The impact of hosting mega-events such as the Summer Olympics may be challenging to measure accurately but are often assessed based on the economic, social, environmental, and political perspectives. The Olympic is perhaps the world’s biggest sports event, attracting hundreds of millions of fans, and is held after every four years since 1896 (Overmyer 2017). The event offers several benefits to the host nation, including throbbing the world’s interest in its cultural wealth, creating job opportunities for the locals, establishing a friendly relationship with the global community, and attracting substantial revenue inflow from tourism. However, as the Olympics continue to grow bigger and costly, the question of whether such events are worth hosting also continues to emerge. Nations continue to bid for a chance to host the Olympics despite the controversies on the benefits of hosting the event, and the setbacks to the host country’s paybacks from the opportunity.
The cost of hosting the Olympics is no doubt enormous, with countries spending billions of dollars to host the events and some cities ending up in massive debts after hosting the games. It is estimated that hosting the Beijing Olympics 2008 cost the Chinese government about $45.1 billion in investment (Yao, 2010, p 23). Brazil incurred about $13.1 billion to host the Rio Olympics, 2016, while the London Olympics, 2012 was worth approximately $14.8 billion (Khraiche and Alakshendra, 2020, p 13). However, despite the costs, nations, regions, and cities wanting to host the summer Olympics spare no efforts for various reasons. There are various actual and perceived impacts associated with hosting World Olympics, cutting across economic, social, environmental, and political dynamics. The purpose of this paper is to explain the economic impacts of hosting the Olympics as the main perspective alongside other impacts such as social and environmental issues associated with the event.
The Economic Impact Perspective of Hosting Olympics
Hosting the Olympics can have a mix of both economic benefits and costs to the host country. Countries that bid to host Olympic Games invest billions of dollars anticipating a boom in the economy, from increased trade, tourism spending, and broadcast revenues, job creations, and infrastructure improvements through sponsorships. Some nations flourish and get back their return on investment from hosting World Olympics, while other countries pile on debt that takes several years to pay off (Khraiche and Alakshendra, 2020), hence the need to explore the economic effects of the games on the host country.
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An increase in trade is one aspect of economic benefit that countries hosting the World Olympic Games can reap. There is a consensus that countries bidding to host Olympic Games are sending signals that they are willing and ready to open up for global trade, a sign that can see a rise in trade for the host country, including increased foreign investments. Many countries bidding to host the events upgrade their transportation and communication systems, improve infrastructure and housing. The measures can help the nation rejuvenate areas that require improvement, which in turn helps to enhance the productive capacity of the economy (De La Cruz, Calderon, França, Réquia and Gioda, 2019, p 206). A study by Rose and Spiegel (2010) found a strong positive correlation between hosting mega-events such as the Olympics and an increase in trade, particularly from the export and import perspectives. Subjective evidence indicates that hosting mega-events such as Olympics is associated with trade liberalization, which can translate into direct and indirect foreign investment (Rose and Spiegel 2010, 12).
For instance, in July 2001, Beijing won the bid to host the Games of the XXIX Olympiad. In September of the same year, China concluded the negotiation with the “World Trade Organization (WTO),” formalizing the country’s commitment to free trade. Researchers argue that this was not coincident (Rose and Spiegel, 2010, 12). China’s bid to host the event was a signal for trade liberalization. Similarly, Italy was awarded the right to host the 1960 Olympic in 1955, the same year the country started moving toward currency convertibility, became a member of the UN, and begin the negotiation leading to the Treaty of Rome and establishment of the “European Economic Community (EEC)” what today is known as the European Union. Similarly, Mexico’s win to host the 1986 Olympics coincided with the country’s agreement with the WTO on tariffs (Rose and Spiegel 2010, p 13).
The explanation here is that hosting Olympics or events of similar magnitude induce trade liberalization, thanks to infrastructural development and other activities such as tourism expenditure and broadcast revenues associated with the events. Trade liberalization is always not easy, and many countries never achieve it; hence, a serious country must send a costly signal such as bidding to host the Olympics (De La Cruz, Calderon, França, Réquia and Gioda, 2019, p 211). The benefits that come in return include increased foreign trade and investment and future trade, beneficial for a country’s economic growth.
As mentioned earlier, hosting mega-events such as Olympics also associated with an increase in tourism and related spending, as many fans across the globe are visiting to watch the games. The study shows that hosting Olympics can significantly increase international tourist visits to the host country in the four years before, during, and even extending to 20 years after the Olympic Games (Vierhaus, 2019, p 1009). Hosting an Olympic provides a platform for the country to market its tourism destinations and related businesses. For instance, the 1996 Olympic Games positioned Atlanta as the leading business city in the United States, achieved through the marketing program called “Operation Legacy,” whose primary goal was to transfer twenty major companies to the state. However, researchers show that tourism and related activities increased significantly in the state before, during and after the Olympics, even though strategically that was not the primary objective of the organizing committee (Overmyer, 2017, p 9).
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Approximately three billion people watched the city through television globally. Today, over 20 years after the Olympic Games, Atlanta still is a brand-new experience and attractive global destination for leisure and business travelers, trade shows and conventional organizers and attendees. Besides, Atlanta experienced an increase in economic growth before, during and after the Olympics, making the isolation of the effects of the Games on tourism practically and empirically impossible. An increase in tourism activities marginally contributes to economic growth (Tsiotsou and Gouri, 2010, p 335), and an extent create more employment, which can be short or long-lasting depending on how the country position itself in the global “map” pre, during and post-Olympic Games. Other Jurisdictions that have benefited significantly economically by hosting the Olympics include Barcelona, which made a significant profit from hosting the 1992 Olympics, helping to rejuvenate its once-struggling city. Seoul City, South Korea reported a profit of about $1.5 billion from hosting the 1988 Olympics and several infrastructural developments, including building modern stadiums, expanding roads and communication networks (Mangan, Ok, and Kwak 2013, p 1834), and becoming a world destination for tourists after the Olympics.
However, hosting the Olympics is costly to the taxpayers, and some countries even go bankrupt or get into debts that take several years to pay off after the Olympics. For instance, Montreal’s 1976 Olympics translated into about $1.5 billion debt, taking the country nearly three decades to repay. The Athens 2004 Olympics placed Greece at $ 14.5 billion in debt when the country’s economy was already in limbo. The cost for hosting the 2000 Olympics in Sydney tripled the expected budget forcing taxpayers to pay about a third of the debt (Mangan, Ok, and Kwak 2013, p 1845). These countries’ common characteristics are that they were emerging economies at that time, an indication that the Olympics may not be profitable for host nations that are still struggling economically.
The Environmental Impacts of Hosting Olympics
The economic perspective of hosting Olympics often takes the upper-hand over environmental protection and sustainability. However, the study shows that hosting Olympics often generates some environmental disasters such as deforestation, carbon print, and land and water pollution. The “2014 Winter Olympics in Sochi, Russia” is a classic example of how hosting an Olympics can negatively impact the environment. The event that was anticipated to be a zero-impact emerged as an environmental disaster to the country. Researchers argue that the massive pre-Olympic constructions have had very minimal sustainable impacts. Instead, prevalent cases of illegal landfills for construction materials, turning animal migration territories into construction zones, spillage of waste into water bodies, and decrease in life quality of all the region’s inhabitants have been documented pre, during, and post-Olympics (La Redazione 2020).
The situation is no different from the case of Brazil’s hosting of the 2016 Olympics, which also turned out to be an environmental disaster, particularly with regard to water pollution. Study shows that concentration of bacteria and viruses in the sea and waterways increase significantly during and after the Olympic to the point that ingesting three teaspoons of the waters could make one seriously ill (La Redazione 2020). Overall, the Olympics’ actual happening causes environmental harm than benefits as it involves creating massive quantities of waste, landfills, and Carbon Monoxide emissions, which are disastrous to the environment. Even though there are some aspects such as cleaning the environment before the event to match air quality standards set by International Olympic Committee (IOC), as it happened in Beijing (Rosenblum, 2009), such activities are not sustainable. The environment is only cleaned for a short period.
Social Impact of Hosting Olympics
Hosting Olympics increases display of local culture to the world. For instance, the opening of the Beijing Olympics, 2008, for instance, provided the Chinese with a platform to display their culture to the world and a political arena to demonstrate their capability as a communist nation to exhibits a magnificent event. However, the Olympics also exposed to the world how controlled China is as a communist state, threatening the rest of the world (Rosenblum, 2009). Host countries have also used the Olympic Games for nation-building exercise and social cohesion purposes. Vancouver 2010 Olympics provided a platform and “opportunity to put forward unified national image and attempt to define what it means to be Canadian” (Archer, 2013). There are also a sense of pride for the host country. Besides, there are also negative social impacts, including the displacement of people from their residential areas. During the construction process for the event arenas, people are evacuated from their homes and compensated for the inconvenience. However, there have been complaints of unfair compensations for citizens evacuated. For instance, Beijing’s “Organizing Committee of the Olympic Games (BOCOG)” claimed that only about 6000 people had been evacuated and properly compensated for the pre-Olympics construction activities. However, a survey by “Geneva-based Centre on Housing Rights and Evictions” about 1.5 people were displaced and unfairly compensated for the inconvenience (Rosenblum, 2009), a figure far from what the Beijing authorities quoted.
The impact of hosting Olympics may be puzzling to measure accurately but are often evaluated based on the economic, social, environmental, and political angles. From an economic perspective, hosting the Olympics has a mix of economic benefits and costs to the host country. The economic benefits to the host include an increase in trade as the Olympics attracts foreign investments. There is also an increase in international tourism, both leisure and business travelers, as in the case with Atlanta. The economic disadvantage includes an increased debt that can paralyze the country’s economy. The environmental impacts include pollution, among others, while social impacts include the increased display of the host county’s culture, social cohesion, and even displacement of people from their homes.
The government should consider bidding to host the Olympics, considering the numerous economic benefits associated with events such as increased trade and foreign investment, which can be maximized for the benefit of the country. Even though there are also several challenges linked to hosting Olympics such as massive debts, with explicit actions undertaken, Olympics host countries can gain positive economic impacts from the event:
- The first recommendation is to revisit or reuse previous Olympic Games host arenas to achieve economies of scale. For instance, instead of constructing new venues for the Olympics, the government should consider renovating already existing athlete villages and venues and other reusable Olympic resources to achieve economies of scale needed to gain a return on massive investments in transportation, infrastructure and community development. An excellent example of this case is the Atlanta Olympics of 1996, which was reasonably profitable and generated positive economic impact such as a temporary boost in GDP due to use of the existing infrastructures and alongside corporate sponsorships (Overmyer, 2017, p 35). This also reduces debt due to massive borrowing to put up new infrastructures.
- The government can also strategically reduce the environmental impacts such as pollution caused by hosting a massive event like Olympic through sustainable practices such as planting trees to offset carbon emissions resulting from the Games and related activities. In 2016, for instance, the Olympics organizers included a plan to plant about 24 million trees before the even to offset or reduce the impact of carbon emissions during the Games, alongside upgrading the sewer systems to minimize pollution levels in the Guanabara Bay (Boykoff and Mascarenhas, 2016, p 9).
- In the event of evacuating citizens to put up new infrastructure, the government should compensate the displaced population appropriately. This helps to avoid complaints that might the display a bad image of the country up investigations by human right groups, as in the case of Beijing where a “Geneva-based Centre on Housing Rights and Evictions” established that about 1.5 people were displaced and unfairly compensated for the inconvenience (Rosenblum, 2009).
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