Challenges Brazil Is Exposed Due to the World Cup - Assignment Example

Name: Course: Institution: Lecturer: Date: Table of Contents Name: 0 Table of Contents 1 2.0 Procedure 2 2. 1 Introduction 2 3.0 Findings 3 3.1 Challenges Brazil is exposed due to the world cup 3 3.2 Opportunities created by the world cup 3 3.2.1 Benefits before the world cup 3 3.2.2 Taxation before the world cup 4 3.2.3 Creation of employment 4 3.2. 4 Impact on small and medium enterprises 5 3. 3 Effects after the world cup 5 3.3.1 Enhanced reputation 5 3.3.2 Impact on industries 6 3.4 SWOT analysis of Brazil 6 3.4.1 Strengths 6 3. 4.2 Weakness 7 3.4.3 Opportunities 7 3.4.4 Threats 8 6.0 Reference list 10 7. 0 Appendices 11 Impact of world cup on GDP in Brazil 1.0 Terms of reference This report due on 11th April 2014 is prepared for the economics department by Leonardo Gonzalez. The report is an analysis of the impact of World cup on Brazil’s economic performance by focusing GDP before and after hosting the world cup. The information analyzed is based on data collected on various aspects contributing to GDP in Brazil. The findings analyzed on the report are based on strengths, weaknesses, opportunities and threats anticipated in Brazil as a result of the world cup. The report provides an analysis of the economic performance of Brazil due to the activities arise and thus provides the recommendations that are appropriate in ensuring that Brazil maximize on the opportunity of hosting the world cup so that their GDP is affected positively. Brazil will reap both direct and indirect benefits some of which are short term and other are long term. 2.0 Procedure The report is based on information gathered through primary and secondary data, though minimal attention was given to primary data collection methods due to the lengthy procedures involved. However, few individuals participating directly in planning for the world cup were interviewed and gave their own views on how the GDP in Brazil will be affected by the world cup. Most of the information was gathered from secondary sources providing insights about the economic performance of Brazil and also containing projections about the impact of hosting the world cup and anticipated economic benefits arising from the world cup. Information in the internet, economic journal, article and newspaper has been adequate in providing a basis for the information contained in the journal. The secondary sources used to source the information are contained in the list of references. The primary information provided has been used to clarify the economic opportunities expected to arise in Brazil due to the world cup and thus, directing on their economic impact which are identified through the GDP analysis. 2. 1 Introduction According to Porter & Kramer (2011), the world cup is a football tournament held after every four years; it is organized by the FIFA and brings together many nations. The teams play in groups made according to geographical placement of the nations where nations are eliminated till the final winner is established. The world cup brings together many individuals from various parts of the world some who are players, spectators, sponsors and others who come for investment purpose since many opportunities are created. Nations get the privilege of hosting this global activity and thus it has varied impacts on the economic performance of the hosting country which is reflected on its GDP. If a nation is not keen on the benefits it can draw from such an opportunity it can register a decline in their economic performance thus affecting their GDP since world cup can also be distracter in the nation so that individuals in a nation fail to concentrate on economically viable activities during the period the world cup is taking place or before due to the excitement that come when individuals know that their nation has been granted the privilege. Brazil will be hosting the 2014 world cup which has potential impacts on the nation’s GDP before and after the world cup as outlined in this report. 3.0 Findings 3.1 Challenges Brazil is exposed due to the world cup Countries that have had the chance to host the world cup in the past have been faced with challenges that are no exceptional to Brazil. The period before and during the world cup people may concentrate on the tournament and reduce their involvement in economic activities, resulting to decline in economic viability of the nation. This is a challenge to the nation since it may register decline in its GDP. Some of the job opportunities created by the world cup are not permanent which means that unemployment issues will temporary solves and so the growth in GDP experienced during the world cup may not be sustainable in some sectors . The government will incur much costs in undertaking preparations for the world cup which do not have any direct revenue pegged on them and may eventually affect their GDP (Bray, E 2011). 3.2 Opportunities created by the world cup 3.2.1 Benefits before the world cup Before Brazil can be ready to host the world cup it has to ensure that they can hold the number of people that will be attracted from other nations. The nation has to ensure security is guaranteed, enhance their infrastructure to ensure accommodation, transport and other amenities are in the right state. This is because most people will be from other countries and the state of the nation will determine of the world cup in Brazil will attract people both as spectators and also to invest in the country. There are costs associated with the country hosting the tournament which when efficiently utilized the nation will reap maximum benefits. Brazil will be in the limelight once the world cup advertisement starts so that many individuals will be attracted to the nation to invest and target the people coming to the nation during the world cup as their market (Simmons & Deutscher 2012). 3.2.2 Taxation before the world cup The government will also commit much of their expenditure in development projects to ensure that the nation is in a better state and is attractive for the visitors expected. Thus, the government will create employment opportunities such that per capita income will rise and in effect the GDP will rise. The government will also have to increase the avenues of taxation such that people will contribute much income to the government so that it can be in a position to support their developmental projects. Since the citizens will bear the cost of preparing the nation for the world cup through increased taxation the country’s GDP will decline. This will only be compensated if the citizen fails to get carried away by the excitement of their nation hosting the world come but instead to maximize on the opportunities created and thus engage in more productive activities. The government will increase borrowing to finance its capital projects that are aimed at ensure that the nation is adequately equipped for the world cup. 3.2.3 Creation of employment Improvement of infrastructures such as hospitals and tourist attraction sites will result to both short term and long term employment opportunities. Thus, citizen will maximize on them enhancing an increase in their income which directly contributes to the nation’s GDP. The government can also maximize of the nation’s wealth created from the new opportunities so that resources within the nation are exploited resulting to increased opportunities. Increased government expenditure will also result to increased economic output which will boost the performance of the nation. Improvement in transport infrastructure will make it easy for individuals to conduct business because they can easily link to the market without strain. Efficiency in production and distribution of goods and services within the nation will also be enhanced; this will impact on the nation’s productivity which will be high resulting to increased per capita income and GDP. 3.2. 4 Impact on small and medium enterprises The world cup preparations will create many opportunities for the SME which will impact on the nation’s GDP. Most of the resources used during the world cup such as caps, t-shirts, flags, bracelets among other will be made by contracting with the SME in the country. This will benefit them due to the economies of large scale production. This will enhance the productivity of local businesses and will increase their income which will contribute to the GDP. By hosting the world cup Brazil will also be advertised and people will be attracted to its details and some will end up settling and investing in the nation which will increase income points in the nation. Since the world cup is world event costs for the resources required are subsidized by most of these countries contributing towards it, thus the SME will produce required items at subsidized costs since which increases the chances of profitability for the nation. Since the wealth created from this is circulated in the economy empowerment is achieved thus an increases in the GDP. 3. 3 Effects after the world cup 3.3.1 Enhanced reputation Brazil will be put to the public after the world cup which will enhance its reputation; this will attract local and foreign investors. The reputation of a nation plays a big role in enhancing its marketability since most individuals will wish to be associated with the nation. This will result in increased earnings that will be made in the nation thus growth in the GDP. The security status of the nation will be put to the public which will increase people’s confidence to invest in the nation and as a result the nation will realize growth in their GDP. The small enterprise will increase their capital invested in their business due to increased profitability thus will expand their business increasing the level of income they contribute to the GDP. The will be improved relationship between Brazil and other nations so that they will be more confidence to invest in it (Du Plessis & Venter 2011). Due to improved infrastructure in the nation the living standard of people will improve, as health status and access to amenities are improve, this gives people an ample opportunity to focus on economically productive activities thus contributing to the well being of the nation and thus will register growth in their GDP. The transportation infrastructures established will remain of economic viability to the nation so that business and other economic activities will be strengthened resulting in growth in GDP. The exposure of Brazil created by hosting the world cup will attract tourists in the nation which will enhance economic performance and increase in income from the sector thus facilitating growth in GDP. The status of restaurant and hotels which are important for hosting the tourists are improved. 3.3.2 Impact on industries After the world cup the product and services related industries such as transport, accommodation, food and beverage, hospitality, media and tourism among others will be established and their performance will be established thus facilitating the growth and in effect growth in nations GDP. Improved performance in these industries will also create employment opportunities so that individuals in the nation will directly contribute to growth in GDP. Security and political status will also enhanced creating an enabling environment for economic productivity, this will facilitate economic development and help the country achieve growth in GDP. 3.4 SWOT analysis of Brazil Mendes Malhado (2012) provides us with the SWOT analysis of Brazil which provides insights on our findings as provided below. 3.4.1 Strengths Brazil is politically stable which creates an ample environment for hosting the world cup; this in turn will benefit Brazil directly and indirectly contributing to better economic performance. After the world cup Brazil will have its reputation enhanced which will attract investors and will enhance confidence in the economic performance of the nation contributing to growth in GDP. The infrastructure and technological levels of Brazil are stable creating a basis for developing on to enhance quality service of individuals during the world cup; this will remain part of nation’s wealth which will facilitate its sustainability in growth of the nation’s GDP. The country also has a well established industrial basis and tourism sector so that it has well established international relations that will facilitate GDP growth. 3. 4.2 Weakness Individuals may get carried away with the world cup activities such that they fail to participate in economically viable activities resulting to decline in the economic status of the nation. The governments will commit most of its expenses to preparing for the world cup instead of being committed to issues of national importance. The employment opportunities created are only short team so that the problem of unemployment is not solved in the nation. 3.4.3 Opportunities New employment opportunities will be created which will result in increased per capita income and as a result increase in nation GDP as well as improved living standards Local businesses will benefit from contracts requiring them to facilitate acquisition of resources required for us during the world cup. This will increase their business earnings and will facilitate growth in their business outcomes. Improved technology facilitated by the event will create new procedure and basis for economic activities in the nation which will facilitate better economic performance and thus enhance growth in the GDP. The world cup will open up an avenue for the development of different sectors thus industrial growth which will facilitate economic growth in the nation. 3.4.4 Threats The global financial crisis as well as increasing inflation is affecting the economic performance of nations especially where international dealings are involved. This will be a threat to Brazil after hosting the world cup since its effects will be increased costs in the nation and lower revenue from economic projects resulting to lower GDP rate. Terrorism has increased in the world, with terrorist mostly targeting crowded areas, thus, terrorism is a threat to Brazil and so has to enhance security to ensure that the world cup is not affected and thus making all investments and opportunities created from it of no economic benefit. 4. 0 Conclusion The world cup brings many nations in the world together and thus promotes international relationships making it possible for nations to develop economically. Brazil will benefit by building its reputation which will promote investor’s confidence in the nation resulting to increased wealth being created in the nation. From the information collected the chance to host world cup in Brazil has opened up opportunities that when effectively maximized productivity of the nation will increase resulting to growth in the gross domestic product. There is an opportunity for growth in the infrastructure which will facilitate transport development, access to amenities and this will improve the general well being of the citizens so that they are able to concentrate on economically viable activities thus promoting growth in the per capita income which will result in the nations GDP. Various industries will be enhanced in their performance which will result in better economic performance of the nation. 5.0 Recommendation Infrastructure development is important for growth in a nation’s GDP, thus the nation should enhance maintenance of the infrastructure developed so that they remain beneficial to local business and investors sustaining economic performance of the nation. Brazil should create awareness to the citizen on the importance of concentrating the economic opportunities created by the world cup and not to be excited about and forget being productive. To sustain employment opportunities created by the world cup the government should support such activities for national benefit and thus they will remain in operation even long after the world cup. The burden of preparing the nation for the world cup should not be solely on the government of Brazil but cost sharing should be the nation and FIFA so as not to place much economic burden on the nation. 6.0 Reference list Bray, E 2011,the Curse of Good Hospitality: Why Developing Countries Shouldn't Host International Sporting Events, Sais Review,Vol.31, Iss.(1), Pp99-102. Du Plessis, S, & Venter, C, 2011, the home team scores! a first assessment of the economic impact of World Cup 2010, Internationale Sportevents im Umbruch?, 31. Mendes Malhado, A, C, 2012, Transporting Mega-Events to Sustainability: Assessing behaviors and attitudes of tourists and residents to promote sustainable mobility for 2014 Fifa World Cup. Porter, M, E, & Kramer, M, R, 2011, Creating shared value, Harvard business review, Vol.89,Iss.(1/2), Pp62-77. Simmons, R, & Deutscher, C, 2012, the economics of the world cup, The Oxford Handbook of Sports Economics Volume 1: The Economics of Sports, 1, 449. 7. 0 Appendices Statement of problem: The report is based on the issues surrounding Brazil due to the opportunity of hosting the world cup 2014. The information is analyzed based on insights collected from secondary sources relating to effect of the world cup on GDP as experienced in the past. Statement of the purpose (including expansions or restrictions): The analysis is provided to provide the anticipated impact of the world cup on the economic performance of brazil Research Strategy Source 1 Journal Harvard citation (as appears in your list of References) Mendes Malhado, A, C, 2012, Transporting Mega-Events to Sustainability: Assessing behaviors and attitudes of tourists and residents to promote sustainable mobility for 2014 Fifa World Cup. Contribution to argument (i.e. why this source was used) It provides as with a swot analysis of Brazil Copy/Screenshots of the relevant pages from which information was taken N/A Source 2 journal Harvard citation (as appears in your list of References) Porter, M, E, & Kramer, M, R, 2011, Creating shared value, Harvard business review, Vol.89,Iss.(1/2), Pp62-77. Contribution to argument (i.e. why this source was used) Introduces to as an analysis of all that is meant by the world cup Copy/Screenshots of the relevant pages from which information was taken Place screenshots here Source 3 Indicate type here (e.g. book, journal, website, etc.) Harvard citation (as appears in your list of References) Bray, E 2011,the Curse of Good Hospitality: Why Developing Countries Shouldn't Host International Sporting Events, Sais Review,Vol.31, Iss.(1), Pp99-102. Contribution to argument (i.e. why this source was used) Provides the challenges faced by a nation that I given a chance to host the world cup Copy/Screenshots of the relevant pages from which information was taken Place screenshots here Source 4 book Harvard citation (as appears in your list of References) Simmons, R, & Deutscher, C, 2012, the economics of the world cup, The Oxford Handbook of Sports Economics Volume 1: The Economics of Sports, 1, 449. Contribution to argument (i.e. why this source was used) Gives insights on the effects before the world cup Copy/Screenshots of the relevant pages from which information was taken Place screenshots here Source 5 Journal Harvard citation (as appears in your list of References) Du Plessis, S, & Venter, C, 2011, the home team scores! a first assessment of the economic impact of World Cup 2010, Internationale Sportevents im Umbruch?, 31. Contribution to argument (i.e. why this source was used) Provides us with information about the economic impacts experienced in the past due to the world cup Copy/Screenshots of the relevant pages from which information was taken Place screenshots here Read More