Saturday, 31 March 2012: 8:30 AM
In “The Olympic Effect” (2009) Rose and Spiegel established the Olympics as a signal of openness through evidence of sustained increases in exports by hosting countries. Willner (2010) should a similar, un-sustained expansion of trade to new countries after hosting the Cup of Nations. Hosting major sporting events is, however, advocated as a mechanism for increasing host country income. Hosting the Cup of Nations requires significant expenditure on infrastructure and the building of capacity (investment). However, this may cause crowding out of other, private investment leading to no long run change in economic growth. Typically, openness to trade should lead to higher incomes. Using data for all African countries from 1950-2005 this paper examines the effect on income from hosting the Cup of Nations. If openness leads to higher growth rate then hosting the Cup of Nations should increase per capita income of the host country beyond the year of hosting.