World Cup: Can France or Argentina reap economic dividends?

For four weeks, the World Cup has commanded the globe's attention and on Sunday evening it will all be over. But Qatar — by far the smallest country to ever host the World Cup — will be grappling with the tournament's legacy for decades to come.

Researchers have published multiple studies over the years on the impact of hosting major sporting tournaments such as the World Cup or Olympics on economies. In general, the effects have been found to be minor or short-lived.

Less well understood is what it means for the economy of the country that wins the tournament.

It's easy for us to picture the outpouring of joy there will be in Argentina or France when one of them wins on Sunday; mass public celebrations on the Avenida 9 de Julio in Buenos Aires or the Champs-Elysees in Paris.

But can that unique feel-good factor be converted into a tangible economic bonus?

Their Cup runneth over

Over the last 30 years, five different countries have won the seven World Cups that have taken place: Brazil (1994, 2002), France (1998, 2018), Italy (2006), Spain (2010) and Germany (2014).

For six of those seven winning years, the country that won the World Cup had a higher GDP growth rate in the year they won the tournament than for the two years on either side of it.

In 1994, Brazil recorded a growth rate of 5.9%, much more than the previous and following two years. The same happened in 2002 when the country's growth rate of 3.1% was way ahead of the 1.4% and 1.1% growth rates recorded in 2001 and 2003 respectively.

This is France's fourth final in that period. In 1998, when the country recorded its first-ever World Cup win in a tournament it hosted, its economy grew by 3.6%, more than in 1997 and 1999. It won the tournament again in 2018 but this time GDP growth fell compared with the previous year, falling to 1.9% from 2.3%.

Italy won the tournament in 2006 when its economy grew by 1.8%, beating the 0.8% and 1.5% rates of 2005 and 2007. Germany's economy enjoyed similar success in its year of glory in 2014. Its economy grew 2.2%, well ahead of the 0.4% rate of 2013 and the 1.5% rate in 2015.

Even Spain, who won the tournament in 2010 in the midst of a major global recession that followed the financial crisis, apparently benefited from a World Cup bonus: its economy grew by 0.2% that year, 4 percentage points more than the previous year and 1 percentage point more than the dip of 2011.

Sugar rush or simple economics?

But is winning the World Cup the actual reason for the improved growth figures, or is it coincidental?

Writing at the time of the 2014 World Cup, Forbes columnist Allen St John wrote: "In the months that follow a Cup win, there seems to be a short-lived boost in productivity." However, he added: "Think of it as the national equivalent of a sugar rush, with a short-lived energy spike followed by that energy bottoming out."

It's certainly easy to speculatively imagine this "sugar rush." Picture ecstatic punters crowding bars and restaurants for days and weeks after the win, or business owners trying to channel the confidence and brio of their country's footballers by making audacious punts they might not have previously attempted.

However, the little bit of academic data there is on the topic points in a different direction. Research carried out ahead of the 2022 World Cup by the University of Surrey found that post-World Cup victory GDP bounces can largely be attributed to boosts in exports, rather than a surge in domestic consumption or investment.

It found that there is an uptick in GDP in the first two quarters following the victory, when the brand strength of the winning country significantly boosts the popularity of its exports.

"The evidence strengthens the idea that success in one of the most viewed and prestigious international sporting competitions has the potential to affect the business cycle," said Marco Mello, the author of the study.

The research compared the growth data of winning countries with those which did not win the tournament.

Cold realities

For the two countries in Sunday's final, an economic boost associated with a victory would undoubtedly be welcome. Argentina, in particular, could do with it.

The country remains mired in economic chaos, as it has been for many decades now. Inflation is expected to reach 100% this year while the country's massive debt pile continues to rise. Although the success in Qatar has led to a huge surge in morale and mass celebrations, Argentina's economic problems are far too severe and deep-rooted for victory on Sunday to have any meaningful impact.

As for Qatar, the World Cup's economic impact will be deeper, one way or another. Between stadium and infrastructure spending, Qatar is estimated to have spent between $200 and $300 billion (€188 and €283 billion) on the tournament. Tourism spending, however vibrant it has been in Doha over the past four weeks, is obviously not going to bridge that gap.

However, experts have repeatedly said Qatar is hosting the tournament to try and attain prestige on the global stage, rather than gain any kind of economic boost.

"It is clear that this World Cup is not about economic viability for Qatar," Dan Plumley from Sheffield Hallam University told DW. "The 2022 World Cup is likely to be loss-making in commercial terms."

"The primary gains Qatar is seeking are non-commercial. International relations are the key motivation for hosting the tournament and it is also about soft power as a defense and security strategy. Money is clearly no object to Qatar. The country can clearly afford to host a World Cup and is willing to absorb the losses attached."

Edited by: Ashutosh Pandey