Economic Effects of Hosting World Cup in Brazil - Admission/Application Essay Example

? 10th December Economics of multinational enterprise Based on the challenges that are faced by countries in their efforts to globalize their economies, some countries have taken the initiatives to invest in global events as a way of increasing the demand of their products. At the same time holding of international sporting activities such as football, racing, and athletics provide ample opportunities through which countries can improve their image in reference to political stability, security, economic development and social progress all of which are vital in attracting new investors. Despite the high costs of organizing such global events, in most cases the hosting countries incurs wide range of benefits that have a positive impact of the economy thus offsetting the high expenditure. One of the international sporting events that attract large number of players and spectators is FIFA World cup. With the growing interest on the football games, the event has been used by hosting countries, the sponsors and the visiting teams as one of the major marketing avenue. This paper discusses the FIFA World cup 2014 that will be held in Brazil, its impact on the country’s economy as well as making a comparison with the FIFA 2010 World Cup in South Africa. FIFA 2014 world cup in Brazil Being hosted by Brazil during the months of June and July 2014, the FIFA 2014 world cup takes place for a second in the country with the previous event being held in 1950. With more that 64 matches scheduled to take place, the events attracts 32 teams from various teams from different countries. 52 referees are expected to undergo evaluation followed by production of a final list by the refereeing department. In order to ensure that games are held in a conducive and spacious environment, the Brazil football authority expects to host the games in eighteen cities that includes Salvador, Belo Horizonte, Cuiaba, Brasilia, Rio Branco, Sao Paulo, Florianopolis and Rio Branco among others. One the key aspects of the FIFA 2014 world cup is that it will emulate the goal-line technology as a way of ensuring that the teams are not denied their goals (Nosso 25). With $11 billion being allocated by the Brazil’s government to host the competition, the government has embarked on refurbishment and construction of stadium. The host cities will be exempt from Value Added Tax. Other infrastructural projects that the government has initiated in preparation for the events includes road system and bus rapid transit that will connect the hosting cities with the airports, light rail as well as 4,300 km of highways. Additionally, the government aims at allocating $5 billion to build new hotels that will be used during the World Cup as well as during the Rio de Janeiro summer Olympics that will be held in 2016. Other changes that the government has put in place since the announcement that World Cup 2014 will be held in Brazil include adoption of an integrated security system. The government has set aside approximately $900 million that it will invest in facial recognition system and as well as unmanned security system that will secure the visitors against terror attacks among other security challenges. Effects of the FIFA 2014 world cup on Brazil economy With the expansive infrastructural system that the Brazilian government is establishing, the transport system of the country will significantly improve thus making it easier for the movement of goods and services. Additionally, the infrastructural system is one of the major fiscal policies that will increase the level of employment in the country. As the result of the high number of visitors who will either be spectators or officials, the country national demand for goods and services will significantly increase. This will not only trigger the industries to produce more products but also it will create more job opportunities for the young people. As the country demand increase, foreign domestic investment will increase as firms will be aimed at increasing their operations in order to maximize profits. The increase on the number of investors will be of great economy. Being known for moderately free markets, Brazilian economy will experience an increase in the GDP from $2,503 trillion to approximately $3,000 or more. This will make the country to be one of the largest economies in the world. One of the positive impacts of the event on the Brazilian economy is that apart from increasing the purchasing power of the households as a result of the creation of the employment opportunities, resulting to increased number of foreign visitors after the games. As a result, the country inflow of foreign currency will continue to increase in future. In future Brazil and other countries aspiring to host the event should ensure that ticket selling is undertaken as early as possible. In this way, it will be possible to meet the demand for the tickets across the globe. Similarly, the government hosting will have a rough idea of the number of visitors expected thus putting in place adequate security and other measures to prepare for the event. Comparisons of the 2014 and 2010 FIFA World Cup in Brazil and South Africa respectively In 2010, the FIFA 2010 World Cup was held in South Africa. While in Brazil around 18 cities are expected to host the tournaments, only 10 South Africa cities hosted the 2010 FIFA 2010 World Cup. One of the major challenges that the South Africa faced during the preparation of the world cup was the strike by the construction workers who were refurbishing the existing stadiums as well as those who were constructing the new stadiums. According to National Union of Mineworkers, the workers were poorly paid despite the economic benefits that the World Cup would generate for the country. Having being refereed by 29 referees, the FIFA 2010 World Cup official mascot was Zakumi, an African leopard that was painted using green and yellow colours to reflect the colours of the hosting country. On its part, FIFA 2014 World Cup will use tatu-bola as its official mascot. While the Brazil government has allocated $11 billion to host the global event, the South Africa government budget for the World Cup was R14.9-billion (Bohlmann 7). The expenditure was mostly incurred in upgrading the country’s stadium and improving the transport system within the hoisting cities. The aim of the government was to ensure that the event brought about a sustainable transport system once it was over. To the South Africa, the event brought about various benefits such as improved country’s image, improved transport and increased number of investors. However, the World Cup did not generate adequate finance that would make the country to attain a sustainable economic development. While the government expected 405,000 foreign fans to arrive at the country, only 309,000 came. This resulted to reduction in revenue from the expected ?570 million to ?323 million. One of the factors that led to reduction in revenue was failure by some group ticket holders to sell all their tickets. The table below indicates the expected key expenditure that Brazil will incur in 2014 as compared to the South Africa FIFA 2010 World Cup costs. Project Brazil (?) South Africa (R) Stadium 1.76 billion 8.4 billion Transport 3 billion 9.0 billion Broadcasting 350 million 400 million ICT 3.4 billion 2.5 billion Security 489 million 666 million Ports 234 million 1.58 billion Community mobilization 14 million 17 million Conclusion Based on the above discussion, it is clear that FIFA World Cup is a global event that if well organized it would improve the market and the economy of the hosting countries. As indicated in the paper, the FIFA 2014 World Cup to be hosted by Brazil will greatly help the country in its development strategies as well as in the creation of market for its products. Despite generating reduced revenue than expected in South Africa, the FIFA 2010 World Cup resulted to enhanced economy of the country in the form of increased job opportunities and improved transport system. Works Cited Bohlmann, H. Predicting the Economic Impact of the 2010 FIFA World Cup on South Africa. Department of Economics Working Paper Series. Retrieved 10 December, 2013. Nosso, T. Rio and the final match of 2014 FIFA World Cup. Copa2014.org.br. Retrieved 10 December, 2013. Read More