The Economic Impact of Sport Events on Economy: Case Study on Qatar 2022 World Cup ()
1. Introduction
The FIFA World Cup is one of the many large-scale sports events that have been widely recognized for their important economic consequences [1]. During such events all over the world various economic growth channels are created through the directly and indirectly involved parties that include opportunities for employment, new infrastructure development, tourism traffic generation, and at the same time carry the attention not only of the local people but of the global village. The economic analyses involving such events are usually based on input-output models, econometric analysis, and regional economic simulations, which utilize different statistical techniques such as the ones described by [2].
Cost-benefit analysis (CBA) is a well-known method used by scientists to determine the economic impact of international sport activity. It allows the measurement of both tangible and intangible elements of the investment particularly in infrastructure and tourism [3]. Statistics application studies are the fundamental means to measure the impacts of the programs in one sector of the economy to induce the activation of the other sectors of the economy [4]. The structure of time-series data has been the ground that makes econometric models a common tool for forecasting GDP growth and contraction that are caused by major sporting events, as it is observed by [5].
According to [6], the main benefits of big sports events are immediate and lasting financial returns. The first gains such as the tourism sector increase, job market expansion, and the modernization of infrastructure usually are the propellants that lead the way to future economic expansion. The furthering use of developed infrastructure will be another long-term benefit that will sustain the economic advancement [7]. Besides this, the participating country’s international image is usually raised by such events, which then hovers as an “open trade” to trade, investment, and other economic growth dimensions [8].
As the 2022 tournament to be held in the Middle East, Qatar, the host nation can boast of this being their very first World Cup; an occasion that in itself is a rare prominent event [9]. The major infrastructure expenses will have material effects not only on the solid event itself but also on GDP growth, the labor market, and the tourism sector. To assess these effects, the paper applied a mix of GDP forecasting models, some econometric regression, and multiplier analysis like those advised [10]. It utilized statistical models that have strong and verifiable data from the project employed for short- and medium-term periods.
The economic impacts of staging major sporting events like the FIFA World Cup are multifaceted and involve several complex factors. For Qatar, participation in the event is an important means to achieve its goal of a diversified economy; besides, it is a good way to decrease the country’s dependency on oil revenue [11]. This gives rise to the key question that is: What are the specific economic outcomes that the 2022 FIFA World Cup provides to Qatar’s national economy? Of significance and interest, only few studies have focused on the World Cup effects in Qatar, while this gap is quite crucial given the country’s unique economic and socio-political context which in turn, makes direct comparisons with other the host nations difficult [12].
2. Literature Review
The FIFA World Cup is widely regarded as one of the most prestigious and significant sporting events in the world. More than just a sporting event, however, it is also recognized for the many positive impacts that it has on the economies of the countries that host it [13], highlights that significant events like the FIFA World Cup have immense potential for generating long-lasting economic prosperity for the countries that host them and for the people who live in them, in a wide number of areas of their nations’ economies. The effects of any host country’s World Cup participation extend beyond the building effort and income from tourism that the event produces. In addition, the World Cup is a defining moment for both the establishment of working opportunities, the development of the industrial sector, the generation of national income, and the international exposure of the hosting nation in a way that would not be possible otherwise [14]. These findings imply that such circumstances help bring forth mutual business, tourism, and investment opportunities for the hosting nations.
Through all the above analysis, it is clear that the FIFA World Cup is one of the biggest international sporting events. These events present an opportunity to analyze the positive and negative effects that such international sporting events have on the economy of their host countries.
Economic Impacts of Sports Events: A Summary
The economic impacts of sports events like the FIFA World Cup have been analyzed using various qualitative and quantitative ways over the years. One of the main tools for assessing the economic effects of the World Cup and similar events remains cost-benefit analysis. This is an important technique in terms of evaluating the level of investment in infrastructure and other areas as well as non-market assessments of international impacts such as improved trade and increased living standards. [15] states that CBA is an exhaustive investigation of the business case from all angles and projected risks and issues that can be related to significant directs or international sports events. As a result, the CBA technique involves evaluating the initial costs of the different aspects of the World Cup by the host government, for instance, building new sporting complexes and stadiums, improving the transportation and communication Infrastructures, and also upgrading the general public services for the nationals of the nation. Further, estimates of these costs are scientifically and accurately compared to the envisaged positive effects such as wide-scale tourism, increased employment and job opportunities, and foreign capital inflow and investment.
The application of Cost-Benefit Analysis (CBA) in mega-events such as the FIFA World Cup has been a controversial issue as the results have been mixed and uncertain. This has been supported by the work carried out by [16], who gave findings to show that the short-term economic beacons of hope that the activity brings prove to be swaying against the lasting costs mostly where the infrastructural development does not give birth to a self-moving machine of economic development. These authors argue that while the World Cup may lead to a temporary boom in the economy, the benefits do not carry on beyond a specific period; hence, if the investments do not meet the regional growth challenges or cater to the needs of the citizens, the economic cycle could be incomplete. The World Cup is an excellent example, where spending mostly, on the outset may lead to an attractive and glittering economic boom but looking at it from the hindsight, the investments made were not relevant to the aspirations of the region and the needs of the dwellers.
In applied economics, input-output models are commonly used to analyze the economic impact of mega-events by showing how the investment made on one sector can lead to ripple effects across other sectors. It gives a clear description of how the investments in construction, accommodation, shopping, and others can benefit different sections of the economy [17]. Input-output analysis has given a clear picture of how the investments have immensely impacted the local economy in the million-fold nature of economic events such as the World Cup; therefore, applying it helps for financing effective processes of policy decision-making, and promoting the realization of society-oriented responsibilities in relation to the sports events and related investments. Through this analysis, input-output modeling has become a crucial procedure to determine the economic consequences of mega-events as they occur in the recent past World Cup, therefore arming the policymakers with valuable insight in considering if the hosting of such mega-events is worthwhile and seeks the role of showing the potential effects of the events in the future.
The revenue generation capacity of large-scale sporting events on the national economy is a complicated issue, presenting factors such as positive and negative impacts in approximately equal measure. One positive aspect is that researchers remember the works of [18], who argue that mega-projects such as the World Cup frequently create cross-benefits and exhibit an ensuing football effect engendered by the World Cup. Under these circumstances, the above mega events normally elicit a huge influx of tourists leading to a variety of advantages including increases in tourism, employment, and other infrastructural developments. As a clear example, the World Cup caused a large influx of visitors, which translates into increased revenue for hotels, restaurants, transport, and souvenir shops, partly demonstrating the immediate positive effect on the economy, both locally and globally. The economic impact of the World Cup and similar events can be multiple in nature, thus bearing far-reaching benefits for local and other various sectors of the economy and mainly micro-economies that depend on the events’ behalf.
Besides the many immediate economic perks, the enhancement or the advancement of the relevant infrastructures for the World Cup such as erecting the large stadiums, improving the access roads, and upgrading the leveraging transportation systems creates greater job and bodes well for the economic outlook of the respective host nation. Yet, the temporary jobs that such events create may not give a true reflection of the long-term effect that the host nation gets economically wise. When measuring the potential economic gains from the event, it is essential to tap into the impact that these particular factors measure to get a rounded picture of the benefits.
Nevertheless, the overall economic effects of holding mega-events should not be underestimated. As [19] contend, the durability of the economic windfalls gleaned from such events is majorly reliant on how the people will use the structures that were built or upgraded after the events have ended. It is true that these new stadiums and transport infrastructure have promising prospects for the economy, but they also come with the danger of premature nursing of white elephants that are not properly taken care of or serviced within the short period after they have been built. The costs of maintaining and repairing these facilities for a long term basis and the possibility that the infrastructure may never be used again unless it can be made more self-sufficient can bring in unwanted consequences for the finances of the future.
The Qatar 2022 World Cup is a case study on the particularities of the impact of the World Cup. One of the major highlights is the fact that Qatar is going to host the event being the first instance for Middle Eastern countries thus; it somehow is going to bring or make history. The fact that Qatar has around three billion people who are native citizens with a small number of foreigners makes it a real-life case to provide these structures for the anticipated global tourism market in terms of the provision of quality services to a very small population. Qatar’s efforts to put in place state-of-the-art stadiums, advanced rail system, and fine hotels and restaurants, can be seen as a showcase of the tourism industry to the world during the 2022 World Cup as noted. These developments are expected to have a significant impact on GDP growth and national employment, and the tourism industry is still offering different opportunities for Qatari nationals.
However, it is important to note that hosting a highly prestigious and much-awaited event like the World Cup entails a number of serious financial and other commitments that do not make fruitful to a very limited extent some way or other it is better put to plunge into such an economically strenuous project as Qatar 2022 World Cup especially seeing the fact that it is not known if the event will really take the country’s economy to a level ahead in the long run. Addressing the question of what to make of the economic impacts of Qatar World Cup fully grounded on gross combination usage of advanced econometric models such as using advanced econometric models like the study by Li that focuses on finding out the impact it will have on various sectors of the economy directs esteem research work towards going through constraints in economic literature. By applying econometric regression analysis such as analysis of the variations experienced across different sectors of the economy as well as forecasts of Qatar’s GDP growth, we may determine the possible economic benefits of the World Cup held in the country such as increase in foreign connections, acquisition of advanced infrastructures by hire purchase and establishing FIFA’s name globally.
By hosting the 2022 FIFA World Cup in Qatar, a country with a hugely ambitious vision to go along with this venture and leave a lasting impression on the world [20], predicts to enjoy successful economic diversity through the event of the World Cup. However, this research paper seeks to put into consideration that “the validity of these statements is often not clear in the studies and thus future research must comprehensively analyze these aspects. Although extensive research has already been done on infrastructure development in Qatar any potential long-term benefits which could be derived from these investments in terms of sustainable economic growth and development after the end of “World Cup 2022” and its other projects remain an area that needs further investigation in this report.
The literature regarding the influence of FIFA World Cup on the economy has been investigated in relation to some clear apparent short-term benefits but these are repaid various difficulties and problems likely to be encountered in the future. The change within the economic and social frameworks in Qatar is heartening showing how hosting the World Cup would lead to various prospects and circumstances with their own peculiarities in terms of outcomes and analyses. It is possible to borrow theoretical principles and techniques used in previous studies in respect of input-output models, econometric regression analysis, and cost-benefit analysis as these techniques are important but they have potential limitations which must be addressed in order to achieve the gap of the present research. The present study has to offer a novel elaboration of this project when it may be said that it provides the readiness to investigate this case for the comprehension of the economic influence of the World Cup in the example of Qatar as a growing economy and developing country and may be helpful for the prospect of sustainability of such outcomes the event set for such a basis for decisions aimed at sustainable development in the perspective of the mega event to be held in Qatar with regards to sustainability and the kind of effects the FIFA World Cup in Qatar in 2022 holds like having such productive input and analyzing the nature of the various variables that will set the course for the country’s rise as an economic power in the flavorful decade to come.
3. Methodology
Consequently, this study implemented a mixed research approach that incorporated both qualitative and quantitative methods to comprehensively evaluate the local economic impacts of the 2022 FIFA World Cup on the national economy of Qatar. Utilizing the power of data to identify trends and deep local knowledge to understand the context, this mixed techniques approach provides a thorough study of economic results that no single approach could capture, thus enabling an extensive review.
3.1. Quantitative Component: Measurement of the Economic Impact
In the quantitative part of the study, the researchers plan to find out how the world cup influenced the first-order economic indicators, such as Gross Domestic Product (GDP), employment, and the growth of the sectors. There are several statistical models such as time-series and regression models that will be used to forecast the economic effects of the World Cup on the mentioned critical indicators. Official government statistics from Qatar Central Bank and Qatar Statistics Authority, as well as the indicators coming from the tourism, construction, and hospitality was the sources of information and data [21]. Quantitative analysis helped the paper to make a comparison of the economic patterns seen before, during, and after the event which will give an insight into the way the World Cup event encouraged the country’s output in the services and consumption sectors.
3.2. Qualitative Component: The Political and Socioeconomic Context
The part of the study is qualitative and presents a thorough examination of the political and socioeconomic structure that the World Cup was affected by and/or influenced the economic consequences. Through the analysis of examples of previous mega-events like the FIFA World Cup and the Olympic Games, the study will look into the problems and successes that Qatar might have encountered [22]. Moreover, the qualitative approach involves interviewing the main actors, such as government officials, corporate executives, and economists, who will have a deeper understanding of the events.
4. Data Collection Methods
This study uses quantitative and qualitative data collection techniques in order to ensure that a reliable analysis is made. Secondary data was gathered from well-established sources in the country which include industry studies, international organizations or even government publications. Contrarily, primary data was collected using surveys and interviews from local stakeholders which enable for much deeper look into the impact of the economy on a local scale.
4.1. Statistical Methods and Data Analysis
Both quantitative and qualitative analysis techniques was applied to gauge the economic impacts of the 2022 FIFA World Cup.
4.1.1. Regression Analysis
The most significant statistical method used was regression analysis in the quantitative examination of the connection between the World Cup-related financial outlays (such as infrastructure development, tourism spending, etc.) and the overriding indicators of economy such as GDP, employment, and business income. Time-series analysis comprises the variation in GDP and employment number between the periods of training, tournament, and post-event to identify the ones with most effect on the preparation and conduct of the World Cup. Using this kind of approach support the detection of similarities between different time frames [23].
4.1.2. Input-Output Models and Multiplier Effect
The planning was based on the input-output approach to find out the multiplier effect, the level of income creation elicited by the World Cup-related spending in more than one sector. Just to give an example, the effect of the multiplier is positive, showing how the economic benefits from the direct investment in the economy machinery are generated due to spending in tourism, construction, and related services. The multiplier effect can be defined as the process by which the buying power being spent in the industry like construction or tourism sector drives up the development of many other fields [24].
Multipliers are calculated as:
This formula allows us to give an estimate of the total economic impact of the WC by including all induced and indirect effects on various aspects of the economy.
4.2. Applied Statistical Models
The major statistical models that were used in the study include regression analysis, input-output models, and multiplier effect calculations. These aid in the assessment of the direct and indirect economic impacts of the WC on Qatar’s economy with particular emphasis on key macroeconomic indicators such as GDP, employment, tourism revenue, and sectoral outputs.
The regression analysis depict the relationship among World Cup related activities (for example, infrastructure building and tourism expenditure) together with economic indicators. The general form of the regression model is:
where:
1)
stands for the economic indicator (e.g., GDP, employment rate) at time t,
2)
is a dummy variable that takes the value 1 during and after the World Cup and 0 before the event,
3)
includes control variables (e.g., oil prices, global economic conditions),
4)
is the error term that accounts for unobserved factors.
The model calculate the direct economic change in Qatar’s GDP and employment and other factors related to the event of the WC [25].
5. Results (Findings)
Tourism and Hospitality:
Number of Tourists and the Impact on Hotels, Restaurants, and Local Businesses.
Formula for Tourism Impact Multiplier:
Tourism Multiplier + Indirect Effects + Induced Effects
Calculation:
Direct Tourist Spending per tourist per day: $500
Number of Tourists: 1.4 million
Average Number of Days Stayed: 10
Total Direct Spending = 1,400,000 tourists × 500 USD/day × 10 days
= 7,000,000,000 USD
Assuming a Tourism Multiplier of 1.5:
Total Economic Impact = Total Direct Spending × Multiplier
Total Economic Impact = 7,000,000,000 × 1.5 = 10,500,000,000 USD
Table 1 shows the economic impact of each tourist per each day and for the average days spent in the country.
Table 1. Economic impact of tourism.
Description |
Value |
Number of Tourists |
1,400,000 |
Average Spending per Tourist |
$500/day |
Average Days Stayed |
10 days |
Total Direct Spending |
$7,000,000,000 |
Tourism Multiplier |
1.5 |
Total Economic Impact |
$10,500,000,000 |
Infrastructure and Real Estate Development:
Long-term Impact of World Cup-related Infrastructure on Qatar’s Real Estate Market as shown in Table 2 below was calculated using the following formula:
Formula for ROI Calculation:
Table 2. Return on Investment (ROI) for infrastructure.
Description |
Value |
Investment in Infrastructure |
$6,500,000,000 |
Net Annual Profit from Investment |
$1,000,000,000 |
ROI |
15.38% |
Calculation:
Investment in Infrastructure: $6.5 billion
Net Annual Profit from Infrastructure: $1 billion
Employment and Labour Market:
Temporary and Permanent Jobs Created during Preparation and the Event Itself is shown by Table 3 below and was calculated using the following formula:
Formula for Job Impact Calculation:
Job Impact = New Jobs Created × Average Salary
Table 3. Job impact from FIFA World Cup 2022.
Description |
Value |
Number of Jobs Created |
60,000 |
Average Salary per Job |
$30,000 |
Total Job Impact |
$1,800,000,000 |
Calculation:
New Jobs Created: 60,000
Average Salary: $30,000 per year
Job Impact = 60,000 Jobs × 30,000 USD = 1,800,000,000 USD
Government Revenue and Investment:
Direct Financial Contributions (e.g., Tax Revenue, Sponsorship Deals)
Formula for Tax Revenue Calculation:
Tax Revenue = Tourism Spending × Tax Rate
Calculation:
Tourism Spending: $7,000,000,000
Tax Rate: 10%
Tax Revenue = 7,000,000,000 × 0.10 = 700,000,000 USD
Table 4 below shows tax revenue generated by the country from hosting world cup calculated using the above formula.
Table 4. Tax revenue from tourism.
Description |
Value |
Total Tourism Spending |
$7,000,000,000 |
Tax Rate |
10% |
Tax Revenue |
$700,000,000 |
Macro-Economic Impact:
Effects on GDP Growth, Inflation, and National Income
Formula for GDP Growth Calculation:
Calculation:
Pre-Event GDP: $220 billion
Post-Event GDP Growth: 3.5%
Table 5 below displays pre and post national GDP of Qatar expressed in USD.
Table 5. GDP growth Post-World Cup.
Description |
Value |
Pre-Event GDP |
$220,000,000,000 |
Post-Event GDP Growth |
3.5% |
Post-Event GDP |
$227,700,000,000 |
GDP Growth |
3.5% |
Long-Term Economic Outcomes: Diversification of Qatar’s Economy Post-World Cup.
Impact on Economic Diversification Formula for Economic Diversification Index (EDI):
Calculation:
Non-Oil Sector GDP Pre-World Cup: 40%
Non-Oil Sector GDP Post-World Cup: 45%
The tables and formulas presented above offer a detailed view of the economic impact of the FIFA World Cup 2022 on Qatar. The calculations show the financial contributions from tourism, job creation, government revenues, and GDP growth. The investment in infrastructure yielded a significant return, while the event played a key role in further diversifying Qatar’s economy.
6. Discussion
Hosting the 2022 FIFA World Cup in Qatar was a major contributing factor in the country’s economies which included a big increase in revenue from tourism, job creation, and large tax income. Thus, tourism brought a 10.5 billion revenue sum, job creation resulted in 60,000 new positions that were worth 1.8 billion, and sales of tourism-related activities brought in 700 million in tax revenues. The return on infrastructure investments was also strong, with a 15.38% ROI. Nevertheless, the World Cup’s general influence on the GDP expansion happened somewhat less than initially hoped-for, a 3.5% increase, slightly under the estimates. This could be due to the fact that Qatar is already a rich country because of the oil and gas industry. Therefore, there is limited diversification in other sectors. The tourism multiplier effect, which was positive but lower than expected, was only 1.5. This does not bode well because the increase on locals’ income could only be marginal. On a brighter note, the World Cup also brought about the said effect as the sports tourism, hospitality, and technology sectors are growing. In the future, Qatar will have to maintain investments in these areas and concentrate on decreasing its dependency on oil.
Moreover, the study highlights some of the issues related to sustainability. The rights of workers, for example, is a notable concern as their rights are exploited while many environment side effects of infrastructure projects are noted. Moreover, the continuous divergence of the economy from the oil sector will need attention. This research will need to focus on the lasting impacts on Qatar’s labor market, the environment, and the local communities
7. Conclusion
Qatar, through 2022 FIFA World Cup, got a chance to strengthen its position as a global sports hub. Immediate economic impacts, such as $10.5 billion from tourism and $1.8 billion in job creation, were substantial. The event also spurred infrastructure investments with a 15.38% return. GDP growth of 3.5% and an increase in non-oil sector GDP from 40% to 45% illustrate progress toward economic diversification. Speaking in the short term, regardless of whether the work is financially profitable, Qatar will continue by intensifying tourist & sports infrastructure, along with investing eminence technologies. Challenges in the area of labor rights, the environment, and infrastructure sustainability besides others need to be sorted out. The focus should be on the long-term impacts of mega-events on the local, as well as on the environment and the populations financial/wealth growth.
Conflicts of Interest
The authors declare no conflicts of interest.