Qatar and the economic significance of hosting the world cup

Very good video from The Economist about Qatar hosting the most expensive World Cup ever – approximately $300bn. Why has this small, gas-rich kingdom chosen to host football’s most prestigious event, and how does it fit into its broader plans for economic transformation? The video below explains the history behind Qatar,

The tournament is a big deal for a country that has fewer than three million residents. For the 2018 tournament, held in Russia, football’s governing body, FIFA, says more than one billion people tuned in to watch at least some of the final game between France and Croatia. However, academic research into the economic impact of hosting the World Cup suggests any advantages gained are at best hard to perceive and at worst non-existent. Since it won the bid to host Qatar has built eight new stadiums, more roads, hospitals and a new metro system. However the criticisms on human rights are not going away.

For Andrew Zimbalist, the author of Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup, the evidence is clear: “There is virtual unanimity in the scholarship that on the question of the economic impact of mega events, they don’t promote economic development.”

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Global GDP per capita – income up but unequal

If you are studying the Growth unit at CIE or NCEA the image below – from the ‘Visual Capital’ site which is well worth a visit – is a good discussion starter for your class. It has an interactive chart where you can elect individual countries and look at the GDP per capita form 1820 to 2018. The graph below shows the major groups of countries with New Zealand added.

  • 1800 – 80% of global population lived in extreme poverty
  • 1975 – incomes were 10 times higher on average. Post WW2 growth was rapid as Europe etc rebuilt after the war.
  • 2015 – incomes rose faster in developing countries with many lifted out of poverty. Between 1975 and 2015 saw the fastest decline in poverty.

In the 19th Century there was much more equal distribution of income across regions of the world – $1,100 per capita. Many lived below the poverty line but the world had less wealth. Today the GDP global average is approximately $15,212 but although there is more wealth the distribution is less equal.

At the highest end of the spectrum are Western and European countries. Strong economic growth, greater industrial output, and sufficient legal institutions have helped underpin higher GDP per capita numbers. Meanwhile, countries with the lowest average incomes have not seen the same levels of growth. This highlights that poverty, and economic prosperity, is heavily influenced by where one lives.

Sign up to elearneconomics for multiple choice test questions (many with coloured diagrams and models) and the reasoned answers on Real GDP. Immediate feedback and tracked
results allow students to identify areas of strength and weakness vital for student-centred learning and understanding.

Contributions to world GDP 2013-16

The Economist produced a graph showing world GDP data and made the following points:

  • India and China account for 65% of world growth
  • Emerging markets contributions in 2016 were down to its lowest figure since 2008 – falling commodity prices would have been a factor
  • Norway contributed less to global GDP with lower oil prices being prevalent.
  • USA with increased government spending and greater export volumes improved its position
  • Brazil has been in negative territory since mid 2014 – interesting point with significant government spending on hosting the Football World Cup and the Olympics.

Maybe a good starter for your classes asking the question who contributes most to world GDP?

World GDP 2013-16.png

 

Global growth

The Economist produced an excellent graphic on the contribution to global growth over the last 5 years. Points to note:

  • World economy grew by 2.7% in early 2016
  • Brazil, Russia, India and China contribution to global growth rose from 1.4% t0 1.6% over the last year
  • Although Britain has contributed the most to GDP growth in the EU, the decision to leave the EU has forecasters predict that GDP in the Union will be 1% lower in 2018
  • Emerging economies continue to dominate world growth and are essential for jobs etc.
  • From growth of around 4.5% in 2010 the global economy has stuttered along reaching  just over 2.5% in the first half of 2016

World GDP 2010-16

 

 

Global GDP – 2007 – 2013. It’s a Chinese Roadshow

Here is an image from The Economist which shows how the global economy is very reliant on China. Some key points from the graph:

* Since 2010 China has contributed 35% of global growth
* Developing economies overall have contributed over 70% of global growth during the same period.
* Developed economies are responsible for approximately 25%

World GDP composition