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The trade effects of the FIFA World Cup

29/9/2014

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by Declan Jordan
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There is a sizeable literature on the economic impacts of major sporting events. Robbie Butler has shown in previous posts such as here and here that the evidence suggests that hosting major sports events, such as the World Cup and the Olympics, rarely pay for themselves financially.

There is an interesting contribution to the literature on the economic effects of hosting major events in the latest issue of Kyklos. An article by two Turkish economists, Veysel Avsar and Umut Unal, looks at the effects on trade between host and participating countries at FIFA World Cups. The article can be accessed here, though there is open access earlier version on SSRN here.

The paper finds strong evidence for a trading effect of the World Cup using bilateral trade data for 196 countries between 1950 and 2006. Pointing to the showcase effect of hosting the World Cup and the opportunities it provides for developing networks and trade channels, the paper finds that the World Cup significantly increases exports from participant countries to host countries and that trade is higher for host participant pairs compared to other country pairs. The authors find that the effects are decreasing over time. A personal view is that this may reflect the diminishing importance of showcase effects as the cost of information and communication diminishes in an increasingly digital society.

The paper is an interesting contribution to the literature and points to economic effects that may be under-appreciated or overlooked in the studies of big event impact analysis.

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