No doubt, FIFA
world cup is the biggest event on earth apart from the Olympics. An estimated 3.5
billion people participated in the 2010 world cup in South Africa. That means the
attention of the world shifts to the country that wins the hosting right. So we
all focus on Brazil for the 2014 World cup. What does that portend?
An economist
like Mark Speigel, would rather look at the cost implications of hosting such a
mega event. As BBC sports wrote, "Will South Africa's leader show the same
impressive technique when it comes to balancing the books."
There are few
cast iron laws in economies, but organizers of sporting mega events over estimate
the economic benefits and under estimate the cost. South Africa for instance, could
only return a tenth of the $3.8 billion spent in hosting the event.
"Hosting FIFA world cup or the Olympics is a very expensive venture, which seems to yield few tangible benefits." Speigel argued. "Cost aren't compensated by either revenue earned during the event or the legacy of large Stadia or other obscure facilities left behind." Speigel wonders if it's the best way to use public treasury.
Yet, we see some
extraordinary lobbying and political maneuvers between countries in the bid to win
the hosting right. It's difficult to understand why policy makers and indeed, citizens
of a country are quite enthusiastic about such spectacle. Already, Australia has budgeted $5 billion in it's bidding plan to host the 2022 world cup. Is it just
about the fun fair or is there any serious benefits for hosting the tournament.
Trade Liberalization:
A country that wishes to liberalize it's trade may want to signal this by bidding
for the world cup. By so doing it can generate extra trade related investments.
The 1986
world cup held in Mexico caused the country to liberalize its trade and joined
GATT.
Growth on International
Trade: After 2002 world cup held in south Korea/ Japan, international trade grew
by 28.6% and 25.5% respectively for the co-hosts.
The world cup
has a positive impact on national export trade, usually get around 30% higher for
countries that have hosted the world cup. It's not just during the event, research
identifies countries that have hosted the world cup to have enjoyed a substantive
permanent increase in trade.
Tourism Revenue
Growth and Expansion: FIFA requires that host countries provide 60, 000 rooms in
five star hotels across host cities. This drive host countries to build new hotels
as well as renovate tourist sites - beaches, natural endowments, restaurants, shopping
malls...
The 1994 world
cup finals in Los Angeles saw a great increase in tourism revenue. There was a total
economic profit of $625 million that went directly into the metropolitan economy.
Revenue from hotels, restaurants, shopping, food and beverages increased by 15%
and 1,700 part time jobs was created.
Building New
and Upgrading of Infrastructures: A total of 20 Stadia were constructed in 2002
world cup, which include the gigantic 70,000 capacity Yokohama stadium - enough
facilities for the future development of
the sport both in South Korea and Japan.
2010 world cup
also brought about the overhaul of airports and the cities' transport system. Media
infrastructures as well as security system were all upgraded. Today, South Africa
attract other top soccer events such as 2013 AFCON tournament.
World Cup Legacy
and the Transfer of Technology: South Africa has acquired some new technologies
and have many of their citizens become skilled labor due to the trainings they
received during the four years period of hosting the world cup.
The Soccer city
stadium will ever bring back the memories of the world cup. Everyday after school,
about 80 children come to play on a brand new football field in the heart of Hill-brow Johannesburg; donated by Johan Cruyff foundation during the 2010 world cup.
The behavioral
changes cannot be measured in figures, but the children now adhere to the rules
of fair play and social involvement. These are some of the legacies of the world
cup.
