With two weeks remaining to the 2014 World Cup in Brazil, many Brazilians are skeptical about whether World Cup will help solve their economic problems or not. Thousands took part in street protests and riots during last year, they were upset with lavish spending on sports events at the expense of the social safety. There are contrasting reports on the actual long-term gains as a result of hosting the World Cup, considered as the most popular sport event in the World.
Forbes Magazine reported that the World Cup, would add about $13.6 billion to the Brazilian economy, already the world’s seventh largest, in 2014 alone. Additional impact is on Brazil’s tourism with 3.7 million people expected to travel throughout 32 day event. It doesn’t stop there, a report by E&Y concluded that the tournament “should generate 3.63 million jobs/year and $28 billion income for the population in the period 2010-2014, besides an additional $8 billion in tax collections.” E&Y’s projected impact on the national production of goods and services stood at $50 billion, while the sectors most benefiting from the event—defined as economic activities with major increased output—were civil construction, food and beverage, business services, utilities, information services, and tourism and hospitality.
There have been contrasting reports on the actual long-term gains as a result of hosting the World Cup—and they aren’t quite as pretty. Moody’s report concluded that the event will provide short-lived sales increases that are unlikely to materially affect earnings and disruptions associated with traffic, crowding and lost work days will take a toll on business.”
All of these economic expectations are eye opening, and show us how a sport event could impact one of the biggest emerging economies in the world. I hope this information would enlarge everyone’s horizon when we sit in front of our TV’s in couple weeks during the games and help us also consider the the bigger economic picture around the fun games.
Erol
These are great ideas to think about while watching World Cup. The perception of such event is the great impact it would have on the economy. I believe this is holds true short-term, but could go both ways in the long run.
Brazil is an exotic destination that attracts nearly 2.8 million tourists annually. With or without 2016 Olympics, Brazil will continue to enjoy the revenues generated tourists annually. Such income could be diminished if a catastrophic event occurred, and/or the expectation of sport fanatics visiting not being met. The impression of the prospective tourists could be altered based on the images imposed, infrastructure, and any events that occur, etc. During the 2008 games in Beijing, stories surfaced about the penetrating pollution and many tourists were discouraged.
Great article Erol! Brazil itself presents a very challenging case. Incredibly the country will host not just the World Cup this year but the next summer Olympics in 2016. Such events are both incredibly expensive events to host with mooted returns. There’s already concern Brazil may not be ready for the Olympics in time and IOC officials have privately suggested London’s 2012 infrastructure might have to be reused as preparations are far behind schedule. Brazilians are up in arms at the cost already . Perhaps it might be wise to have a process in place to ensure that countries are able to afford such ventures to prevent national pride junkets.
Its only just starting to get much needed attention but the impact of corruption that accompanies big economic extravaganzas such as the World Cup or Olympics can be profoundly damaging to a country’s economy. This is especially true when these events are held in developing or even BRIC economies where the inflow of relatively massive amounts of hot money can represent the dark underbelly of the sport. Various interests can stand to make alot of money from the accompanying business if they can somehow the World Cup to their country.
This includes bribery of public officials and FIFA officials such as referees and senior executives. This can impact everything from the bidding process that determines the hosting nation for the world Cup to the outcome of a match. The 2022 World Cup was bizzarely slated for Qatar, an oil rich tiny desert nation. The surprise choice in 2010 of a nation with little football heritage, no existing stadiums and where soaring daytime temperatures make playing soccer problematic lead some to suspect if bribery was involved. This is finally being investigated and Qatar may be stripped of the games.
A British newspaper revealed that the 10-year-old daughter of a Brazilian Fifa executive who participated in the 2010 decision had more than £2 million put into a savings account set up in her name.
http://www.bloomberg.com/news/2014-03-17/world-cup-risks-bribes-by-naming-referees-ex-security-head-says.html