Vugar Nazarov

The low level of the nation’s health and physical activity highlights the need to find additional mechanisms for the development of the sports sphere, one of which is to increase its financing. This paper aims to investigate how an increase in general government expenditure on recreation and sports affects sports entrepreneurship (turnover or gross premium written in the sports industry; value added at factor cost of sports enterprises; sports industry market size) and the share of the population involved in sports (as an indicator characterizing the development of sports). The study used the panel unit root test and fixed and random effects models. Modeling proved that the increase in general government expenditure on recreation and sports by 1% largely determines the increase in value added at factor cost of sports enterprises (by 5.48%). A significantly less effect is for turnover or gross premium written in the sports industry (by 0.85%), and the smallest is for the sports industry market size (by 0.4%). A 1% increase in general government expenditure on recreation and sport has the greatest impact in the Czech Republic (by 2.37%) and Slovakia (by 2.44%) and the least – in Australia (by 0.4%). The share of the population involved in sports is almost independent of general government expenditure on recreation and sports in all 10 OECD countries.