High Life – New Empirical Evidence on the Economic Boost of the FIFA World Cup

Abstract

Does the FIFA World Cup boost the economy? Can a host country capitalise on a ‘high life’? The following paper develops, besides a valid econometric analysis, the factor ϕ for World Cup-specific effects on GDP per capita growth.This econometric approach uses multiple regression models. Both, first a Fixed-Effects-OLS and then GMM estimations are used to render the possibility to outline in detail World Cup-specific effects on GDP per capita growth and its three-year moving average. My investigation period covers the World Cups between 1962 and 2010. Based on in-depth analysis and the proof of a structural break, the period is subsequently split into two subperiods: World Cups 1962-1986 and World Cups 1990-2010. As peer-reviewed research has stated previously, there is no significant result for host variable ϕ for the whole period. After accounting for the structural break, results change: Pre-1990 era shows statistically significant negative results, annually (-4.6), whereas the post-1990 era shows statistically highly significant positive results: +1.1.These innovative findings indicate, accounting for a structural break at World Cup 1990 is necessary for the analysis of economic effects. Reasons can be the increased popularity of the tournament, but mainly the commercialisation of the tournament transcending into the world of entertainment.