Heterogeneous Impacts of Local Infrastructure Investments: The 2014 Football World Cup in Brazil

We analyze the effects of large-scale local public infrastructure investments on economic development, exploiting the infrastructure shock following when Brazil was awarded the 2014 FIFA World Cup. We place particular emphasis on effect heterogeneity with respect to the type, location, temporal evolution, and costs and benefits of the investments. Using novel data on monthly night light luminosity at the municipal district level as a proxy for economic activity, we apply Difference-in-Differences and event studies for estimation. Overall, we find strongly positive impacts both in the short and longer run. However, a closer examination reveals that effects are larger and longer-lasting for transport infrastructure as opposed to sports infrastructure, and they are more pronounced in smaller areas. Importantly, we quantify significant negative spatial spillovers. Factoring them in, we still find positive net benefits of transport infrastructure investments two years after the tournament.

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