The Impact of Visibility on Trade: Evidence from the World Cup

Success in the FIFA World Cup provides countries with substantial international visibility. This paper uses this information shock associated with the World Cup to show that visibility has a significant impact on trade flows. In isolating the visibility effect, two identification problems are solved...

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Bibliographic Details
Published in:Review of international economics 2014-09, Vol.22 (4), p.759-782
Main Authors: Bayar, Omer, Schaur, Georg
Format: Article
Language:English
Subjects:
Economic development
Endogenous growth
Exports
FIFA World Cup
Identification
Impact analysis
Information
International trade
Professional sports
Soccer
Studies
Success
Tournaments & championships
Trade flows
Uncertainty
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Summary:Success in the FIFA World Cup provides countries with substantial international visibility. This paper uses this information shock associated with the World Cup to show that visibility has a significant impact on trade flows. In isolating the visibility effect, two identification problems are solved. Match outcomes in the World Cup are subject to significant uncertainty. This uncertainty, when combined with controls for economic development, makes World Cup success exogenous to exports. By contrast, hosting the World Cup is potentially endogenous owing to self‐selection issues. The paper exploits FIFA's host selection policy to construct exogenous instruments for hosting. The results show that success in the World Cup raises exports temporarily by around 5%.
ISSN:0965-7576
1467-9396
DOI:10.1111/roie.12125