Does the World Cup Get the Economic Ball Rolling?

Assessing the Impact of the World Cup of Soccer on Host Countries’ Economies

The Germans are hoping for a successful run this summer in the World Cup — and not just inside the stadium. It is the everlasting hope of countries that host major sporting events that the games will bring about not only sporting glory but also an economic boom. Organizers inevitably claim that hosting a major event will lead to filled hotels, packed restaurants, new construction projects, and a general boost to the economy.

Past experience, however, shows that hosting the World Cup may not be the economic Holy Grail organizers often predict — at least not immediately. The historic experiences of past hosts show that countries are about as likely to see lower economic growth in the World Cup year as they are to see higher growth. In the years immediately following the World Cup, however, the economies of host countries have performed better on average.

A look at the historical experience of World Cup host nations reveals that:

• In seven of the 13 World Cups since 1954, economic growth has been slower in the World Cup year than in the two years leading up to the event.
• On average, economic growth is slower in a World Cup year than in the years both preceding and following.[1]

Yet there appears to be some potential for a comeback. Economic growth in the years following a World Cup appears to be strong:

• In nine of the 13 World Cups since 1954, economic growth has been faster in the two years following the World Cup than in the year of the event.
• On average, economic growth is stronger in the two years following the World Cup than the World Cup year or the preceding two years.

Furthermore, being both the host and winner of the World Cup has led to a triple blessing:

• The four countries that have hosted and won the World Cup have seen an increase in growth rates in the two years following the event.

But here’s a warning for Germany. It hosted and won the Cup in 1974, and while growth rates recovered nicely two years down the road, the country had low growth rates both in the year of the competition as well as the year immediately following the event.

[1] The statements comparing average growth rates are true in an arithmetic sense. Statistical significance, and the lack thereof, is discussed in the full report.

View the full report with images:

Does the World Cup Get the Economic Ball Rolling? (PDF)