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



6.


Conclusion


The dream of a nation has come true today. Some South Africans may not have food or a job, but
they now have hope. FIFA has said Africa is worthy. It is wonderful to be an African today.

Danny Jordaan, CEO of South Africa’s bid committee

This study examined the impact of the pre-event phase of the 2010 FIFA World Cup on the
South African economy using a Computable General Equilibrium (CGE) modelling approach.
The results from the UPGEM model show that the pre-event phase of the World Cup will have
a positive impact on the South African economy. The contribution to real GDP is estimated to
be in excess of R10 billion, with thousands of jobs being created by the construction of new
venues and upgrading of existing infrastructure. In addition, this improvement to the
infrastructure of the country, especially the transport sector, will benefit productivity in the
longer term and further increase GDP. Given the fact that the expected gains from the second
and third phases of hosting the World Cup have not been included in the simulation, we can
conclude with relative certainty that the country as a whole will benefit significantly in terms of
higher economic growth and development over the next decade. Studies indicate that the
overall impact of the World Cup might contribute in excess of R20 billion to GDP, generate
159 000 jobs annually, and increase government revenue from taxes by an additional R7
billion (Grant Thornton, 2003). Potential foreign direct investment (FDI) due to the World Cup
is another important boost to the economy, expected to play an increasingly larger role in the
domestic economy over the next couple of years.

Future research on this topic may include the building of a dynamic version of the UPGEM
model to achieve better simulation results. This is a very intensive exercise though as
dynamic models require far more information about changes in exogenous variables than
comparative-static models (Horridge, 2000). In addition, it would be appropriate to simulate
the overall impact of the different phases of the World Cup simultaneously using CGE
analysis.



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