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economic impacts of the world cup



Written By: Abdullah Al-Ejel


The long-awaited global soccer event officially debuted in Qatar on Sunday, November 20th. As the biggest soccer event in the world, there is an immense amount of investment, and culture participation from 32 nations, which leads one to wonder how much of an economic impact there is on the lucky country selected to host it.


Positive Effects

The positives that entail hosting the world cup is a surge in tourism, sales, and infrastructure investments. In addition to participating locals, tens of thousands of people travel in from all over the world, purchasing services from local businesses in transportation, hospitality, food and more. Consumer spending contributes to uplifting business owners, which in turn drives more economic activity across the country.


Hosting is also good news for those who are unemployed or in search of new opportunities. Every world cup, new stadiums must be built to accommodate for fans, as well as improving existing stadiums. In the 2010 world cup, South Africa “created 130,000 construction jobs… and as a whole indirectly resulted in a gain of 415,000 jobs” (Bruegel). These jobs then lead to heavy investments into improved transportation and security. Below is an example of Brazil’s spending into their infrastructure, similar to most host countrys’ spending habits:



Russia and Qatar have also built new railway systems, bringing on positive long-term investment in public infrastructure, and providing more reliable transportation to its citizens.


Negative Effects/Backlash

While positive gains are present, countries can overspend on infrastructure, run the potential risk of long-term debt, and lose opportunities due to media backlash.


Many host countries are left with “massive debt and constructions that serve little use after the World Cup comes to a close” (CNBC). Citizens typically criticize spending decisions, arguing that it could have alternatively been used for people who need it most. This sort of dilemma argument is common during big spending projects. Qatar has spent roughly $229 Billion on this world cup, making it the most expensive world cup in history. Hopefully, revenues from ticket sales and advertising can help them break even and not put them into immense debt.


When all attention is focused on you, it’s inevitable that the media will work to point out imperfections and issues. This ranges from disagreements from political disagreements all the way to pointing out humanitarian rights & issues. For example, Russia and Qatar have committed or been accused of worker exploitation during the process of building toward the world cup. This can pose a risk of potentially ending partnerships or boycotts, and can even lead to a bad look for business partners to not boycott the event. Notable controversies in Qatar included criticism of LGBT rights and worker deaths. Many teams and social activists have protested Qatar, discouraging some people from attending and news outlets badmouthing the event, which can hurt potential ticket sales and revenue.


Sources:

https://constructiondigital.com/epc/world-cup-2018-how-russia-has-transformed-its-infrastructure

https://www.middleeasteye.net/news/qatar-world-cup-brands-sponsors-navigate-controversy

https://www.weforum.org/agenda/2018/06/world-cup-football-smart-investment-russia-host/

https://www.bruegel.org/blog-post/world-cup-economics

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