Legacy or liability: is hosting sports events good for developing countries?

Hosting the 2010 FIFA World Cup cost South Africa $7.3 billion, 6 percent of its annual budget. In a country where approximately 7 million people are living with HIV and around 17 percent are living on less than $1.90 a day, was this investment really worth it? Advocates argue the hugely successful tournament rebranded the country as a great place to invest in and visit and made many South Africans happy. Skeptics point out that the supposed legacy of the tournament has not stopped GDP per capita falling dramatically from $8,078 in 2011 to $5,724 in 2015. Similar arguments took place in Brazil after they hosted the 2014 World Cup, and will continue in the aftermath of the 2016 Olympic Games. So, is it all worth it?

Jacob Zuma, South Africa’s president, said he believed the legacy of hosting the World Cup would benefit Africa for decades. Countries such as Kenya and Morocco have voiced their ambition to host future Olympic Games.  In 2012, Raila Odinga, Kenya’s prime minister at the time, said hosting the Games would bring “enormous benefits” from investment in infrastructure. Such claims might make sense on paper; showing developing countries in a positive light would attract foreign investment, the tourism sector would boom and improvements in infrastructure would increase productivity. However, economists who have studied this are less optimistic. In South Africa, money spent on new stadiums, which incidentally are now rather redundant, could have been allocated to fighting HIV/AIDS. In Kenya, increased tax burdens might be better spent addressing long-term traffic problems in Nairobi rather than building luxury Olympic Village-style apartments. Government investment in infrastructure tends to be focused on the event itself rather than day-to-day living and business activity in the region, benefiting visitors at the expense of locals.

Furthermore, jobs created in constructing this infrastructure tend to be temporary.  In Brazil, more secure, longer-term jobs would have been created if the Brazilian government had invested in renewable energy or new schools rather than the World Cup and the Olympics. The wider benefits of the boost in employment tend to be overestimated and wealth may leak out of the cities like Rio de Janeiro given that many workers tend to be migrants.

 

So, if the economics do not stack up then why do politicians in emerging countries appear so enthusiastic about hosting these events? Surely voters will punish them when the promised economic booms do not materialize? The reason they do not, might be because as studies suggest, these events increase the short-term life satisfaction and happiness of people living in the host nation. The pride of seeing one’s country appearing in a positive light on the world stage is one reason, another is being able to support one’s home nation and the social cohesion that comes with it. And, as a result, the political standing of the country’s leaders improves. But these increases in life satisfaction tend to be short-term. Seeing a decrease in HIV infections, corruption or income inequality in South Africa and Brazil respectively surely would have a bigger long-term impact than hosting the World Cup or Olympics.

Governments should take the short-term happiness of citizens into account when making decisions but the economics of hosting these feel-good events has been shown to be detrimental. Investing in health, education and democratic institutions to boost economic growth and improve the daily lives of constituents is a better solution than a month-long vanity extravaganza. As has been demonstrated by South Africa, even despite a successful World Cup, the tournament’s legacy has not stopped life being gloomy for many people.

Thumbnail image: Unidentified group of kids play football in a village in South Sudan |Photograph Shutterstock/ John Wollwerth

Learn more:

New York Times – Brazil’s Uplifting Olympics

Guardian – What is Rio’s Olympic Legacy?

 


The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.

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