Mega sporting event effects on the host country’s economy : empirical evaluation of past tournaments on GDP, Employment, FDI and Trade

Details

Supervisors

Iania, Leonardo

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

enThe purpose of this research is to investigate the relationship between hosting a mega event, and specifically a football World Cup or Olympic Games, and the effects on the host country's economy. While previous studies have typically focused on a single economic dimension, this research addresses a gap by adopting a more holistic approach, analyzing the effects of hosting on four economic indicators: GDP per capita growth, employment rate, FDI inflow, and exports. Data from 1990 to 2023 were collected to examine, not only the impact of hosting a mega event, but also the impact of the infrastructure costs associated with the event, and the difference in effect between developed and developing countries. To explore these questions, a panel data analysis is conducted using linear regression models across several model specifications. Models (1) to (3) cover different subsamples, host and candidate countries, hosts only, and developed countries. Models (4) to (6) include lag and lead variables to capture anticipation and legacy effects, while covering respectively the same subsamples as the first three models. A total of 24 regressions were therefore performed, 6 on each of the 4 economic indicators acting as the dependent variables. The explanatory variables in the regression models include hosting a major tournament, a term interaction with hosting if the country is developed, infrastructure costs and control variables to limit omitted variable bias. The findings reveal mixed results, depending on the country’s level of development, the timing of the measurement, and the indicator in question. Firstly, there appears to be a negative impact on a host country's GDP per capita, particularly for developing countries. For the employment rate, there is a large and positive significant effect, especially for developed countries. The benefits in terms of FDI are significantly positive, and often greater for less advanced countries. Lastly, the implications for the host country's trade balance of hosting the competition have been mixed, but seem to greatly improve exports for developed countries. Overall, the results highlight that the economic impact of hosting mega events is neither automatic nor uniform. Effects vary across time, country type, and indicator, suggesting that benefits are conditional on broader structural factors and policy readiness.