Football technology transfer effect

I estimate the effect of participation in the top-level football league on national teams’ FIFA world ranking points. I hypothesize that the greater the number of football players on the national team who play in the top-level league, the more powerful the national team becomes, via technology transfer. Taking each national team’s FIFA world ranking points as a proxy for the proficiency of a nation in international football, I examine this football technology transfer effect. For this purpose, I use panel data from FIFA member nations for 1999–2006 to control for unobserved nations’ specific effects. In addition, allowing for reverse causality, by which players in powerful national teams tend to play in the top league, I utilize real purchase power parity as an instrumental variable.

The results are summarized as follows. When including all nations in the analysis, the number of top-league players has a small negative effect, although the estimated coefficient is not significant. By contrast, for “developing” nations (in football terms), i.e., Africa, Asia, North America, and Oceania, the number of top-league players has a small positive effect. If African national teams are excluded, the technology transfer effect in developing nations strengthens substantially. In particular, if an Asian plays in the top-level league, the FIFA world ranking points of his national team increase by around 30%, and the estimated coefficient is significant at the 10% level.