Olympics: A Boon or Bane for the Economy of the Host Country
Introduction
Various Tokyo and Beijing Olympics videos left us in awe and wonder. From decoration, participation to publicity, host countries never fails to disappoint the audience.
The City of Lights will be in the spotlight for the next few weeks as Paris serves as centre stage for incredible performances and achievements of the human body, mind and spirit. We are all set to enjoy the Olympics to be held in Paris, France, which began on the 26th
However, we often overlook the economic impact of these extravagant events on the host countries.
History of Olympics
The ancient Olympic Games held in Olympia, Greece, from the 8th century BC to the 4th century AD influenced their creation. Baron Pierre de Coubertin founded the International Olympic Committee (IOC) in 1894, resulting in the first modern Games in Athens in 1896.
The IOC is the governing body of the Olympic Movement, which encompasses all entities and individuals involved in the Olympic Games.
Olympics and Economy
- A recent study by The University Of Oxford, “The Oxford Olympics Study 2024:
Are Cost and Cost Overrun at the Games Coming Down?” stated that these games remain costly and continue to have large cost overruns to a degree that threatens their viability. The IOC is aware of the problem and has even initiated reform. -
In his book “Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup,” Andrew Zimbalist explains that hosting the Olympics often exaggerates benefits, leaving many host countries with heavy burdens and maintenance responsibilities.
Anticipated Economic Benefits Of Olympics
International Olympic Committee (IOC) and its supporters contend that hosting have various benefits.
- It raises a city’s global profile.
- It generates economic benefits through tourism.
- Investments in infrastructure also increases.
- It develops the knowledge and skills of their workforce and volunteers
- Cities hosting the Olympics gain temporary jobs due to infrastructure improvements that continue benefiting the cities into the future.
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Not only this, but country’s diplomatic relations also improves.
Countries that benefitted economically by hosting Olympics in the past
- Japan(Tokyo, 1964)- saw significant economic growth and infrastructure
- The 1992 Olympics in Barcelona revitalized the city’s infrastructure, improved its global profile, and boosted tourism.
- Australia (Sydney,2000)- Sydney benefited from infrastructure improvements, such as the construction of the Olympic Village and enhanced transportation networks.
Negative economic consequences of hosting Olympics
Sometimes, however hosting the Olympics tends to result in severe economic deficiencies for cities.
- Projected budgets are never enough to cover actual costs.
- In many instances, the games have failed to deliver on their projected economic boons, leaving host cities with debt and defunct facilities.
- Many of the arenas constructed for the Olympics are not one-time costs. Rather, they represent ongoing expenses
- Many countries and the cities within them bid tens of millions of dollars for the chance to host the Olympics.
Countries that suffered from hosting the Olympics in the past
- Montreal’s global profile soared when the 1976 Montreal Olympics were held. These plans, along with the ’67 World’s Fair to celebrate the country’s centennial, helped make the city famous around the world. But the administration has had budget problems lately, with the cost estimated at $360 million, well below the final bill of $1.6 billion. The Montreal Games left a 30-year legacy of debt and financial disaster for the city, with the decaying, custom-built venues remaining a forlorn eyesore for decades.
- Some economists trace the beginning of Greece’s ongoing economic woes to the 2004 Olympics held in Athens. The event stands as the embodiment of excess and irresponsible spending. Its total cost was an estimated $15 billion, far exceeding the original budgeted amount. A significant portion of the overrun was partly due to additional security costs incurred in the aftermath of 9/11.
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In 2021, COVID-19 surged in many parts of the world, including Japan, leading officials to bar spectators from the Tokyo Olympics. Without fans, international tourism did not provide the spending needed to make up for the costs incurred by the Japanese government. When COVID-19 pandemic hit in the spring of 2020, and the decision was made to postpone the Olympics to the summer of 2021.The postponement increased the total outlay by an additional $2.8 billion, bringing the estimated total to more than $15 billion and making the Olympics the most expensive ever held.
Conclusion
The economic impact of hosting the Olympics remains a contentious issue, with benefits and drawbacks vividly highlighted by past Games. While the International Olympic Committee (IOC) believes that it bring positive outcomes for the host—such as elevated global profiles, tourism boosts, and infrastructure improvements, recent studies and historical examples reveal a more complex reality.
Countries like Japan, Spain, and Australia have seen significant infrastructural and economic advantages from hosting the Olympics. However, the negative consequences often outweigh these benefits. Cities like Montreal, Athens, and Tokyo have grappled with severe cost overruns, substantial debt, and underused facilities. The ambitious promises of economic gains frequently fall short, leaving host cities burdened with long-term financial liabilities. This dichotomy underscores the need for cautious consideration and robust planning to mitigate the substantial risks associated with hosting the Games.
