If someone asks if hosting the Olympics benefits a country, you will probably say, “Yes, of course”. However, is it? And does a ‘yes’ apply to all nations participating in the Olympic games?
It’s certainly a question worth asking.
Hosting the Olympic games indeed has economic benefits for the country, allowing it to strengthen its global profile, diplomatic relationships, the tourism sector and even its various business industries. However, not every expenditure and diplomatic arrival oil the cork of an economy. Perhaps, this is why many economists say that the Olympic Games don’t pay off.
Here’s a detailed analysis explaining whether the Olympic games are economically viable for the host country or not.
The Say Of Experts:
A study conducted by researchers at Oxford University highlights that since 1960, every Olympic Games has surpassed the budget by a significant amount, at an aggregate of 172% in inflation-adjusted terms. The study concluded that hosting these games results in “the highest overrun on record for any type of megaproject”.
For example, according to the Council of Foreign Relations, in the Summer Games of 2016, held for the first time in South America, Rio de Janeiro had planned to spend $14 billion, but ended up spending $20 billion.
Similarly, for the 2014 Winter Olympics, Sochi, Russia, budgeted $10.3 billion, but the spending exceeded $51 billion. The same goes for London, which was the host for the Summer Games in 2012. It aimed to spend $5 billion, but it had to spend $18 billion.
Another study, named ‘Going for the Gold: The Economics of the Olympics’, conducted by the Journal of Economic Perspectives, also reached the same conclusion – the real economic impact of hosting the Olympics “are either near-zero or a fraction of that predicted prior to the event”.
An economist and professor at Smith College, USA, Andrew Zimbalist, has written three books on the economies involved in the Olympics. He has proved that Tokyo has spent much more than the government had estimated in the 2019 audit, which led to the loss of $35 billion. His critical analysis on this subject has influenced some countries to back away from bidding the games.
Nations undergo a bidding process, under the IOC (International Olympic Committee) to host the Olympic games, 10 years before the actual event. The country that presents the most elaborate plans for infrastructure and new developments wins the bid to host the Olympic games.
However, most of the time, the planned budget is often surpassed and the host country is left with no option but to spend almost a decade repaying the debts.
Concerning the brand new buildings and venues built to accommodate athletes, their crew, and the international audience who come to cheer for the sportspeople representing their countries during the games, Zimbalist said, “The reason why they didn’t exist before the Olympics is because there was no economically viable use for them” and that “they’re going to be white elephants.”
Read More: How Much Will It Cost India To Bid And Host Olympics 2036?
Are Countries Realising The Economic Problems Hosting Olympics Will Create?
Many European countries have taken a step back from the bidding process for the 2024 Olympic Games, after going through their balance sheets that show negative signs, the environmental problems they can cause and the negative response from the citizens. As such, the IOC has now made the bidding process a completely closed-door event.
Even though the infrastructure made during the project can still be used after the games are over, economists argue that taking up those projects in the first place was not suitable for the country’s economic growth. They could have rather spent on high-yielding and even more important projects concerning the country’s developments.
One of the main reasons why a plethora of nations want to host the Olympic games is because of their keen interest in the construction sector. The idea of getting billions of contracts and foreign investments is incentivizing. The political interests and the resources of the IOC also play a major role in convincing the countries to host the IOC.
Will India Be Able To Host The Olympic Games In The Future?
Prime Minister Narendra Modi, in Mumbai last year announced that India was entering the bidding process intending to host the Summer Olympic Games in 2036.
While it is comparatively easier and more economically viable for developed countries to host such a large-scale event, this is not the case for developing nations.
Andrew Zimbalist argued in an interview with ‘Daybreak’ that while hosting the Olympic games brings prestige, it also comes with a significant amount of risk and doesn’t always result in a positive image outcome. He explained that when a developing nation hosts such a huge event, the chances of mishaps increase significantly.
For example, security concerns within the venues, transportation challenges, geographical factors, and the provision of facilities such as air conditioning for international athletes in response to increasing summer temperatures could potentially tarnish the host country’s reputation on the global stage due to the high likelihood of mismanagement before the start of the games.
Andrew argued that when developing or underdeveloped countries undertake such actions to build facilities and solve the problem of space crunch, it forms a negative image of the host in front of the entire world.
A case in point: when India hosted the G20 summit in New Delhi last year, hundreds of roadside houses and stalls were demolished including slums. Similar incidents happened when it hosted the 2010 Commonwealth Games as well. These activities received a lot of attention and flak.
Some economists also believe that to solve the economic problems that hosting the Olympics can create, the same country must host it twice a year so that billions of dollars need not be spent again and again to build infrastructure or new facilities.
Do you believe that developing or underdeveloped nations should still aim at hosting the Olympics? Let us know in the comments below.
Image Credits: Google Images
Sources: The New York Times, The Ken, International Olympic Committee
This post is tagged under: Olympics, Olympic games, developing, underdeveloped, developed, countries, nations, Rio de Janeiro. South America, Sochi, Russia, India, G20, Commonwealth games, Summer games, Andrew Zimbalist, New Delhi, IOC, Smith College, USA, Tokyo, Journal of Economic Perspectives, Oxford University, inflation, Council of Foreign Relations, winter olympics, London
Disclaimer: We do not hold any right, or copyright over any of the images used, these have been taken from Google. In case of credits or removal, the owner may kindly mail us.
