Are Olympic Games vi­able?

Enterprise - - Economy -

The de­bate on the eco­nomic im­pact of Olympics on host coun­tries has be­come a lot more in­tense in the past few years. Analysing po­lar­ized views re­gard­ing the pos­i­tive and neg­a­tive as­pects of host­ing Olympics now seems to be a ma­jor con­cern.

One can­not deny that host­ing the Olympics, which is the most pres­ti­gious sports event, is in­deed a mat­ter of ex­treme hon­our and pride. Yet, many coun­tries are be­gin­ning to view it as a bur­den on their econ­omy. De­spite the gen­eral as­sump­tion of Olympics be­ing an eco­nomic boon, a closer in­spec­tion of former host coun­tries re­veals that the huge in­vest­ment in the Games even­tu­ally turns out to be use­less and non-ben­e­fi­cial for the coun­tries con­cerned. Of­ten, due to the hype cre­ated about the event, host coun­tries ac­com­mo­date the in­flux of tourists on a large scale. Many times this as­sump­tion proves to be re­gret­tably wrong.

Many ex­perts ar­gue that the Games stim­u­late a process of in­fra­struc­ture devel­op­ment on a macro level. In­fra­struc­ture, be­ing the core el­e­ment that leads to a coun­try’s success, is al­ways wel­come but many claim that the games al­low the in­stant devel­op­ment of in­fra­struc­ture that would oth­er­wise take years to ac­com­plish. The Rio de Janeiro city government rec­og­nized the pos­i­tive out­comes of the event, say­ing Olympics “have brought a sense of ur­gency to projects that the city has needed for decades”. How­ever, such in­vest­ments only cater to those who ex­ist in close prox­im­ity to the sta­di­ums. They thereby dis­turb the balanced distri­bu­tion of in­cen­tives avail­able.

On the other hand, many ar­gue that in­fra­struc­ture de­vel­op­ments pre­ced­ing the Games of­ten di­vert at­ten­tion from other con­struc­tive projects. More­over, Sa­muel Tomb, an econ­o­mist, ex­plains that the in­fra­struc­ture built for the grand event of­ten fails to cater to needs of the host coun­try af­ter the Games have ended. Sa­muel Tomb claims that the boost in the con­struc­tion sec­tor is only tem­po­rary.

This also leads to the ques­tion as to whether the money might have been di­rected to more cru­cial sec­tors such as hos­pi­tals and ed­u­ca­tional in­sti­tutes. Keep­ing th­ese di­verse views in mind, Rio de Janeiro’s mu­nic­i­pal government has an­nounced that the Games should serve the city rather than the city serv­ing the Games.

An­other econ­o­mist, Gold­man Sachs be­lieves that the Olympic Games lead to short- term fi­nan­cial gains for the host cities, along with neg­li­gi­ble long- term eco­nomic ben­e­fits. The eco­nomic ac­tiv­ity in­di­ca­tor eas­ily cap­tures the short- term gains re­sult­ing from the games. For in­stance, the sur­plus ex­pen­di­ture on the re­cent Games in Lon­don could have in­creased the UK’s third quar­ter GDP by ap­prox­i­mately 1.2 to 1.6 per­cent. But long term ef­fects re­quire thor­ough analy­ses of tourist venues, pro­mo­tion of the city, re­main­ing ex­port fa­cil­i­ties and ar­eas for po­ten­tial in­vest­ment. The col­lec­tion and analy­ses of such de­tailed data is rel­a­tively harder to de­duce.

Although there is no con­clu­sive ev­i­dence avail­able sug­gest­ing that the Olympics have helped in boost­ing tourism, but it is safe to as­sume that tourism does, in fact, ben­e­fit a coun­try in the end. Sim­i­larly, the boost in con­sumer spend­ing in Lon­don has also not been as im­pres­sive as it was ex­pected to be. It needs to be re­mem­bered that higher lev­els of in­come and devel­op­ment are di­rectly pro­por­tional to the success of the Olympics.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.