Sporting economic development

By | Business
Brazil is creating about 1 million jobs directly as a result of the World Cup. Image credit - @Rodrigo Soldon via flickr.co.uk

The 2014 FIFA World Cup, held in Brazil, is expected to inject approximately $13.5 billion into the Brazilian economy; according to a survey conducted by the Economic Research Institute Foundation (FIPE), commissioned by Brazil’s Ministry of Tourism.

FIPE’s projection is based on a study of the economic impact of the FIFA Confederations Cup in Brazil, which took place last June in the cities of Brasília, Belo Horizonte, Fortaleza, Recife, Rio de Janeiro and Salvador. According to the survey, last year’s tournament added $4.3 billion to Brazil’s GDP. The expectation is that the World Cup will inject three times as much, or about $13.5 billion, into the Brazilian economy.

The study examines the initial, direct, indirect and induced impact of the event on Brazil’s economy. The basis for calculation used was the sum of public and private investments in infrastructure (BRL$ 9.1 billion), spending by local tourists (BRL$ 346 million) and foreign tourists (BRL$ 102 million) and investments by the Local Organising Committee (LOC) on the event (BRL$ 311 million).

The World Cup will produce a surprising, cascading effect on investments made in the country. The economy will snowball, increasing by five times the total amount invested directly in event-related activities and impacting various industries. One of the aspects that most attracts a country to host a World Cup, is the tourist inflow generated by such an event; directly with fans who will watch the games and indirectly, as a result of the international media exposure.

Brazil is creating about 1 million jobs directly as a result of the World Cup. Add to this about BRL$ 30 billion, which, according to research by the think tank FIPE, will be injected into Brazil’s overall economy. The 1 million jobs generated by the World Cup means 710,000 are permanent jobs and 200,000 are temporary. Of this total amount, approximately 50,000 workers entered the tourism sector directly.

Tourist inflow entails a significant inflow of funds; notably to the hospitality, transportation, communications, culture, entertainment and retail industries. The tourist inflow directly and indirectly induced by the World Cup is expected to account for additional income up to BRL$ 5.94 billion for Brazilian companies. An estimated 3.7 million people are expected to travel throughout Brazil during the 2014 FIFA World Cup; and it is believed that the average foreign tourist will attend four World Cup matches and spend approximately $2,488 during his or her stay in Brazil.  The economic windfall for Brazil based on the influx of visitors is estimated to add roughly $3.03 billion to Brazil’s economy.

Brazil’s Minister of Tourism, Vinicius Lages, has said, “the total financial turnover for tourism during the 2014 FIFA World Cup may be more than double the anticipated figure, if we consider the multiplier effect of these resources on the Brazilian economy.”

Along with hosting the FIFA World Cup this year, Brazil is scheduled to host the Olympics in 2016. This should also bring major economic benefits to the country. Looking at evidence from London 2012, The UK economy has seen a £9.9billion boost in trade and investment from hosting the 2012 London Olympic and Paralympic Games. Games-related projects helped generate thousands of jobs in the UK. A report projects that the total benefit to the UK from hosting London 2012 could reach up to GBP 41 billion by 2020; underlining the positive impact the Games have had on new business contracts, additional sales and foreign investment.

The Games also had a productive impact on unemployment levels; with independent experts reporting that Games preparations were a major factor behind a 1.2 per cent reduction in London’s unemployment rate in early 2012. The Olympics in Brazil should also increase tourism, as the large number of tourists who flocked to London for the 2012 Olympic games also helped lift the British economy. Figures released by the Office of National Statistics show that the 590,000 people who visited the city for the Games, or attended a ticketed event, spent an average of £1,290 during their visit.

What do you believe has been the best feature of the World Cup in Brazil? 

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