Anand Mahindra tweeted on Thursday morning about his business partner in Chile (Mahindra?s biggest export market for autos) celebrating in the streets of Santiago after the country?s team defeated Spain in their World Cup encounter. The celebrations will only increase if Chile progresses further, creating a feel-good factor that will have a ripple economic effect; people make impulsive purchases or buy extra merchandise and splurge on expensive products. Bars and restaurants do enhanced business. In a survey of participating countries, 62% of men and 52% of women suggested that if their national team did well, it would lead to extra spending. Contrast this with Spain, the defending champions who were knocked out of the tournament. Across the country, the funereal mood means that spending will slow and depress an economy already under pressure. The World Cup impacts nations and economies in significant ways.

There is a recorded boost in the economy among World Cup-winning countries. The two World Cup wins by Brazil saw a 5.9% growth in 1994 and a 2.7% growth in 2002, the latter reversing a recession and jumpstarting the economy that increased the GDP to $1.58 trillion; 2006 World champions Italy saw a 2% growth in the economy and its GDP increased more than $250 billion from 2006 to 2007; its tourism rose from $38.3 billion to $42.7 billion. In the 2006 report ?Soccernomics? by two economists with Dutch bank ABN AMRO, they calculated that the World Cup winner enjoys an economic boost of about 0.7%. According to Goldman Sachs, a World Cup win gives a country a stock market bump. All the winners since 1974 have outperformed vis-a-vis their markets in the month following the final. The winner of the World Cup, the report said, outperforms the global market by 3.5% in the first month before tailing off. Even for the host nation, market outperformance is around 2.7% despite not winning the Cup. Spain?s stock market rallied 5.7% in the month after the national team won its first World Cup in 2010.

The World Cup victory brought Spain a much-needed economic boost. At the time, Spain?s economy was in a crisis, with the highest unemployment rate in Europe. On a short-term level, the win aided in consumption?souvenirs and other tokens in celebration of the World Cup, along with drinks and food. The victory was also an important tool for increasing tourism in Spain. A World Cup victory is a free advertising campaign. Tourism accounts for nearly 10% of Spain?s economy. The win put Spain in the spotlight globally, leading to a significant jump in tourist arrivals in the year after the Cup victory. Indeed, the way nations compete to host the tournament implies there is considerable worth to a country in hosting football?s biggest competition. Commonly-used estimates indicated that the past three World Cups would generate a positive economic impact of $9 billion (Japan and South Korea in 2002), $12 billion (Germany in 2006) and $15 billion (South Africa in 2010).

Brazil, the current hosts, is an emerging economy and the bid for the World Cup is a reflection of the bigger role they wish to play in global economic affairs. The 32 countries taking part in this World Cup account for over 80% of the global GDP, and increased spending by team sponsors, governments and fans can be considerable, especially for the hosts. In the US (the 1994 hosts), 65% of the total money spent on sponsorship is in sports, 63% in Germany (the 2006 hosts) and 80% in South Africa (the 2010 hosts). With this level and value of sport sponsorship, hosting a World Cup is certain to strongly impact the local economy. The German government reported that tourism revenue over the month of the World Cup in 2006 was up roughly $400 million. They made about $3 billion more in soccer-related merchandise and a reported 500,000 new jobs were created in preparation for the tournament. This impact sends ripples through the economy. Restaurants and bars were full to capacity at all hours of the tournament and 15 million more spectators arrived in Germany than was expected. In addition, global viewing of the German professional league, the Bundesliga, increased as well, giving sponsors and German telecasters increased profits.

For other host countries like South Africa, it offered a chance to attract international investors. Businessmen and corporations flock to such events and a country that can showcase stability, efficiency and the level of technology can prove a major boost to their economy and government through enhanced foreign direct investment. For this year?s tournament in Brazil, various forecasters have identified the positive economic impact could reach $14 billion and some reports suggest the tournament would add nearly $30 billion to Brazil?s GDP between 2010 and 2014, generating 3.63 million jobs a year and raising an additional $8 billion in tax revenues. The event will attract an additional 3.7 million tourists to the country, each of whom will spend an average of $2,500, providing a hike in hotel revenues, and food and beverages, in the region of 10% and 15%. There are also around 1 billion potential tourists watching the matches on TV. The World Cup is clearly worth much more than two human figures cast in 18-carat gold.

The writer is Group Editor, Special Projects & Features, The Indian Express