The Economic Effects of the World Cup
Every four years the biggest sporting event in the world – the FIFA World Cup – takes place. Qatar will host the World Cup this November and December. Soccer is the most popular sport in the world with an estimated four billion fans. With so many people invested in the sport, there comes an immense commercial opportunity. While there are some social and environmental consequences to hosting the World Cup the economic benefits most definitely outweigh the deficits.
The economic benefits of hosting a World Cup can be better understood by looking at a study done in 2009 by AECOM that focused on what would've happened if the United States had hosted the 2018 World Cup. AECOM concluded that conservatively there would be a domestic economic impact of about five billion dollars. Consumption increases because domestic consumers are bound to spend money to go and watch games when they’re more accessible. Investment increases because the World Cup attracts investors trying to capitalize on the economic boom that comes with the event. An assumption can be made that government spending will increase because there are lots of rules and regulations that FIFA requires a county to follow to be allowed to host. Most of these rules have to do with safety, transportation, and construction; all of which costs the government millions of dollars. Finally, net exports increase because the consumption of domestic goods by a foreign tourist counts as an export for the country where the goods or services were bought. With the combination of all of these factors, GDP would easily skyrocket for the months when the World Cup is occurring. Also, AECOM predicted 65,000 to 100,000 jobs would’ve been created during the entirety of the tournament (AECOM 2009). These job opportunities would help the all-around well-being of thousands of Americans as well as boost the economy even more.
Despite all the economic advantages of hosting the World Cup, there can be economic, social, and environmental disadvantages too. During the preparation and execution of the event, the economy gets a massive boost. However, economic problems can develop in the months to years after the event ends, when the country is left with higher inflation due to increased demand-pull. The high inflation causes the greatest problems for the poor who can no longer afford normal goods and services. They have to rely more on inferior goods to get by.
The greatest social disadvantage a country faces when hosting the World Cup is the increased crime rates. When people come for the World Cup they help the economy grow, but they are susceptible to burglaries and other crimes that result in monetary gain. For the 1990 World Cup held in Italy, “We find that hosting the Football World Cup leads to a significant increase in most property crimes (bag-snatching, pick-pocketing, shoplifting, and burglary)” (Campaniello 2011). With a large number of wealthy people coming into the country, there becomes a variety of targets for thieves to attack. Security at these events are also on high alert for potential terrorist attacks that could take place at an event so big. The reason that the World Cup could potentially be a target for terrorist attacks it because of the controversy it would cause, politically, economically, and socially.
Environmentally, the disadvantage of hosting a World Cup comes mostly in the form of pollution caused by the huge preparation that is required. Stadiums need to be built/remodeled which creates the need for lots of construction and the use of gasoline which has a negative effect on the environment. Also, there will be a huge increase in transportation when the event begins. Tourists will need to travel a lot to get to the stadiums, hotels, and restaurants. Essentially, this increase in transportation will cause huge amounts of gas to be consumed and create lots of pollution. Other environmental disadvantages include the excessive use of energy, pollution of land, and production of waste. All of these factors can lead to major negative repercussions for Qatar.
Qatar is set to host the 2022 World Cup in November. When Qatar first won the bid to host the world cup in 2010 many people speculated that FIFA had made a mistake. Heat plays a major role in a cardio-dominated sport. Qatar is the ninth hottest country in the world in annual average temperature according to a study done by World Population Review. Playing in that heat is unbearable and more importantly dangerous. Qatar also has a poor record on human rights. Qatar is a relatively tiny country, and previously to earning the bid had no World Cup venues. Since the bid, Qatar has built seven stadiums, an airport, a new train system, several more roads, and 100 new hotels. With a large demand for workers needed, immigrant workers from surrounding countries came to work. An article released by the Guardian in 2021 stated that 6,500 migrant workers had died since the preparation for the World Cup had begun. Their blatant disregard for human rights and extreme temperatures are two reasons that people did not want Qatar to have anything to do with the World Cup.
Qatar is a country in the midst of a transformation period. They are using the World Cup as a catalyst for their government initiative Qatar National Vision 2030 which plans to turn Qatar into a global society with higher standards of living. Qatar’s main source of income comes from oil production and natural gas reserves. While energy production is a strong source of income, it is highly volatile, so the government wants to build up its non-energy economy to become more stable, and less reliant on volatile commodities like oil. The World Cup provides the perfect opportunity for Qatar to become the country it wants to be. First of all, the economic benefits that follow are considerable. As discussed above, GDP gets a significant boost when a country hosts the World Cup. This statement is especially true for Qatar because of the immense amount of work that was needed to create the World Cup venue. Qatar predicts that 1.5 million jobs will have been created in the preparation, execution, and remnants of the tournament venues. A 1% increase in the employment rate increases the output of a country by 2% according to Okun’s law (Okun 1962). Employment will have undoubtedly increased during the preparation and execution of the event. GDP will also increase through growth in consumption, investment, government spending, and exports. The increase in output will help Qatar achieve its 2030 goal. Also, tourism has been known to increase in a country after a World Cup due to the fact that the country will be more well-known and the country can spread its culture to foreigners on a global stage. In fact, Qatar has even seen an increase in tourism before the World Cup even begins. This boost in tourism will also help them achieve their government initiative because tourism will become another main source of income to help stabilize their economy. Qatar’s construction to meet the standards of a World Cup host has also turned the country into a more developed place. Qatar’s plan to become a global society with higher standards of living is attainable with the help of this year's World Cup. The event will help make Qatar a new and improved country.
Qatar will become even more independent and stable.
The effects of hosting the World Cup are almost unfathomable. There are both pros and cons to hosting the World Cup, but the economic benefits indubitably outweigh the cons. Obviously nobody knows what will actually end up happening with Qatar following the World Cup, but recent trends have provided empirical evidence that Qatar will end up better off in many ways than before. The economic power that the event has to possibly turn a less well-known country like Qatar into a flourishing global destination is amazing. Qatar is paving the way for many other countries to possibly follow in their footsteps and also transform their country into a more well-off place.
References
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