Monday, May 31, 2010

LMG Alternative World Cup Football 2010: Group D The first 2 matches

Today round 4 of our alternative football world championship where we use a mixture of economic and political and sports data to derive a championship result. We will compare our results with the real tournament in South Africa next month.

Very often we see scientific studies that suggest that a good result, e.g. world championship, in football is beneficial for the country. We suspect that causality might run the other way round. That a better economic situation might be a positive factor in explaining good football results. If so, this could also explain the improving performance of Emerging countries in recent years.
Group D; The first two matches

In group D we play the first two matches today. Germany (GER) plays Australia (AUS) and Serbia (SER) is the opponent of Ghana (GHA).

Game 1; GER-AUS 4-1
In the match between Germany and Australia we will look to the following indicators: a) Team quality based on Fifa World Cup Ranking; b) People; c) Communications; and d) World Politics.

It is the first time in this tournament so far that the Fifa World Cup Ranking and People will be looked at. Germany is nr 6 in the FIFA World Cup Ranking with a total of 1082 points. This ranking makes the former World Champions definitely a team to reckon with in South Africa. Australia is nr 20 with a total of 886 points. Therefore a win for GER on this double-counting variable.


When we analyze People we look at the following sub-factors: i) Population Size; ii) Life Expectancy; iii) Average Age; iv) Literacy rate; and v) Employment Situation / Unemployment rate.
 GER has a total population of 82.3 million versus 21.5 million for AUS. First sub-factor goes to Germany therefore. Life expectancy in GER is 79.41 years versus 81.72 for AUS. This implies an equalizer for Australia. The third factor is the average population age. We use the median as average indicator. The median age in AUS is 37.5 years, versus 44.3 in GER. This implies that things are a bit healthier - also when taking into account potential demographical problems with pensions etc. - in Australia. 2-1 in sub-factors for AUS now. The literacy rate in both AUS and GER is 99 percent. So no decision there. The Unemployment Rate will therefore decide if GER can draw on this factor, or if AUS will win. AUS has an unemployment rate of 5.7% versus 8.2% in GER. Therefore 'People' a win for AUS.


When we look at Communications, you know by now that the sub-variables we look at are: i) Telephone lines (fixed plus cell); ii) Radio Stations; iii) TV Stations and iv) Internet users/hosts.
Australia has a combined number (fixed plus cell) of 31.5 million phone lines. With a total population of 21.5 million people this translates to a ratio of 1.47. Germany has a total of 158.7 million lines, which translates to a ratio of 1.93. Therefore a higher density in GER. Germany has 51 AM and 787 FM stations. Australia 262 and 345 respectively. That is unclear. Sure, GER has a larger population but Australia is a far bigger country. This explains the discrepancy when looking at AM versus FM. We decide to leave this factor undecided. Score remains 1-0 for GER on this factor. Then TV stations. The total is 104 in Australia versus 373 in GER. A win for Germany. Internet usage is not deciding anymore, but for completeness sake here the outcome. AUS has 11.8 million hosts and 15.2 million users. GER has 23.8 million hosts and 62 million users. When comparing the populations (82.3 million versus 21.5 million) this translates in a ratio of 3.83. I.e. GER needs to have 3.83 times more hosts and/or users. In terms of hosts this doesn't happen and in terms of users it does. Therefore undecided. But it leaves GER with a win on Communications.


It is clear that Germany is the more powerful country in World Politics. The European export machine and leader within EU is one of the most influential countries in the world.

 Germany; political and economic giant
Football powerhouse
Angela Merkel here with coach Loew (r)

Therefore a 4-1 victory for Germany.

Game 2; SER-GHA 3-1
We expect a closer match between Serbia and Ghana. The factors on which this match will be decided are 5 non-football factors namely i) Geography; ii) Government/Governance; iii) Economy; iv)  Finance and v) Communications.

The first factor Geography looks at 2 components: a) Size of the Country and b) Natural Resources.  Serbia has a size of 77,474 sq km versus 238,5333 sq km for Ghana. Both countries do have quite some resources: Serbia has oil, gas, coal, iron ore, copper, zinc, gold, silver, magnesium, limestone, salt and arable land. Ghana is known for gold, timber, industrial diamonds, bauxite, manganese, fish, rubber, hydropower, petroleum, silver, salt and limestone.
Combining the two factors we decide that it is a close win for Ghana

GHA - SER 1-0

The second factor is Government/Governance. In terms of the stability of government, Ghana is a constitutional democracy with 10 regions. President Mills won the elections in 2009 with the smallest possible margin. So not a bad track record so far, but we wouldn't be too surprised if things end up less stable than people think. Obviously, with people like Kofi Annan being still very influential in the background there is definitely a chance that this kind of instability can be avoided. Serbia scores a similar situation. The government is a bit longer in power but the country does of course bear the history of the unstable Balkan and the immense number of administrative units (at the city level! as opposed to provinces) doesn't really make ruling simpler. No clear difference between the two therefore. The Transparency Corruption Index will therefore decide: 3.5 is the score for Serbia. Ghana scores 3.9. Not that much difference and both are relatively poor scores. We did therefore decide to leave this factor undecided.

Factor 3 is the Economy. For Economy we look at the following sub-variables: i) GDP; ii) GDP per capita; iii) Econ growth; iv) Public Debt percentage and v) Current Account as percentage of GDP.

Serbia has the bigger GDP: 60.6 billion USD versus Ghana 25.8 billion. Both countries are definitely developing. Serbia's score translates to USD 8250 per capita versus a mere USD 1050 for Ghana. When we look at economic growth in the countries, the expected growth rate fo r the next 3 years in our LMG Emerge database is just a mere 0.40 percent or Serbia that is struggling under Europe's problems. Ghana is a big grower with more than 10 percent expected economic growth. This implies that after 3 sub-variables Serbia has a 2-1 lead. When looking at Public Debt as percentage of GDP Ghana scores a higher value: 67.5 percent versus 31.3 percent for Serbia. That implies a 3-1 for Serbia on this sub-variable. Last but not least we look at the current account, although it cannot change the score anymore. Serbia has a huge shortage of 12.4 percent of GDP. Ghana's deficit is even worse: almost 16 percent.

Therefore SER winner of Economics.


Next variable is Finance. The three sub-variables that we look at here are i) Size of the stock market; ii) Performance of the stock market over the last 10 years; and iii) Performance of the currency over the last 10 years. Both Ghana and Serbia are Frontier stock markets that are not yet part of the MSCI Emerging Markets. Serbia is already part of the MSCI Frontier Market index whereas Ghana is on the MSCI watchlist but not yet included in it. Therefore 1-0 for Serbia after the first sub-variable. Both country indices don't exist for 10 years yet with MSCI, which means that our second sub-variable ends in a draw. The decision concerning Finance as a factor is therefore based on the currency performance. One USD translates to 1.434 Ghanaian Cedi as of May 31, 2010. The current exchange rate of the Serbian Dinar is 1 to 83.9927
Now let's check how things were 10 years ago. The Serbian Dinar was at 11.6095. In other words: Serbia went through a currency catastrophe. The New Cedi wasn't yet introduced. Ghana underwent a currency reparation in 2007. In other words: Ghana did even worse. This implies that the Finance factor goes to Serbia.

SER-GHA 2-1 

Communications will therefore either bring Serbia a victory in the match or lead to a draw. Communications consists of four sub-variables: telephone lines, radio stations, tv stations and internet density. Ghana has almost no fixed phone lines. Almost everything is mobile. The total number of phone lines is 11.71 million. There are 86 FM radio stations and no AM stations in the country. The number of TV stations is 7. There are 23,850 internet hosts and 997,000 users. Now let's see if Serbia can beat those numbers.

Serbia has 12.71 million phone lines. Exactly one million more than Ghana. It is therefore important to look at population sizes for a good comparison. Ghana has 24.3 million people, Serbia just 7.3 million. Definitely higher density in Serbia. Serbia has also more radio stations (308) and tv stations (138). And with 181,313 internet hosts and 2.9 million users Serbia dominates and wins this variable as well.

 With greetings from Belgrade!
Serbia too strong for Ghana 
in a match that was decided purely on the basis of non-football factors

SER-GHA 3-1. 

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