By Lynn Reaser
As the world’s most popular spectator sport, viewers from every corner of the globe will be watching progress of the Fédération Internationale de Football Association (FIFA) World Cup Soccer as South Africa hosts the event running through July 11th. Beyond the intense fan interest, are there significant economic effects on either winning or host countries?
We examined the economic performance of both World Cup champions and hosts in the last seven tournaments, occurring every four years, since 1982. We calculated the growth in real gross domestic product (GDP) for each nation for the year before, during, and after the soccer match and compared it with real GDP growth for the world as a whole.
This analysis found that winning on the soccer field has also generally transcended into winning on the economic field over this period of time. In six out of seven cases, all of the victorious countries improved their performance relative to the world in their year of victory. The only exception was Brazil in 1994. Even in that case, Brazil still outperformed the world substantially, although its growth margin edged down to 2.5 percentage points from 2.9 percentage points in the prior year. With this small sample, it is impossible to draw any definitive conclusions. However, the boost to consumer optimism may give a lift to general spending in the winning country.
The economic value of serving as the host country is less clear cut. In three of the seven cases, relative economic performance improved for the host country in the year of the tournaments, while in three of the seven cases, relative economic performance deteriorated. In one case—the U.S. in 1994—there was no change in relative economic performance. However, the impact on awareness by investors and others may boost a host country’s fortunes after the games have ended. Indeed, in five of the seven cases, host countries’ performance relative to the world improved in the year following the games relative to its standing in the year preceding the matches.
The bottom line? Winning and hosting soccer games may have some benefits for the broader economy. At a minimum, this year’s games will provide a welcome respite from the economic stresses and strains facing the world.
Research for this report was provided by Reka Katona, Student Assistant