” countries are very passionate about football, but this is obviously endogenous - nobody cares about sports they’re bad at. But a bunch of other countries, most of them in South America (and also Portugal and a few other European ones) also really care but haven’t gotten anywhere - Mexico is a major underperformer, Uruguay in particular loves the sport, but hasn’t been a real contender since the Soviets invaded Hungary; and until 2006, Italy hadn’t won any Cups since Mussolini hung upside down. But I think there’s a very clear relationship: countries with more “passion for the sport” will have a larger pool of players, which will result in more good ones playing from a young age and being discovered. This is pretty endogenous growth-y: more players means more cups, just like more scientists means more ideas. Obviously big countries remain a problem, but the US not caring about football rules it out, and I think China and India being very poor slash the market as a whole regardless of how popular the sport is. The big remaining outlier is Mexico, a country that loves fútbol and has a population not much smaller than Brazil, but just like EGT papers allow for differing productivity of scientists, so will we allow different productivity of players - some countries produce lots of players, but very few actually good ones. And most of the remainder of South America is just very small and can’t really produce many players of any quality - but it’s not all.

The second aspect, in my opinion, is the scale of the league - yet another scale effects moment. For the Americans: each country has its own national league where local teams play, and the national team is drawn from the country’s best players, regardless of which league they play in (this is a big deal for Argentina and Brazil, since all our good players play in Europe). There’s also soccer confederations, which are regional blocs of nations, and they hold both confederation-wide cups for teams (i.e. Barcelona, Bayern Munich, Boca Juniors) and for countries (Spain, Germany, Argentina). Plus sometimes they hold a championship between the winners of different confederations, like the 2021 Finalissima where Argentina beat Italy. The scale effect here is pretty simple: having a more competitive league will increase soccer quality because of higher productivity of players.

How many teams are actually competitive in each national league doesn’t seem that important: small countries obviously only have a handful, like the Dutch Eredivise being dominated by Ajax and Eindhoven, or the Uruguayan League normally being won by Nacional or Peñarol. Countries like Argentina, Brazil, and Italy have extremely competitive leagues, with the number of top teams being larger (Boca, River, Racing, Independiente, and San Lorenzo for Argentina, for instance) and a larger and more fluid second tier. But France is kind of in the middle, England goes back and forth on being won by a few or many teams, and Germany has one team (Bayern Munich) dominating the Bundesliga like Ayax does the Eredivise. But the issue here is that, for Europe, the European League is the important one, while for South America, the domestic league is, to a much smaller extent - for probably arbitrary or historically contingent reasons, like most players from Europe playing in Europe. Meanwhile, this effect is smaller for South America, since most good players play in Europe too. But this means that countries with small leagues like Peru or Chile don’t have much of a chance, since their players don’t gain productivity from the European market as much and don’t generate productive players on their own; many good South American players actually play in Argentina or Brazil instead (Paraguay’s Chilavert being a good example). So it seems like Mexico is stuck in a lots of players, low productivity trap that can’t really end on its own… or can it?

The last item, in my opinion, is that most successful teams usually have mostly good players but a few truly exceptional ones - Pele in 60s Brazil, Beckenbauer in 70s Germany, Cruyff in 70s Netherlands, Maradona in 80s Argentina, (the 90s were a big mess but maybe Ronaldinho), Messi in the 2000s, and Mbappe in the 2020s. And a lot of teams that aren’t that good but have one big name player tend to punch above their weight: Zlatan’s Sweden, (Cristiano) Ronaldo’s Portugal or, let’s be real, Forlán’s Uruguay, Vidal’s Chile, and (hot take) Modric’s Croatia are probably good examples. Ultimately what this represents is a large productivity shock to a team, and one that can definitely get it pretty far. Of course, this also applies to managers and coaches, since big talents like Louis van Gaal or Carlos Bilardo tend to make a big difference. A good example of why this matters is Hungary: in the 50s, Hungary’s “Mighty Magyars” were a force to be reckoned with, but most of the brains behind Hungarian football fled to Germany after the Hungarian Revolution of 1956. Meanwhile, Germany (already a good team) became one of the most successful teams ever.

Can this be done on purpose? Kinda. A specific team, FC Barcelona, went from being a minor player in the Spanish league (previously dominated by Real Madrid and Atlético Madrid) to the most dominant Spanish team basically by building a team that would have a lot of stars, and investing heavily in them. At the same time, Spain as a whole benefitted from their approach, since they built many Spanish talents as well as global ones like Messi. While some teams (most notably France) have pretty robust academies and systems to produce top professional players, it’s probably endogenous to other factors; but it can actually be done: lure in top talent (especially coaches) and build talent of your own. Argentina is particularly bad at retaining the “brains” of its operations: for instance, at the 2018 World Cup, the extremely capable José Pekerman was leading Colombia, while our coach was the third rater Jorge Sampaoli.

Conclusion

Being a big country that loves football isn’t enough; you also need a competitive league (either domestic or participating in a big regional one) and a somewhat reliable record of pumping out good players. This means that top teams tend to stay at the top (although with big slumps, like Argentina from 1994 to 2022, save 2014; Italy for like all of the 20th century, or present-day Germany), but new contenders might emerge: I think Spain will become a reliably good team, and a dark horse for getting there might be a country like Mexico or Morocco - Argentina was a good but unremarkable team until the 70s, and has been at the top of the league ever since. The Krugman-Fujita-Venables logic where some places just get good at something randomly applies here too.