What the Olympic Medals Table Tells Investors

9 mins. to read
What the Olympic Medals Table Tells Investors

It is five days now since the world’s Olympians filed out of the stadium in Rio heading home in a blaze of samba. But for the glorious lasses and lads of Team GB their homecoming on golden-nosed flight BA2016 on Tuesday – which we were told was groaning with Champagne – was triumphant. Of course, I’m biased.

Putting national pride aside, as an economist, one would have expected the UK to have done well. Its new-found sporting superpower status aligns precisely with its long-held status as a soft-power superpower whose books, fashions, TV formats, music and ideas resonate around the world. As an illustration of this status, I cite an experience I had some time ago. I stumbled into a bar in a remote part of Tajikistan only to find that the semi-nomadic yokels were entranced by TV coverage of the English Premier League. (My knowledge of the local patois was not up to explaining that, at a national level, the British – with the noble exception of the Welsh – are rubbish at football.)

Actually – and far be it for me to rain on our parade – the main reason why Team GB ended up in second place in the medals table (trailing the almighty USA by a long way) was that China underperformed – at least relative to the last three Olympics. At London 2012 the Chinese won 88 (a lucky Chinese number) medals, of which 38 gold. This time they won a total of 70 medals, of which “just” 26 gold. By the way, Team GB got 29 gold medals in London versus 27 in Rio. But no one talks about Britain’s underperformance because of the second place in the medals’ league.

Call me a curmudgeon, but I would warn Team GB not to be too triumphalist lest they go all Chinese at Tokyo 2020. And what is victory? Remember Kipling: If you can meet with triumph and disaster/ And meet those two imposters just the same…You’ll be a man, my son…

It does taste sweet, though.

Why did China underperform? Is it related to economics? And are there any trends or patterns that explain medal-winning behaviour for investors? What are the real outliers and surprises?

To win Olympic medals countries need a large talent pool with access to good healthcare and nutrition. They require organised coaching elites with passionate advocacy and psychological insight plus the funding to make possible the gyms, arenas, velodromes, swimming pools and tracks where athletes can train. It is not surprising therefore that there is a correlation between the size of a nation’s economy and its relative success in the Olympics. What is surprising is that there is actually little correlation between GDP per capita and medal winning. In 21st century sport, being big, as in weightlifting, has its own reward.

Just to prove this point, observe that the Arab Gulf countries, which enjoy some of the highest levels of GDP per capita in the world, scored lowest on the medals table. Qatar, probably the world’s richest state, won one silver medal in athletics. The UAE won one bronze in judo. Maybe this reflects the fact that these countries are not really states at all in the sense we understand that term. Rather they are family businesses with police.

So I observe that the top 10 nations in the medals table are – approximately – the global G-10 largest economies. There are a couple of exceptions. I mean, of the BRICs there are two in the top ten: China and Russia (3rd and 4th place respectively). But where are India and Brazil – the 7th and 9th largest economies in the world, according to the IMF? They languish in the medals table at numbers 67 and 13. In fact India won just one silver medal in badminton and one bronze in wrestling.

Now I have spent nearly two years talking up India in various media but today my Indian friends will have to forgive me because I am frankly shocked at their poor performance. And I do think this does give investors pause as to conditions in that great country. It’s no good offering quasi-genetic (and quasi-racist) arguments about Indians being slight and passive. India has a long and extraordinary warrior tradition reflected in their national prowess in archery, swordsmanship, horsemanship (they taught the English how to play polo), wrestling and martial arts. Yet these traditions have not been sufficiently cultivated by government because, since independence in 1947 until very recently, India has been mis-developed with an emphasis towards a form of state socialism which has largely benefited the elite.

I have outlined before how public health outcomes in India greatly lag behind those of China – a country of equivalent population. Notoriously, 600 million people in India – just under half the population – do not have access to toilets. Now economists may struggle to find correlations between medal-winning and various economic parameters but I bet there is a strong positive correlation between toilets per capita and medals per capita. It’s a question of prioritising public health.

On this count India has form. Again apologies to my Indian friends, but I’ve just come across the account of an Arabic traveller to Asia in the early 9th century. He writes: “Though India is the land of medicine and philosophers…China is a healthier country with fewer diseases and better air…[It is rare to see] the blind, one-eyed and deformed [in China] whereas in India there are plenty of them…[i]”. Perhaps, ultimately, climate is destiny.

This does not change my perception of India as one of the rising stars of the world economy. On the contrary, it confirms that India has not even started to fulfil its potential as a global power. It will take most of this century for India to catch up with China. By the way, a very good proxy measure of general health outcomes in an economy is life expectancy. Last year the average Indian could expect to live for 68.13 years while her Chinese counterpart looked forward to 75.41 years of life[ii]. When that gap is closed we can expect India to win more medals.

Brazil’s performance at her home games was creditable. She won seven gold and 19 medals in total, cheered on of course by a fiercely patriotic public. And the organisational disasters that were anticipated failed to materialise. Overall, this confirmed that Brazil is over the worst of its recent political and economic reversals. As my colleague Adrian Kempton-Cumber observed last week, the global economy functions largely in spite of the politicians rather than because of them.

You would expect South Korea, with the 11th largest economy in the world to be placed around 8th in the medals table. Similarly, Italy with the 8th largest economy in the world came in at 9th. Or the Netherlands with the 17th largest economy was ranked number 11 in the medals table. All quite predictable.

You would not expect Hungary, however, with the 56th largest economy in the world to be placed 12th in Rio – with 15 medals, of which eight gold (three in canoeing, three in swimming and two in fencing). It is a few years since I was last in Hungary but I remember it as a very congenial country with excellent food and wine and good-looking people. Apparently Budapest is one of the hottest selling long-weekends right now. What’s more, in June, Moody’s upgraded the outlook for the Hungarian banking system to positive[iii]. What’s not to like? Interestingly, Hungry is the most Eurosceptic of those new accession states who joined the EU in 2003. Could there be a correlation between medal-winning and Europhobia?

Then there is a breed of country with prodigious athletic talent raised in poverty. Kenya, a poor country by any measure, which ranks at number 72 in the global economic league, stands at 15 in the medals table with 13 medals, of which six golds – all in athletics, of course. Given that most Kenyan kids normally run 12 miles or so to school in the morning, it’s not surprising that Kenya has more than its fair share of middle and long-distance champion runners. And yet much the same could be said of Kenya’s northern neighbour, Somalia whose people share many of the same genes. Somalia, which I reminded readers back in May is the most corrupt country in the world, won precisely zero medals, despite its natural raw talent. Our very own Mo Farah, of course, is of Somali heritage though it is very unlikely that he would have become one of the world’s greatest athletes had he remained in the land of his birth. So what does Kenya have that Somalia has not? Institutions, of course. The rule of law (more or less). A functioning legal system and so forth. In fact, there is a very good story to tell here which I shall relate another time.

Then there is Jamaica (118th largest economy in the world) at the number 16 slot in the medals table just behind Kenya – mostly thanks to the amazing Usain Bolt, who won three of Jamaica’s six gold medals. But – going back to the soft power sports axis – Jamaica is actually an extraordinarily influential country for its size, having given the world reggae, Rastafarianism, Bob Marley, jerk chicken and peri peri sauce. Not forgetting one of our national treasures, Diane Abbott MP, born in London to Jamaican parents.

One other “emerging” (though I hate that term) economy catches my eye. Thailand, which last year had the 27th largest economy in the world, won six medals, of which two gold (both in weightlifting), finishing 35th in the medals table. You might say then that they underperformed but I would point out that Team GB didn’t get near a medal in weightlifting. Why? Supposedly because the powers that be determined that the funding should be allocated to sports in which the British are supposed to possess a competitive advantage. In fact weightlifting appears to be one field where there is no correlation between economic wealth and sporting success, being dominated by Iran, Kazakhstan and such countries where brute strength is greatly prized.

The Daily Express and The Daily Telegraph worked themselves up into a bit of a lather when the Europeans recast the medals table to show that “the EU” had come top by aggregating all the medals of the 28 countries[iv]. The appropriate response to this was to add together the medals of the Commonwealth big four – CANZUK (Canada, Australia, New Zealand, and United Kingdom) which would top even the medal haul of the EU. A Tory MP who tweeted along these lines was savaged on social media for using the evidently odious term British Empire. There is, however, in my view, a pointer here to our post-Brexit future.

The joke at London 2012 was that Team GB only won medals sitting down (cycling, show jumping, rowing). With Max Whitlock’s double gold in gymnastics and Jack Laugher and Chris Mears’ gold in synchronised diving – and so many other triumphs – that joke doesn’t run anymore. We’ve still got some way to go in weightlifting, though.

You can be sure that the Chinese will be gunning for Team GB at Tokyo 2020 – even though the final medals table there is likely to be much like this one. The world is changing fast; but in many ways it stays the same.

[i] Two Arabic Travel Books, translated by T Mackintosh-Smith (New York, 2014), quoted by Peter Frankopan in The Silk Roads (London, 2015), page 95.

[ii] See: http://www.infoplease.com/world/statistics/life-expectancy-country.html China was ranked 99 out of 224 countries and territories while India stood at 163.  The number one slot was taken by Monaco (89.52 years!) and the bottom by Chad (49.81 years).

[iii] See: http://bbj.hu/economy/moodys-upgrades-hungarys-banking-system-outlook-to-positive_118372

[iv] See: http://www.telegraph.co.uk/olympics/2016/08/19/how-dare-the-eu-try-to-claim-britains-olympic-gold-medals-as-its/

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