The World Cup of Property Rights
Jul 10, 2018
Every four years athletes from nations across the world (except notably, Italy, the US, and the Netherlands this year) gather to compete in the FIFA World Cup hoping to gain glory and prestige for their home countries. Here at Property Rights Alliance we’ve compared World Cup success with achievements in the ultimate competition: achieving a score of 10.0 in the International Property Rights Index (IPRI). The Index compares 10 factors organized under three components: the legal and political environment, physical property rights, and intellectual property for nearly 130 countries to determine which nations value personal liberty.
All 32 World Cup 2018 participants are included in the Index and significant correlations exist between strong property rights and World Cup success. Not always, however, recent World Cup hosts, as well as pre- final winners, experience a mix of effective property rights and winnings on the pitch.
The 2018 World Cup is hosted by the Russian Federation, which according to the 2017 IPRI has an overall score of 4.04, placing the country 111th in the world in terms of property rights rankings. While Russia’s poor performance in the IPRI might not make it seem like the most ideal location for an international tournament, it is not entirely dissimilar to past hosts. Specifically, the 2014 World Cup was hosted by Brazil, which has an overall score of 5.43, ranking 58th in the world and 7th in Latin America. However, both South Africa (host of the 2010 World Cup) and Qatar (the upcoming host of the 2022 World Cup) ranked fairly well in terms of property rights. Indeed, Qatar’s IPRI is quite high at 7.35 placing it 2nd in the Middle East and North Africa region and 22nd in the world. South Africa’s ranking is not quite as strong as Qatar’s but is very close, as South IPRI score is 7.00, placing it 1st in the Africa region and 26th in the world.
Why might property rights have anything to do with World Cup success? For one, the ability to own land, build a pitch, and charge people for using it is directly related to property right enforcement. Football clubs need to sell jerseys with their name and logo (and prevent others from profiting off their success) which is directly related to property right protections. What about a competitive environment that forces teams to cultivate top talent for top rankings- again, this a function of property rights. In fact, property rights are correlated with many economic and social indicators that a World Cup team would be envious of including higher income and GDP per capita.
Property rights are particularly important in helping teams protect their reputation and past accomplishments by selling official merchandise. Counterfeit goods threaten not only the teams themselves, but also directly harm consumers and the general public. For example, US officials recently seized hundreds of thousands of dollars worth of counterfeit World Cup jerseys at the Texas-Mexico border. Customs and Border Protection El Paso director Hector Mancha explained that “Counterfeit goods are generally of poor quality and can also pose significant health and safety hazards to consumers depending on the product.” Furthermore, profits from selling counterfeits can fund cartels that operate near the border, posing a serious public safety risk to both Mexicans and Americans. Outside of the USA, counterfeit items have been linked to terrorist groups such as Al Qaeda and large crime organizations.
Besides the notable of exception to this year’s competition World Cups are typically held in nations with strong property rights. As a result, World Cups are clearly often awarded to countries that have the infrastructure and economic capabilities needed to host such an event.
Furthermore, we have found, the World Cup is associated with improving IPRI scores. For example, Spain hosted the 1982 World Cup–just seven years after the end of General Franco’s dictatorship–during a period of increased democratization and enshrining of property rights. In contemporary times, Brazil’s hosting of the World Cup occurred as the nation was slowly, but surely, rising in the IPRI rankings. For example, Brazil’s IPRI score increased from 4.453 in 2007 to 5.5 in 2014. The data suggests that hosting the World Cup brings not only international prestige and attention but also is firmly correlated to an increase in property rights.
A strong property rights ecosystem also seems to play a positive role in predicting the likely winner of a finals match. A survey of past World Cup finalists reveals that nearly every final World Cup game features two nations with strong property rights’ protections. In 2010 the Netherlands (with an IPRI score of 8.3 placing it 6th in the Western Europe region and 9th in the world ) took on Germany (with an IPRI score of 7.96 placing it 10th in the Western Europe region and 16th in the world) with Germany ultimately prevailing in the match. This scenario plays out countless times across past World Cups. A country from Western Europe, a region with extremely high property rights rankings, has made it to the finals in every single World Cup since 1954. Germany and France (France has an IPRI score of 7.34 placing it 14th in the Western Europe region and 23rd in the world) in particular have made it to the World Cup finals many times. Often, a western European team faces off against Brazil, which as discussed previously, has been rising in the IPRI rankings.
This year’s 2018 World Cup has already bucked some of the established trends, with Russia defeating Spain, and Uruguay knocking out Portugal. Russia has a much lower IPRI score than Spain, as Spain has an IPRI score of 6.42 placing it 17th in the Western Europe region and 35th in the world, compared to Russia’s 111th world ranking. Uruguay and Portugal are much more comparable in terms of their IPRI score, but Portugal still possesses the edge over Uruguay (well, except on the soccer pitch this year). However, as France beat Uruguay, Belgium ousted Brazil and Croatia championed Russia in the quarter-finals the overall trend of stronger property right scores predicting winners was back on (the last exception was England overcoming Sweden).
The 2018 World Cup is truly one for the history books. Previous World Cup champion Germany could not even advance out of its group! Perhaps these unpredicted outcomes are an stem of the atypical location of the World Cup in Russia, a country that ranks quite low in terms of property rights protection. In more ways than one, this World Cup might throw some newfound wrinkles into the established trend of countries with strong IPRI scores performing well in the tournament. For any non-savvy soccer fans, counting on countries with high IPRI scores to go far (and indeed, to the final match) in the World Cup is almost always a safe bet!
However, as it turns out, strong property right protections may not be the only ingredient to winning the World Cup… But can anything really substitute for the freedom of individuals to own their own work and exchange it how and with whom they please? The research continues.