Abstract
Developing countries have recently started to apply for mega sporting events. The developing countries are trying to advance their economy by hosting a mega sporting event. Developing countries that have hosted a mega sporting event are China, which hosted the 2008 Beijing Olympic Games, South Africa that hosted the 2010 FIFA Soccer World Cup and Brazil that hosted the 2014 FIFA Soccer World Cup. It is necessary for developing countries to take the cost of a mega sporting event into consideration. Developing countries do not have the necessary infrastructure to host a mega sporting event and most of the facilities need to be upgraded or new infrastructure has to be built for the event.
The benefit to host a mega sporting event can be determined by investigating the financial impact a mega sporting event has on a host country. This can be determined by a quantitative research methodology by making use of a panel regression methodology. This technique takes the time series and cross section data that have been combined into consideration. For the current study the FIFA world cup will be used as the mega sporting event to be analysed.The data that was used in the study is for the period 1994 to 2014 of developing and developed countries that hosted the FIFA world cup. The data will be tested in several panel regression models, namely the grouped regression model, fixed effects model and the random effects model. In the study, the random effects model was the best model with which to test the data.
The dependent variable in this model is foreign direct investment (BDI). The independent variables were current account (CA), inflow of tourism (ARR), market size (MG), inflation (INF), fixed capital form (FIX) and gross domestic product (BBP).The findings were that the World Cup had a negative impact on the inflow of FDI to the host country. The study is in agreement with the Baloshenko (2012) study, which found that FDI is positifly influenced by offering mega-events and it is only temporary.
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