Football World Cup was not an economically driving force

The often cited economic miracle of the Football World Cup is just a myth, say economists Karl Brenke and Gert G. Wagner of the German Institute for economic research. Even though the organizers, FIFA and the German Football Association, earned millions of Euros, the macroeconomic effect is said to have been quite limited.

In their analysis called »Macroeconomic importance of Football World Cups» the two economist assess costs and revenue of last year´s mega event in proportion to the economy as a whole. On the basis of statistical data now available for the first time they demonstrate that expectations of the event having a boosting effect on the economy were completely exaggerated thereby confirming their ealier assessment made in June 2006.

In general it is difficult to assess to what extent the World Cup affected investment. Realistic is the assumption that this effect amounted to just 0.2 per mill of the total economic performance. Although it is true that in June 2006 more guests from abroad visited Germany, expectations of the organizers were not fully met in this respect. Foreign guests may have spent 500 million Euros at the most which is a figure not relevant from a macroeconomic point of view. Additional employment was generated only temporarily by the event, e.g. in the hotel industry. In retail trade no effects at all were registered.

Even though the macroeconomic effects generated by the World Cup were rather insignificant, it of course had a positive societal effect. Such an event not only contributes to international understanding, but it also provides the opportunity to a country to give a positive image of itself. In this respect Germany succeeded. GERMAN