The Invisible Hand of Thierry Henry

Abstract

This article highlights an aspect of mega-events that has been neglected: the changing composition of tourist arrivals during and after the event. The change happens because, in the FIFA World Cup, a quota of countries participate from each continent and this opens up new tourism markets. We show that the 2010 FIFA World Cup in South Africa had a smaller growth effect on South Africa’s traditional tourism markets but attracted a large increase from nontraditional ones. However, the size of the effect, we find, is partly due to randomness: It depends on match results in the qualification phase of the tournament. We use a new long-run data set of tourism flows to South Africa and a gravity model for tourism flows and run counterfactual examples of play-off matches during the qualification phase to estimate how much more South Africa could have benefited had larger or richer countries qualified. We conclude that the random results of a few play-off games significantly affect the extent to which the World Cup benefits the host country’s economy.