Considerations on the Economic Impact of the 2010 FIFA World Cup on South Africa

Menezes, Mathew Gomes (2010) Considerations on the Economic Impact of the 2010 FIFA World Cup on South Africa. Masters thesis, Rhodes University.

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Abstract

Mega-events are associated with significant positive implications such as enhanced international exposure of the host, improved infrastructure, increased tourist numbers, higher employment levels and tax revenues, greater feelings of patriotism among host region residents and integration of the host into the international community. Supporters of events have claimed that the occasions stimulate prominent economic gains for the host region. The economic and tourism growth that occurred in Barcelona following the 1992 Olympic Games is erroneously cited by proponents of hosting as an example of the potential benefits that an event can derive on the host. Those Games were not the sole driver of growth in the region. An analysis of previous mega-events, demonstrated that net benefits were not a necessary consequence of hosting. Comparison of pre-event estimates of the economic impact and their actual effects are universally divergent. The observation was validated by the consensus academic opinion that economic impact studies systematically overstate the benefits of hosting, and underestimate the costs. Further, different forward-looking studies of the same event, calculate vastly different predictions. The tools for calculating the economic impact, specifically Input-Output Analysis and Computable General Equilibrium, do not provide useful predictions given their dependence on the inaccurate data. With 2010 cost data having continually increased since 2003, determining the appropriate inputs to an I-O or CGE is problematic. It was identified that the weight given to the multiplier effect was also a factor in the amplification of the expected benefits. Given the poor data sets available as inputs to I-O and CGE models, the study concentrated on conducting a comprehensive Cost-Benefit Analysis of the determinants of the economic impact of the 2010 World Cup based on the premise that the identification of the relative costs and benefits of staging the event was regarded as a greater contribution to the body of knowledge on the topic. It can be expected that there will not be significant short-term economic gains; this study predicted a net cost of R8.4bn, which is marginally offset by short-term net intangible benefits. The short-term economic consequences of the 2010 World Cup are expected to be overshadowed by the long-term effects on revenues within the tourism industry. The image implication of hosting 2010 is the most salient factor in considering the economic impact of 2010, as an alteration in the national image can have long-term effects on FDI and tourism. It is however not a certainty that the international exposure that South Africa receives will be beneficial, in the instance that the World Cup is characterised by poor organisational measures or crime. The net impact of hosting is expected to be a function of the long-term benefits, which can be expected to exceed the short-terms costs, and derive a cumulative net benefit from staging 2010. The World Cup is however unlikely to stimulate the economic growth rate above levels that would have occurred had the event not been held in South Africa.

Item Type:Thesis (Masters)
Uncontrolled Keywords:World Cup (Soccer) - (2010) - Economic aspects, Sports - Economic aspects - South Africa, Soccer - Economic aspects - South Africa
Subjects:H Social Sciences > HC Economic History and Conditions
Divisions:Faculty > Faculty of Commerce > Economics and Economic History
Supervisors:Antrobus, G. G. (Geoffrey Gordon), 1944-
ID Code:1843
Deposited By: Mrs Carol Perold
Deposited On:07 Dec 2010 06:46
Last Modified:06 Jan 2012 16:21
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