Economics Update on the World Cup from John Birchall
The 2010 Football World Cup is almost up on us. The cup itself has been insured for US$ 9 billion but what is the true cost of this prestigious event and what does it do for the economy of the host nation?
The costs to South Africa, not a rich nation by world standards includes:
Transport $1.2bn
Stadiums $1.12bn
Organising Committee $ 428m
Broadcasting/IT $ 387m
Ports of Entry $ 200m
Security $ 89m
Legacy Projects $ 45m
Telecommunications $ 40m
Arts and Culture $20m
Training Volunteers $ 3m
Source: Public Service Commission of the Republic of South Africa
The total bill of hosting this World Cup has risen tenfold and in a poor country some are asking if the money could have been spent on housing, clean water etc – two parts of normal life that still evade many of the poorer South Africans.
In 2002 the billions poured into Japan’s ailing economy barely made any difference. The Sydney Olympics, though very well organised did not produce the rush of tourists the planners hoped for. Athens, well don’t even mention the Olympic games of 2004 as some feel that this was when the public deficit really got out of control.
A look at the past history of the World Cup shows conflicting evidence
Year Host Country Growth in World Cup year Rate of growth the following year
1970 Mexico 6.9 4.2 (-2.7)
1974 West Germany 0.2 1.3 (-1.5)
1978 Argentina - 3.4 7.1 (+10.5)
1982 Spain 1.2 1.8 (-0.6)
1986 Mexico -3.7 1.8 (+ 5.4)
1990 Italy 2.0 1.4 (-0.6)
1994 United States 4.0 2.7 (-1.3)
1998 France 3.5 3.0 (-.5)
Not a very encouraging picture. Let’s hope when the numbers have been crunched for South Africa 2010 they look more like Argentina 1978 and not a repeat of some of the minus numbers.