The home team scores! A first assessment of the economic impact of World Cup 2010

The FIFA World Cup hosted in South Africa during June/July 2010 was a much anticipated sport spectacle, but also widely expected to yield lasting and considerable economic benefits for the host country. Optimistic scenarios have encouraged these expectations, but there have also been cautionary studies based on the economic impact of earlier mega sport events. There are three dimensions to the potential contribution of a mega sport event to the local economy, (i) the preparatory activity such as the construction of stadia, (ii) the event itself and the impact of large numbers of tourists and (iii) the long term impact of the tournament due to a changed perception of the host economy and the potential for trade, investment and tourism. This paper provides an early assessment of the tournament’s known impact along these dimensions and the results are sobering: the tournament made only a small contribution to the economy in the preparatory phase, though that was fortuitously countercyclical. Further the immediate impact of the event on the economy, around 0.1% of GDP, was much lower than widely expected and reported. It is the longer run implications of hosting a successful tournament that holds more promise for sizeable benefits, though the outcome remains uncertain on that dimension and contingent on other factors that might undermine the favourable impression created by the tournament.