Economic impact studies undertaken in advance of large sporting events typically anticipate large positive economic effects. However, studies undertaken after the event almost universally fail to demonstrate the anticipated effects. To that list (and see the links at the end of this post for specific examples), you can now add the 2010 FIFA World Cup, hosted by South Africa.
This 2025 article by Busani Moyo (University of South Africa) and Tendai Gwatidzo (University of the Witwatersrand), published in the Journal of Sports Economics (open access), provides the details. They apply the synthetic control method, which involves comparing the time series of outcome variables for South Africa with a counterfactual made up of a weighted average of other countries, chosen because that weighted average best replicates the trajectory of the outcome variable from before the treatment date.
In their main analysis, they use 2010 as the treatment date, in order to demonstrate any effect of the staging of the 2010 FIFA World Cup itself. The synthetic control they employ is made up of 31.7 percent Brazil, 21.3 percent Morocco, 18.1 percent Algeria, 15.5 percent Botswana, and small weightings of Kazakhstan, Malaysia, Mauritania, and Argentina. The results are shown in Figure 1 from the paper:
The solid blue line is the actual GDP per capita for South Africa, while the dashed red line is the counterfactual 'synthetic South Africa', which is supposed to show what would have happened to GDP per capita if South Africa hadn't hosted the FIFA World Cup. The results clearly demonstrate that actual South Africa performed worse than synthetic South Africa, suggesting that hosting the FIFA World Cup may have made South Africa worse off (at least, using GDP per capita as a measure).
But wait, not so fast. A lot of economic activity occurs in the lead-up to the hosting of the event. Moyo and Gwatidzo therefore change the treatment date to 2004, when South Africa was announced as the host, and check whether there was any impact then. The synthetic control changes (since they are using a different treatment date), now being made up of 31.3 percent Morocco, 24.7 percent Brazil, 17.9 percent Algeria, 14.3 percent Malaysia, and small weightings of Kazakhstan, Costa Rica, and Mexico. The results from this analysis are shown in Figure 3 from the paper:
Moyo and Gwatidzo interpret this as showing a positive effect on GDP per capita in the lead-up to the event, but I struggle to see evidence of any effect in Figure 3 (at least, before 2010 where, as in Figure 1, actual South Africa performs worse than synthetic South Africa). Actual GDP per capita tracks synthetic GDP per capita remarkably closely between 2004 and 2010, with little indication of any sustained positive effect. Moyo and Gwatidzo don't provide a clear quantitative estimate of the effect, which makes it difficult to assess whether the apparent positive effect is economically meaningful or statistically significant. Both seem unlikely to me.
Moyo and Gwatidzo then turn to looking at tourism arrivals, where the results are mixed. Using 2010 as the treatment date, actual tourism arrivals exceed those for synthetic South Africa for several years after the World Cup. However, using 2004 as the treatment date, synthetic South Africa clearly outperforms actual South Africa.
Moyo and Gwatidzo then turn to looking at tourism arrivals. In this case, the effect is modestly positive, as shown in Figure 10 from the paper:
Notice that in this case, there is a small positive difference in international tourism arrivals between actual South Africa and synthetic South Africa, at least up to 2013 or 2014. So, at least there is some good news for South Africa. Nevertheless, given the apparent negative effects on GDP per capita after the event, I am not convinced by their conclusion that:
These results, at least for South Africa, show that it is not the actual hosting of the World Cup that has a positive effect on GDP but the period of preparation for the tournament. The actual hosting of the tournament is only beneficial in the form of international tourism inflows.
Like many other studies, I think the results suggest that South Africa had a good party, which attracted extra visitors from outside the country, but failed to deliver the large positive economic benefits that were anticipated. I suggest that you file this study along with the multitude of others that cast doubt on the large positive economic benefits that are routinely predicted for major sporting events.
Read more:
- Tim Hazeldine on economic impact studies
- Beware economists bearing impact studies of the America's Cup
- Even less reason to believe in the economic impact of the America's Cup
- The overstated impact of the Super Bowl
- The economic impact of the 2010 World Cup in South Africa
- The economic impact of the 2000 Sydney Olympics
- Maybe hosting the Olympics just shuffles income around a country, rather than increasing it
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