Controversial discussions have arisen about the justification of public expenditure on the preparation and staging of mega-sporting events in developing countries. The money spent on the event could have been used to improve or establish basic services such as health care, education, transportation or personal safety. The aim of this Master Thesis is to investigate the economic impact of the 2010 FIFA World Cup on South Africa’s tourism industry. The thesis, thereby, contributes to existing literature by adding an ex-post study on a mega-sporting event in a developing country.
This thesis employs six econometric models using time series data for the period between May 2004 and May 2011 to assess the impact of the 2010 FIFA World Cup on the number of holiday tourists arriving in South Africa and income in South Africa’s tourism industry. The study focuses on South Africa’s tourism sector because the tourism sector becomes increasingly important in economies worldwide and tourism activity is expected to have a stronger impact on economic growth in developing countries than in developed countries. The results of the econometric modeling procedure show that the 2010 FIFA World Cup had a small positive impact on the absolute numbers of holiday tourists and a significant positive impact on income in South Africa’s tourism industry. These positive effects, however, are likely to be short term as data reveals a decline in both variables for the months after the event concluded. Based on these findings, the thesis suggests that developing countries aspiring to host a mega-sporting event in the future develop a strategy that allows to translate the short-term positive impacts of the event into long-term benefits that eventually help to balance the substantial costs related to the event.
This thesis is among the first efforts to evaluate the economic impacts for the 2010 FIFA World Cup. Although it focuses on one economic area (the tourism industry) and is conducted only one year after the event was staged, it could be a reference point for further studies. To assess the overall impact of the 2010 FIFA World Cup on South Africa supplemental research investigating the long-term effects of the event on other economic areas (such as consumption and investment levels) is necessary.