Will 2010 World Cup Be Economic Boom or Bust for South Africa?

When South Africa kicks off the 2010 World Cup against Mexico in Johannesburg this June, the host nation hopes that their squad can score a big victory. But on a much larger scale than the global soccer showcase the country is hoping the event will shower the country's economy with cash.

"It must contribute to long-term economic growth and the creation of decent jobs," South African president Jacob Zuma said in a New Year's Eve statement.

"It is an event of significant and far-reaching economic impact," said Rejoice Mabudafhasi, South Africa's Deputy Minister of Water and Environmental Affairs, at an event last November.

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But how significant will it ultimately prove to be?

Analysts are divided on whether the tournament will be as significant as some South Africans seem to expect.

A 2008 report from consulting firm Grant Thornton predicted that the month-long soccer event could inject about $7.6 billion into the country's economy, with around 490,000 foreign tourists flocking to the country and approximately 415,000 annual jobs sustained and created by the tournament.

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"And our projections, I would say, are conservative," Lee-Anne Bac, director at Grant Thornton Strategic Solutions, told ABC News.

But that was before the global recession ravaged countries around the world, including sending South Africa into its first downturn in the last 17 years. As Africa's largest economy now emerges from the slump, a great deal of hopes rest on this summer's soccer tournament. The country has built or renovated 10 world-class soccer stadiums, but not without considerable cost – the price tag for Cape Town's Green Point stadium was four times what was originally anticipated.

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Some analysts argue that expectations that the tournament will prove to be a cash cow for the Rainbow Nation are sorely mistaken. Rob Baade, policy advisor on economic issues for the Heartland Institute and chairman of the economics department at Lake Forest College in Chicago, has done numerous studies on "mega-events" in the sporting world such as World Cups and Olympic Games.

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"You've got this image of people descending on a country and that's going to provide a significant economic boost to the country," he told ABC News. "The reality is something quite different."

Baade cited a variety of factors that can counteract the economic boost of these sporting spectacles, such as potential tourists deciding not to go to a host country because of the event and residents deciding to leave a host country during that timeframe.


Before the Summer Olympics in 2004, the excitement among business owners in Athens, Greece was palpable, Baade recalled. After the Games? Not so much.

"They all told me they wouldn't do it again," he said, "because the infrastructure that is so critical to creating something in the way of an economic legacy was really disruptive to the normal flow of economic activity, so much so that some business owners said their revenues were down by 80 to 90 percent as a games…When you disrupt commercial activity, you've got to consider that as a cost."

"When you put all those things together, that's a pretty lengthy list," he cautioned. "We really found that mega-events do not provide the kind of boost that apologists for the games argue will occur as a consequence. Things don't materialize as a lot of people hope and think."

VIDEO: A soccer player at SMU scores a 95-yard goal.

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