Can South Africa afford the World Cup?

The Cup's tab comes to about $122 per South African -- a substantial sum relative to public revenues of about $75 billion

By , Guest blogger

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    The shoes of Uruguay national team are seen on a line before a practice session in Kimberley, South Africa on June 7. South Africa is the first African nation to host the World Cup. The tournament will likely have both negative and positive economic impacts on the country.
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I think hosting the World Cup in South Africa may be too large a burden for a smallish developing country: population 49 million, with per capita income $10,000. With $6 billion invested in infrastructure, security, etc, the tab would come to about $122 per capita, which is not outrageously high, but is more than a trivial sum. This is also a substantial sum relative to public revenues of about $75 billion. Unlike Greece, however, South Africa’s finances are in good shape, with public debt at about 36% of GDP in 2009. The World Cup won’t help matters on this score, but thus bulge in public investment won’t break the bank.

The positive side of the World Cup in South Africa is that it heralds an ongoing transformation in the country. It is perhaps capable of countering the view “that Africa is a place of disease, despair, death and destruction, no matter how much progress gets made on the political front,” as Michigan State’s Peter Alegi puts it. This story in USAToday, ”For South Africa, the World Cup is finally a time to shine” looks at both the positives and the negatives for the country. There are plenty of both.

As for the chances of our national team, I rate our chances of progressing past the group stage at about 50-50. England is a powerhouse, and Slovenia will provide a tough test. The US will likely need to beat at least win one of those rivals to have a chance going into the final match vs. Algeria, although two draws would work if England beat Slovenia.

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Why is the United States a second-rate soccer power? Patrick Rishe discusses the economic factors in his column at Forbes.com. If he’s right, an upset against England might put some fuel in the American soccer engine. Meanwhile, folks in Boston are salivating over the prospect of hosting World Cup games in 2018 or 2022, for which the USA is planning to bid. I hope they get the chance, even if the economic impact numbers are inflated. Meanwhile, the opening game of the 2010 World Cup is just four days away, and England vs. USA is Saturday. Come on USA! Beat England!!

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