For Argentina's soccer team, like its economy, diversification is the key to success.
- By Mariano Turzi <p> Mariano Turzi is PhD in International Studies at Johns Hopkins University and a professor at New York University and Di Tella University in Buenos Aires, Argentina </p>
Argentina is not known in the world for economic management. But its road to the final game of the World Cup is indeed a lesson in economics. Far away from the larger-than-life epic style (on and off the field) of Diego Armando Maradona who took the country to the final stage in 1986 and 1990, Lionel Messi‘s team arrives at the 2014 finals by rather the opposite road.
In economics, Dutch disease is used as a cautionary example of what can happen when a country discovers a new source of wealth, typically a natural resource. Investments are directed to the "star" resource – whether it is copper, diamonds, or oil — triggering a currency appreciation, which makes the country’s other products less competitive on the export market. Star players like Maradona and Messi present national teams with an analogous dilemma by creating structures and strategies around those exceptional resources. Argentina’s head coach Alejandro Sabella has openly recognized this during and before the 2014 World Cup, even coining the phrase "Messidependence" to refer to his team’s reliance on Messi.
To avoid Dutch disease the economy (or the team) needs to reduce dependency by managing the structural imbalances created by the booming sector (or player), to ensure equitable distribution and stability, typically through worker retraining and product diversification. This is precisely what Argentina has done once it entered the World Cup’s knockout stage. Messi’s role was balanced with the rest of the team and Dutch disease was averted. The booming sector (player) adapted himself to the rest of the economy (team) and the development continued — all the way to the finals. Sabella himself admitted his job was "to disguise that imbalance in the best way possible."
In consonance with the times, Argentina’s economy fell full throttle into the resource curse in 1986 and 1990, Maradona’s heyday. Growth based on a "star" product has locked Latin American countries into commodity bubbles that burst when international conditions turned adverse. National football teams also get locked into excessive dependence, lack of diversification, and — ultimately — an unbalanced pattern of development and playing. Amid the Argentina’s 1986 World Cup win against West Germany, nobody questioned the model built around a star player. But this kind of dependence can create institutional instability and even regime breakdown — both in politics and on soccer field. This was one of the effects caused by Neymar’s loss and exposed by Germany in the match against Brazil, when the home team could not react to Germany’s first goal, completely lost direction and henceforth suffered seven humiliating goals.
When Maradona coached the Argentine team in 2010, Germany exposed the vulnerability of the Argentine model and sent them home with four goals. But times have changed. Just as in macroeconomic terms the 1980s was the lost decade for Argentina and the 1990s a period of neoliberal reforms, the 2000s were times of economic growth and political maturity.
Emerging countries are more prudent. Argentina is reflecting this in its national soccer team. Sabella maximizes his star resource, Messi, but as a means to further the collective game, encouraging forwards to score and also to help in defense when the team loses possession. Regardless of the end match against Germany, Argentina´s team is an example of economic diversification at its best, a lesson in handling booming and lagging sectors within an economy.