— This is the script of CNBC's financial news report for China's CCTV on December 19, 2022.
As many people watched the World Cup final in the early hours of the morning, what kind of economic impact does winning the tournament have on the country that wins it? It has been found that countries that win the World Cup tend to benefit from a boost in their economies following the event, according to recent research by Marco Mello, Postdoctoral Research Fellow at the University of Surrey.
Mello's study examined data from 1961 through the present and found that countries winning the World Cup tend to gain an additional 0.25 percentage points of economic growth in the two quarters following the tournament.
An improved export growth and an improved trade balance may account for this effect, which may result in a greater international appeal for the country after winning the most prestigious football competition. Brazil is a typical example. Brazil's exports increased following its victory at the 2002 FIFA World Cup.
Before the final began, Mello stated that Argentina would benefit more from winning the title than France. A reason for this may be that Argentina has a more similar image as an exporter to Brazil, and another may be that France is the previous champion, and if it successfully defends its title, it will not have as much of a surprise and thus will not have a significant impact on exports.
The winning country's economic problems can, however, limit the benefits derived from a World Cup victory. As an example, Spain, in 2010, faced a sovereign debt crisis, a cost-of-living crisis, and a possible recession, all of which overshadowed Spain's World Cup victory.
Currently, Argentina is experiencing a difficult economic situation. November's inflation figures for Argentina were as high as 92.4% from a year earlier, the highest increase in 30 years, and according to an expectation survey released by Argentina's central bank, its annual inflation will reach 99% in 2022. Further, Argentina has also suffered from a drought, which may result in a reduction in crop exports next year.
Mello's study also found that being the host country of the FIFA World Cup does not bring any significant economic benefit, at least in the short and medium term. In an interview with CNBC, Andrew Zimbalist, Professor of Economics at Smith College, also discussed the impact of the World Cup on Qatar. Qatar's large investment in this year's World Cup may enable it to enhance its soft power in the Middle East world, but some negative news has still adversely affected its reputation outside the Middle East.
Andrew Zimbalist
Smith College, Professor of Economics
"I think they did well, in terms of Middle East standards. I don't think they did well, in terms of the non Muslim world, though. There's just a tremendous amount of negative news."
It's not just the World Cup. He also points out that the Olympics are also difficult for host countries to benefit from as an expert on the economic impact of sporting events.
Andrew Zimbalist
Smith College, Professor of Economics
"If you look at some of the Olympic games over the last 20 or 30 years, it's very hard, I think, to make the claim that countries have benefited economically or politically from hosting."
Considering the current economic situation in Argentina, it remains to be seen whether Mello's conclusion regarding the "World Cup effect" will hold true for Argentina. What will happen to Qatar's economy after the World Cup? We will also keep a close eye on it for you.