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

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  • Omer Bayar
  • Georg Schaur

Abstract

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%.

Suggested Citation

  • Omer Bayar & Georg Schaur, 2014. "The Impact of Visibility on Trade: Evidence from the World Cup," Review of International Economics, Wiley Blackwell, vol. 22(4), pages 759-782, September.
    • Handle: RePEc:bla:reviec:v:22:y:2014:i:4:p:759-782
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