Date of Defense

4-17-2015

Date of Graduation

5-2015

Department

Economics

First Advisor

Sisay Asefa

Second Advisor

Donald Alexander

Third Advisor

Donald Meyer

Abstract

Hosting mega events, which have traditionally been a privilege of developed nations, became an attainable goal for developing countries starting in 2008. This might seem to be a positive step, but there are speculations concerning the real benefits and expenses those games generate. The aim of this thesis is to investigate if it is recommendable for a developing country to host a World Cup. This question is answered through an analysis of the two previous World Cups in South Africa (2010) and Brazil (2014). The research involves comparing before and after data for both countries on government expenditure, labor market, infra-structure, tourism revenue, international recognition and social impact. As seen in this paper, South Africa invested USD 3.12 billion on transportation, telecommunication and stadia. The event generated in return USD 509 million to the 2010 real GDP and created USD 769 million in benefits for the households. Brazil went bigger spending USD 15 billion on the 12 host cities infra-structure, but the impact on GDP is still unknown. Anyhow, for both countries, the World Cup was not able to generate enough financial gains. Tourists spending returned 10% and 2.5% of the total expenditure on the World Cup for South Africa and Brazil, respectively. In both cases, there were fewer visitors than expected. Moreover the infra-structure constructed, which might be one of the biggest legacies from the events, was developed in areas of the host cities that do not need much rehabilitation. Generally, a mega event such as the World Cup can bring a lot of benefits for a developing country. It can boost the investments in infra-structure and improve the international exposure. On the other hand, because of the high level of inefficiency and corruption, those gains might have less impact than expected. Governments end up spending way more resources than needed and planned, just as what happened to both Brazil and South Africa.

Access Setting

Honors Thesis-Open Access

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