June 17th, 2010
04:46 AM GMT
(CNN) – Whether it’s the Olympics or the World Cup, groups vying for prestigious sporting events always tout the economic impact of the games.
For example, a pitch by the USA Bid Committee to host the World Cup in 2018 or 2022 estimates that the games would have a $5 billion impact on the economy and add 65,000 to 100,000 jobs to the local economy.
But over time, what real impact does hosting the World Cup have on local economies? Not much, according to a study released last week by Daiwa Capital Markets.
Analyzing the 15 country economies where 18 World Cups have been held since 1930, the study found that the real GDP growth averaged about half percent a year.
But wait, there’s more – if Uruguay, which held the 1930 World Cup, is taken out of the equation, the figures suggest the World Cup actually depresses the economic growth in the host country by 0.75 percent year on year, followed by a 1 percent recovery the year after, according to Daiwa.
Don Eggington, head of long-term analysis and modeling for Daiwa, concludes: “So, despite being the ‘World’s most widely viewed sporting event,’ the evidence suggests that the World Cup’s impact on the host country’s economy is too small to over-ride the other economic forces at work.
“As such, while South Africa is likely to reap plenty of publicity over the coming month, the evidence from previous tournaments suggests that the tournament will do nothing to boost growth, and hence nothing to tackle the enormous social problems that continue to confront the country.”
This reminds me of coverage (including our own) of whether Beijing would succumb to “the Olympic curse” after hosting the 2008 games. Study after study shows that with few exceptions, the year after the games the host economies tend to fall, and the expected bounce in tourism thanks to the media exposure never materializes.
Three weeks after the close of the Beijing games Lehman Brothers went bust – igniting the “Great Recession” – so the “after” effect of the games in China may be hard to judge.
But if these studies are right, it makes one wonder why so much attention is paid to the economic impact of hosting large sporting events. Perhaps a jolt of pride and patriotism is more difficult to put a price tag on.
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