World Cup brings mixed bag for global economy

Illustration: Chen Xia/GT

Expenses may be large, but benefits incalculable

The FIFA World Cup, arguably the most popular sports gala after the Olympic Games, is a spectacle with the potential to generate huge economic benefits. Very few people would challenge this idea, because most believe the event can attract tourists and spur consumption.

Estimates from various organizations price the benefits in multi-billion US dollars terms, while the fact that many countries vigorously vie to host the World Cup supports the assumption that it's profitable.

But not all are fans of World Cup economics.

Some cite fewer working hours and declining efficiency to prove that the World Cup actually brings losses.

The argument goes like this: as people watch the World Cup, they come to work late and leave early. Others might not even show up at all. And even those who report to work on time may suffer from increased inefficiency from staying up late into the night to watch matches.

This theory was quantified by Beijing-based Anbound Consulting in 2002 when China competed in the World Cup for the first - and so far the only - time.

The consultancy said China would lose 3.5 billion yuan ($562 million) from the World Cup. This amount was based on estimates that two of every 2,000 working hours would be spent watching the games.

Gross domestic product growth that year seemed to validate the theory. The Chinese economy grew 8.9 percent in the second quarter when the World Cup was in full swing. The growth was on a par with that in the first quarter but slower than the 9.2 percent and 9.1 percent growth rates recorded in the third and fourth quarters respectively.

In this sense, the World Cup may not exactly be a boon to countries like China, where many people withdraw from various forms of economic production to watch soccer.

But how about host countries?

Baade Robert and Victor Matheson, two professors who regularly study the economics of mega sports events, found that the nine US cities which together hosted the 1994 World Cup recorded economic growth that was roughly $4 billion less than they would have otherwise been expected to realize.

As for employment, some economists have pointed out that the World Cup brings only short-term, low-pay jobs in industries like retail and food service.

German economists Florian Hagn and Wolfgang Maennig?examined the German experience related to the employment effects of the 1974 World Cup.

They concluded that the 1974 World Cup in the country "did not generate any short- to long-term employment effects that were significantly different from zero."

Meanwhile, Dennis Coastes, a professor of economics at the University of Maryland Baltimore County, has found that the cost of holding a World Cup is steadily mounting. Stadium construction remains one of the largest expenditures, but other inputs such as security to manage soccer fans are also increasingly expensive.

Coastes concluded that "there are certainly dozens, if not hundreds, of ways to spend taxpayer dollars which provide a better return to society than spending money on the World Cup."

Many also expect the event to boost tourism by attracting global visitors, but Maennig?has a different view. After analyzing the 2006 Germany World Cup, he found it had not produced any significant impact on the tourism industry.

In fact, he said many locals actually chose to leave Germany during the event to avoid crowds, offsetting gains from incoming tourists.

Indeed, the assumption that the World Cup attracts more global visitors is not always true. In 2002, co-host South Korea saw fewer foreign visitors during the World Cup than it did during the same period a year earlier.

Summing up the economists, the World Cup does not appear to be a cost-effective undertaking.

But they forget one thing: the intangible return it can bring to the host nation, not to mention people around the world.

The tears and joys elicited by the World Cup, as well as the great fun surrounding it, cannot be quantified. The boost to a host nation's image on the international stage is invaluable, as is the sense of national unity that mega sports events inspire.

So, forget economics. The World Cup is a time to party and have fun. Cheers and enjoy!