March 2001

SEMINAR: SPORTS AS A MEANS FOR ECONOMIC AND SOCIAL DEVELOPMENT

ECONOMIC AND SOCIAL DEVELOPMENT THROUGH SPORT

Seminar will focus on how to increase private investment in sport to boost development

Foremost figures from the world of Latin American athletics will gather in Santiago, Chile, on March 16, to discuss how to increase the contribution of soccer and other sports to the region's economic and social development.

The seminar "Sports as a Means for Economic and Social Development," will be held in conjunction with the 42^nd Annual Meeting of the IDB Board of Governors. It will be inaugurated by the IDB’s President, Enrique V. Iglesias, and by former Brazilian Minister of Sports and soccer icon Edson Arantes do Nascimiento, known as "Pelé". Speakers will include the IDB´s Vice President for Planning and Administration, Paulo Paiva, and other senior government and private sector leaders from the world of sports.

Topics covered in the seminar will include a comparative analysis of the sports industry in Europe and South America and an examination of the contribution needed from both the public and private sectors to increase both indirect and direct benefits from the sector.

Sports in a globalizing world

In recent years, the service sector—which includes sport--has claimed a growing share of Latin America's economies, increasing from around 50 cent of the region's GDP at the end of the 1980s to over 60 percent today.

Moreover, the region's economies are part of the strong trend toward globalization. This includes the cultural and sports sectors. The Olympics and the Soccer World Cup are among the sports with the largest global audiences.

Of all sports, none has the worldwide audience of soccer. By far the most popular sport in Latin America, soccer is far more than a physical activity. "Its popularity transcends the limits of social class, race, religion, gender, and education level," said IDB President Enrique V. Iglesias at a seminar on the business of soccer held last year at Bank headquarters.

The direct economic impact of sports includes not only the salaries of athletes and support staff, but also the full range of goods used in sports contests, the construction and maintenance of arenas, and the media.

But while sports is a business, it is a business like no other, according to IDB Vice President Paiva, seminar organizer. In making investment decisions, potential investors are motivated by psychological as well as monetary factors. "Investors want to link the image of their firm with sports clubs that are winners," says Paiva. In the same vein, a country whose Olympic or Pan American athletes have won many medals has a better chance to woe investors.

But in other respects, the business of sports is ruled by the same requirements as other economic activities, says Paiva. Investors demand transparency, both in terms of the fairness of the games themselves as well as financial management. They also demand high quality management, an area where observers agree could use considerable improvement in Latin America.

Although the economic impact of sports is felt primarily on the professional level, its social contribution is largely made in the schools and communities. According to Paiva, studies have shown the benefits of sport on improving the health of young people and as a complement to schoolwork.