Because most cities have ended up falling massively in debt after hosting the games, cities without the necessary infrastructure may be better off not submitting bids. Hosting the games is even more costly than the bidding process. Once a city wins a bid for hosting the Olympics, cities commonly add roads, build or enhance airports, and construct rail lines to accommodate the large influx of people.
September 01, Market Commentary Countries that host the Olympic Games invest billions of dollars hoping to see a boom in their economy, from increased tourism spending and The economic impact of the olympic updates. Some countries flourish and see a return on their investment from hosting the Olympics, while others pile on debt that can take decades to pay off.
With the end of the Summer Olympic Games, we take a look at the economic impact the games have on host countries. When Rio won the bid to host the Summer Games back inBrazil was in the midst of one of its best economic times in 50 years.
Contrast that with today, when Brazil is mired in its worst recession since the s, President Dilma Rousseff is undergoing impeachment proceedings, cutbacks are being made in education, healthcare, and security, and the country is requesting aid to keep basic services up and running.
Surely, there are certain benefits countries hosting the Olympics can reap.
Host countries can see an increase in trade, which can also lead to increased foreign investment. Many countries upgrade communication and transportation systems, buildings, infrastructure, and housing.
These measures can help revitalize areas in need of updates and can also help to increase the productive capacity of the economy. During the Olympics, host countries see increased travel and tourism-related spending, since people from across the world are visiting to watch the Olympic Games.
This can marginally help contribute to economic growth. Unfortunately, these effects are mostly temporary and largely fizzle out after the games conclude. Hosting the Olympics is rarely profitable, especially in emerging countries, although some host countries have been successful in making a profit and boosting their economy.
Infor example, Los Angeles was the first city to profit from hosting the Olympics since because it used mostly existing structures and took advantage of corporate sponsorships.
With that included, Seoul nearly broke even. InBarcelona made a profit from hosting the Olympics and the games helped to revitalize the once struggling city.
On the other hand, some countries have nearly gone bankrupt after hosting the Olympics. While it is possible for a country to realize economic benefits from hosting the Olympics, most countries increase their debt and fail to repurpose the accommodations that have been built. Cities in emerging countries especially struggle to see a profit from hosting the Olympics, whereas host cities in developed markets have greater potential to make a profit by using existing structures and making minimal updates in preparation of hosting.
Regarding Brazil specifically, hosting the Olympics is unlikely to lift the country out of recession. If Brazil undertook a massive infrastructure build-out for the games that would improve future productivity and ease of conducting business, it would have been economically positive for the country.
Instead, Brazil chose to spend billions of dollars on sporting facilities, such as arenas and athlete villages. Nonetheless, the use of funds was seen as a slap in the face to the underprivileged population in a very populist leaning country, where many people feel entitled to government handouts.
Even the more fortunate population prefers their tax dollars go toward supporting those in need, rather than construction projects overseen by the government where corruption typically runs rampant.
Lending credence to this argument is a federal investigation into alleged corruption at all federally financed venues and services tied to the Olympics. In a country such as Brazil—where income inequality is very high—how the games were handled along with the aftermath could stoke further resentment between classes.
Positively, the Olympics came to a close without any headline horror stories of crime and with Brazil winning gold in three marquee events that are very popular with Brazilians: Although this will likely foster some sense of national unity, we do not suspect that the perception of the country has changed such that we should see massive tourist inflows, nor do we believe that its economic prospects have markedly changed as a result of hosting.The social and economic impact of hosting the Olympic Games: A guide to online resources Hiromi Kubo While there is little doubt that the Olympic Games is the premier sporting venue for amateur athletes from around the world, they, like other mega-scale sporting events, are also significant to the hosting city and country.
The paper argues that the Beijing Olympics could only have limited impacts on the city’s brand.” “Assessing the Impact of the Olympic Games on the Greek Economy: A Small Macroeconometric Model” Kasimati, Evangelia; Dawson, Peter. Economic Modelling, January , Vol.
26, Issue 1, , doi: /initiativeblog.comd In this paper, we reconcile these positions by examining the economic impact of hosting mega-events like the Olympics; we focus on trade. Using a variety of trade models, we show that hosting a mega-event like the Olympics has a positive impact on national exports.
The social and economic impact of hosting the Olympic Games: A guide to online resources Hiromi Kubo While there is little doubt that the Olympic Games is the premier sporting venue for amateur athletes from around the world, they, like other mega-scale sporting events, are also significant to .
On average, the economic impacts of Olympic Games are under $10 billion. The expenditure seen in Table 2 of the appendix indicates an estimate of Billion USD in spending alone. The expenditure seen in Table 2 of the appendix indicates an estimate of Billion USD in spending alone.
Because the economic impact of hosting the Olympics tends to be less positive than anticipated, most cities may be better off not submitting bids.