Title: NEGATIVE ECONOMIC IMPACTS OF THE 2014 FIFA WORLD CUP IN BRAZIL Name: Institution: Professor: Course: Date: NEGATIVE ECONOMIC IMPACTS OF THE 2014 FIFA WORLD CUP IN BRAZIL 1.0 INTRODUCTION The FIFA World Cup has been identified as the world’s biggest single sport event that takes place anywhere (Aslund, 2012)…
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Most available literature has also been limited to the positive aspects of hosting the FIFA World Cup. The argumentative question that this research paper poses however is whether there are no negative economic impacts of hosting the FIFA World Cup. In the opinion of the researcher, there could be some very crucial negative economic impacts that the hostage of the FIFA World Cup comes with, but most of these have been ignored by host countries. In this research paper, Brazil is used as a case study, where the hosting of the 2014 FIFA World Cup is brought under perspective. The research paper shall be delimited to only the negative economic impacts of the 2014 FIFA World Cup and so will not look into other aspects like social effects. The approach to discussing the negative economic impact would be to look at different variables of economic parameters that may be of concern to the country’s economy, before, during and after the World Cup. At the end of the paper an argumentative debate shall be developed with the question given below: 1.1 Research Question Is the 2014 FIFA World Cup an economic imprudence for Brazil? 2.0 Pre-World Cup Effects 2.1 Government spending Government spending is a crucial aspect of the economic determinant of Brazil. This is because already, the government is under much pressure for its inability to live within its annual budget (Bukova, 2013 International Finance Corporation (2009) notes that within the past decade, the Brazilian government has used a supplementary budget in about 7 out of 10 national budgets. The simple reason is that the bid for the World Cup came several years ahead of 2014. For countries to be approved to host the World Cup there are strict requirements laid down by the Federation of International Football Association (FIFA) that must be adhered to. Greater part of these requirements looks at the availability of sports infrastructure, security, transportation, power supply, accommodation, sanitation, among others (Istomina, 2005). In effect, the very moment that the country announced its intention to host the World Cup in 2014, active preparations started going on. Meanwhile, even though there were some level of sports development in Brazil, it was not adequate to get the country the bid. To this end, government had to start spending, in most cases, beyond its budget to get some of the required requirements underway. As an economic effect however, whenever government is forced to spend beyond its budget, there are sectors of the economy that suffers massively. It is not surprising the number of labor unrest that has hit Brazil since the government started spending on the World Cup preparation (Ivanova, 2004). Already, the government has spent R$9.9 billion (USD1.1 billion) on infrastructure alone; made up of the construction and renovation of existing stadia (Karbalevich, 2011). The upgrading of international airports alone in Brazil ahead of the World Cup has cost the government US$2.5 billion with some other budget spending that have come up to a total of S$14 billion (). 2.2 Taxation The effect of the World Cup hostage on taxation in Brazil has been analyzed in various peer reviewed literature and economic forums. It has for example been noted that one of the very first economic policies that the government undertook as a way of raising money to cater for the US$14billion budget it was faced with in hosting the World Cup was to raise taxes in several aspects of the
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