Russia is making headlines again, and this time not for political reasons but because the country is the host of this year’s FIFA World Cup.
The competition began June 14 with the first game between Russia and Saudi Arabia at the Volgograd Arena.
The bidding process to be chosen as the host country is long and can take several years to conclude. Many countries go through the process, hoping that hosting such a big event can bring short- and long-term benefits to the economy.
Despite any potential benefits, there is disagreement on whether hosting the World Cup is worth the time and effort.
Many believe that the short-term effects are undeniable, but the cost of repairing and building new stadiums can be harmful long-term. The answer often comes down to how developed a country is.
FIFA requires that the host country have at least 12 modern stadiums dispersed in several cities. Out of the 12 stadiums, Russia had to build half of them and make repairs to the rest. The construction of each stadium cost nearly $20 billion, according to The Boston Globe.
Therefore, a host country must prepare for the World Cup years ahead of the event.
The costs are big, but tourists can bring in a lot of revenue from ticketed events.
An influx of tourists can also create a stronger market for products in the country like food, hotels and other tourist sites. The real question that causes a lot of debate is, what happens when the World Cup ends?
Many economists argue that while the World Cup may bring some tourists in, it also “crowds out” other tourists who do not have an interest in soccer, so they may end up delaying or canceling their trip to avoid any stress, Reuters reported.
Other economists say that residents living in the host country don’t bring any extra profit because they only switch their consumption to World Cup-related expenses, rather than pay for both non–World Cup expenses and World Cup expenses.
It is often believed that the economy of the country will improve because of all the money tourists are expected to spend. However, a lot of the hotels and businesses benefiting are owned by foreign investors, which means that the money will go overseas anyway.
The short-term benefits are often more debatable and more complex depending on many factors that define a country —
its existing economy and infrastructure, government, crime rate, for example.
Long-term effects are even more complex and harder to predict and directly correlate to hosting the World Cup.
The PIT Journal argues that hosting a World Cup will have three main long-term positive effects.
The first is the benefit the construction of new stadiums will bring. Many soccer clubs use them as their home stadiums and host many games after the World Cup.
A lot of stadiums from previous World Cups have also become landmarks for that country, which then brings in long-term tourism. According to The PIT Journal, tourism increases 60 percent after a country hosts the World Cup.
It is also believed that hosting the World Cup created the feel-good effect that makes residents happier and prouder of the hosting country, which then results in higher consumption.
The World Cup may also change international perception. Host countries often rely on the event to change international opinion and attract more tourism after the World Cup.
Russia can definitely take advantage of this since previous events seem to have created a mostly unfavorable opinion about the country.
All of these factors are complex and can vary by country. Developed countries have been shown to benefit more than developing ones. Germany hosted the
2006 World Cup and has experienced positive short-and long-term effects.
But soccer was already popular in Germany and profits from newly constructed stadiums continued after the World Cup. Germany also had a strong enough economy to maintain these stadiums and its population had the spending power to go to events in these
South Africa and Brazil, on the other hand, did not have the same luck. South Africa spent billions of dollars to host the World Cup, and the stadiums now only see an average of 7,500 people per event. Brazil’s most expensive World Cup stadium is now a parking lot,
according to the World Economic Forum.
Whether Russia will benefit from hosting this year’s World Cup will only be seen years from now. Many analysts and the organizers of the event don’t have high expectations, some arguing that the impact could be as high as $308 billion by 2013, the World Economic Forum reported.
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