Stephen King: Zimbabwe and Jamaica run away with the economically adjusted Olympics

As we preen ourselves over our Olympic achievements, it's worth pausing to consider Britain's amazing haul of gold medals in the light of the broader economic context. Relative to our nation's population and wealth, how have we done in comparison to others?

The six columns in the table offer differing perspectives, based on the results of the top 40 or so medal-winning nations. Three deal only with gold medals. The others look at a cumulative medals haul, giving six points for gold, two for silver and one for bronze. (I'm assuming, entirely subjectively, that sportsmen and women regard gold medals as three times as valuable as silver medals, while silver medals are only twice the value of bronze.) Two of the columns adjust merely for population size. Two others adjust for overall economic size, using consistent (although sometimes rather ropey) measures of national income across countries.

Based on population alone, Team GB (representing a country with a population of 60 million) did rather well compared with the usual Olympic suspects, outranking China, the US and Russia. The UK also outperformed, by some considerable distance, the other members of the G7. However, we're nowhere near the top 10 sporting nations on this basis. Despite all the smug comments about our medal superiority vis-à-vis Australia, a population-adjusted score shows, not surprisingly, that people Down Under are streets ahead of us in sporting prowess. Population adjusted, Australia and New Zealand are two of the best sporting nations in the world.

Adjusting only for population, though, doesn't quite capture the degree to which countries are out- or under-performing. Richer countries might reasonably be expected to do better than poorer countries. After all, richer countries should be able to offer their sporting stars and synchronised swimmers superior training facilities (and, for those who cheat, higher-quality drugs) in order to transform raw talent into Olympian gold.

On the basis of this economic comparison, we still (just) outperform China and the US, but the overall winner from the three Big Guns (in more ways than one at the moment) is Russia, which has a relatively large, but relatively poor, population.

All of the countries in the top four, though, have performed poorly relative to countries elsewhere in the world. The real winner, both on a "gold medals only" and a points comparison, is Zimbabwe. Before, though, Robert Mugabe steps forward to claim his place as the leader of a nation which now competes on the playing field with the best of the world, Zimbabwe's apparent success relies not so much on the gold and three silvers that Kirsty Coventry won in the Water Cube but, instead, on the catastrophic failure of Mr Mugabe's economic policies, which have left Zimbabwe in a state of economic collapse and hyperinflation. It is, then, an odd kind of sporting achievement.

In second place in my economically adjusted lists (and in first place on the population-adjusted lists) lies Jamaica. Usain Bolt and his colleagues have done extraordinarily well. Jamaica is a poor country, its people living off only one-sixth of the incomes per capita enjoyed by citizens of the United States. There are, though, many other countries facing a similar economic plight. Jamaica's high standing really rests on its very small population. According to the World Bank, Jamaica has only 2.7 million inhabitants, making it the same size demographically as Chicago. Its haul of six golds, three silvers and one bronze – all for running extremely quickly – is a truly remarkable achievement.

In third place is either Georgia or Mongolia, poverty-stricken countries with low populations. They are, however, nations with particular skills in boxing, wrestling, judo and shooting, perhaps explaining Russia's decision to engage in a bit of invading while the cream of Georgia's fighting crop were otherwise engaged in Beijing. If there's any consolation to be drawn from its recent woes, Georgia significantly outranks Russia in sporting prowess when adjusted for population and economic wealth.

I'm no sporting expert, but there is something rather intriguing about these results. Whereas the Big Guns are able to win medals here, there and everywhere, the countries which have been the most successful when adjusted for demographic size and economic success are those which have specialised: Jamaica in sprinting, Zimbabwe in swimming and Georgia and Mongolia in fighting of one kind or another.

Even Team GB has been partial to a fair degree of specialisation. We only won the one gold medal in track and field (for the women's 400 metres), even though athletics is the sporting area which most obviously springs to mind when thinking about the Olympics. Our medals came in other areas, primarily cycling, sailing, rowing and swimming. In three of these, you compete sitting down, an approach which presumably wasn't uppermost in the minds of the Ancient Greeks when they first devised their games.

Specialisation, in turn, is what makes economies tick. One economic lesson to be drawn from the Olympics is, surely, that no country, other than those with huge populations, can hope to win medals in a wide range of different disciplines. Moreover, success in any particular discipline breeds further success. Jamaica has produced world-class sprinters for many years. Britain, in cycling, may now be able to do the same. Once acquired, knowledge does, indeed, pass from generation to generation. What's true in sport is often also true in business.

Another lesson, frequently forgotten by free traders, is the importance of the "infant industry" argument. No matter how talented are your sportsmen and women, they're unlikely to make a great deal of progress at the world level unless they have access to high-quality coaches and training facilities. That requires upfront cash. Athletes need to be nurtured if they are to succeed. It's a view equally well understood by business leaders and policymakers today in China, by Japanese and Korean leaders in the 1950s and 1960s, and by the Americans in the 19th century, all of whom utilised the infant industry argument to develop economies of scale behind closed doors.

No doubt Gordon Brown will attempt to capitalise on our Olympic heroes, in much the same way Harold Wilson tried to take advantage of the Beatles in the 1960s. Certainly, Mr Brown needs something to take the nation's mind off the performance of the economy.

The admission last week that the level of economic activity ground to a halt in the second quarter of this year has, at a stroke, removed one of Labour's proudest boasts. In his 2007 Budget speech, Mr Brown, then the Chancellor of the Exchequer, stated that "[this Budget] is built on the foundation of the longest period of economic stability and sustained growth in our country's history ... after 10 years of sustained growth, Britain's growth will continue into its 59th quarter – the forecast end of the cycle – and then into its 60th and 61st quarter and beyond."

An enviable record has now come to an end. Whereas Mr Brown will be happy to celebrate the breaking of world records by British stars in Beijing, his own record has been broken in a way he would never have wished for. Our Olympians may indeed be golden but Labour's economic record is now looking distinctly tarnished.

Stephen King is managing director of economics at HSBC

stephen.king@hsbcib.com