AFP, Rio De Janeiro :
The World Cup will cost Brazil more than $11 billion, a sum that sparked outraged protests and sent economists dashing for new data on an old question: is hosting global sports events worth it?
The protesters who have taken to the streets, sometimes violently, say Brazil would be better off spending on education, health and transport-areas where the gaping divide between rich and poor is most conspicuous in this sprawling country of 200 million people. But Brazil’s leaders say hosting the tournament is about more than building stadiums and throwing a party.
“The Cup is not an economic panacea but a catalyst for Brazilian development,” tourism minister Vinicius Lages told AFP. “It was a key factor behind Brazil finally overhauling its infrastructure.”
He predicted the event would add about $13.6 billion this year to the Brazilian economy-the world’s seventh-largest at $2.25 trillion-thanks to a tidal wave of foreign and domestic tourists.
Then there is the long term impact.
According to a 2012 report by consulting firm Ernst & Young and the Getulio Vargas Foundation, a Brazilian economics institute, the cup “will produce a surprising cascading effect on investments.”
The report estimated the Cup and 2016 Olympics in Rio de Janeiro will between them create 3.6 million jobs and add four percentage points a year to economic growth through 2019.
But it also warned that Brazil must ensure the benefits accrue to the entire population.
Ernst & Young said Brazil would be judged on its ability to “capitalize on the Cup’s legacies, turning them into permanent assets” thereby “reaching another socioeconomic and structural level.”
The experts are not unanimous.
In March, a report by ratings agency Moody’s forecast the World Cup would have a negligible effect on the economy, given Brazil’s sluggish growth since 2011.
Senior analyst Barbara Mattos said the tournament “will provide short-lived sales increases that are unlikely to materially affect earnings.”
Meanwhile, she warned, “disruptions associated with traffic, crowding and lost work days will take a toll on business.”
Studies show little long-term financial gain from sports extravaganzas, said Wolfgang Maennig, an economics professor at Hamburg University in Germany.
“There have been many investigations into the benefits derived from World Cups and Olympics, mostly showing that any benefit is just temporary,” said Maennig.
“For Germany (in 2006) there were high hopes but in the end people said, ‘Great event, great fun but did we gain financially? No.'”
