The production of goods and services related to sports is a significant part of the world economy. In the United States alone, sports were estimated to contribute around $50 billion to GDP in 2005. The trend of mega-events like the World Cup being hosted in emerging economies like South Africa and Brazil makes understanding the governance and economic factors that influence whether mega-events can lead to successful sports economies and spillovers a particularly relevant goal for the International Development community.

The Center for International Development at Harvard University has launched a collaborative research project with the International Centre for Sport Security (ICSS) to examine the factors that influence the development of a robust and sustainable sports sector. This project will further the CID research agendas of the Growth Lab and Building State Capability programs by applying each program’s theoretical framework to the special case of the sports economy. To make the findings relevant for policy makers, the second phase of the project will involve creating indicators that will help to evaluate the potential development of the sports sector in a particular city. These indicators will provide inputs for a diagnostic assessment of a city’s sport economy and identify pathways to promote the sport sector and improve its beneficial spillover to the rest of a city’s economy.

The research project will utilize the methodology behind the Growth Lab's Product Space theory to identify which sports industries require similar kinds of knowhow to each other. The methodology will also identify the non-sports industries that appear to help build parts of the knowhow required by sports industries. This will be done by creating a mapping of city level economies across Europe including cities in Spain and Germany. With this understanding of how sports industries fit into the larger economic ecosystem, the following questions will be examined for pilot cities within Europe and potentially South Africa:

  • Does a city have related industries that imply that sport industries can be successful?

  • What are the intermediate industries that can make the development of a dynamic sports sector viable?

The impact of mega-events also provides a lens through which we can examine the impact of the sport industry on a given economy. Mega-events can be seen as a large stimulus or industrial policy push for the sports economy of the participating cities. The effects of this industrial policy on economic development has been written about extensively, however the application of the product space or industry space framework will be a new approach that may provide unique insights. Some of the questions the research will examine through application of the Product Space methodology are:

  • Was there anything about the industries that were present in host cities that could have predicted impacts?

  • How have the productive structures of the host cities and their presence in the industry space evolved after the World Cup?

The capabilities of the public sector in any given city are also important inputs to the development of sports industries. The Building State Capability program is focused on examining the capability of state organizations to implement (as opposed to just design) policies and programs. The successful development of sports economies is likely to be affected by the ability of governments to implement policy in a diverse set of domains, from policing and public financial management to dispute resolution, infrastructure and economic regulation.

The project will examine the role of national and local government capabilities in a city’s sports economy as well as their role in the success of mega-events. Case studies from South Africa and the World Cup will provide insight into relevant governance factors. The goals of the research are to:

  • Understand how governance structures affect the success of sports industries

  • What are the public sector capabilities that are needed to successfully host a mega-event?

The project duration is two years (2013-2015).