So hosting a big national sporting event like the NCAA Final Four isn't likely to revitalize businesses in a city (see previous post here). But what about events on an even grander scale--like the Olympics, or the World Cup?
That question is the subject of a new paper from economists Andrew Kenan Rose of the University of California at Berkeley, and Mark Spiegel of the Federal Reserve Bank of San Francisco. They looked at cities trying to host "mega-events" and how trade was affected in those cities. They indeed found that mega-events significantly boosted exports for a city--by 30 percent. But the effect was the same regardless of whether the city actually hosted the event or not. Just the very act of bidding to host the games had a positive effect.
So the lesson is that publicity matters a lot more than spending millions to host an event in an attempt to stir up economic development. Of course, this study only looked at trade--we don't know if bidding to host an event has the same effect on other kinds of economic activity.