The Impact of Hosting a Major Sport Event on the South African Economy

of changes in imports and exports of 0.51 percent corresponds to the percentage change in
the balance of trade (contBOT) variable shown in Table 1.1. The cumulative change of 0.94
percent from the various sectors indicated in Table 1.2 corresponds with the percentage
change in real GDP (x0gdpexp) of 0.94 percent previously discussed.

From an industry specific point of view, it is interesting to note which industries are impacted
on most favourably. Results for key selected industries are shown in Table 1.3 below.

Table 1.3 Percentage change in activity level of selected industries

It is not surprising that the biggest winners are the construction and transport services
industries, those directly affected by the shock. Construction increases by a larger margin in
scenario 1 than in scenario 2 due to the nature of the shocks, and transport service activity
increases by more than 4 percent in scenario 2 due to the technical change associated with
the shock. In general, the results are as expected with all related industries showing positive
gains, albeit very moderate.

The financing of the proposed infrastructure developments has not been discussed in this
simulation due to the unavailability of information. Government has however pledged to
finance the renovations to the Soccer City Stadium in Johannesburg.

From a cost-benefit analysis viewpoint, South Africa’s bid to host the 2011 IRB World Cup
and the 2016 Olympic Games makes a great deal of sense. Given the high level of
infrastructure that would be in place after the 2010 FIFA World Cup, these costs would not
have to be repeated when hosting future mega-events, whilst the possible gains might even
exceed those of the 2010 World Cup. The revenue generated from tourism, increased tax
income, and ticket sales should prove to have a significant impact on the economy if South
Africa’s bid to host these events is successful.

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