Every couple of years the Olympic games take the world by storm. You will probably have noticed just how expensive it can be to host the Olympics, with experts predicting that the cost of the Rio Olympics could run up to $20 billion. So, why are countries willing to spend so much money to host this major event? Well, luckily, it offers many economic benefits, as well as social and cultural advantages.
Raising The Country’s Profile
For some countries, this will be a much larger benefit than others. Hosting the Olympics is a great way to raise the image of your city and the country as a whole. An elevated global status can lead to long-term economic benefits by attracting tourism and business investments through increased recognition and international acceptance.
The ‘Olympics Effect’, after all, is expected to lead to a boost in economic growth for these very reasons. Previous cities that have benefited from hosting the Olympics include Sydney, Barcelona, and Beijing. Being able to host such a major sporting event can make a big difference in how a city is perceived and lead to long-term benefits.
There is a reason that Forex traders use major sporting events, including the Olympics, to earn a good profit. The host nation has long been a simple tool to help investors identify who will do well in the foreign exchange market in the long-run. We typically see an appreciation in the value of the nation’s currency in the run-up to hosting the event, as well as a boost to the economy in the long-term.
Long Term Investment
As a country makes preparations to host the Olympics, you can usually expect an upgrade to transport links, infrastructure, as well as improved sporting venues. These new builds and improvements offer economic benefits that last far beyond the Olympic games.
While many of the facilities built specifically for the Games are unlikely to enjoy the same level of use, they can serve another purpose through careful planning. Athletic stadiums, for instance, can be utilized by other sporting teams, such as football teams, in the future. You can also convert the Olympic village into affordable housing to avoid leaving behind large unused facilities.
Improvements in public transport leave a lasting legacy for residents, who can enjoy better transport links and reduced congestion. These enhancements will also aid in improving efficiency for local businesses while helping to raise the economy’s productive capacity.
Another long-term benefit is that this type of large-scale sporting event can create a lot of excitement and enthusiasm around sports. Often, it leads to an increased interest of sport, which provides long-lasting benefits for the country’s health.
When the UK hosted London 2012, thousands of jobs were generated before the event even took place. Considering that the country was facing the worst global recession in over sixty years, these jobs provided a much-needed boost to the economy.
Of course, while the Games were said to create more than 100,000 jobs in London, many of these would have been short-term or temporary contracts. The majority of new jobs are generated in the run-up to the Olympics, particularly in the construction industry, as well as during the Games themselves.
However, strategic placement of the event could help to revitalise a depressed city. This was the reasoning behind deciding on a site in East London, which at the time was a relatively depressed area. The city also put in place a four-year programme which aimed to make the most of the Olympics effect through organized events and activities. The idea here was to create long-term benefits to the economy by generating work that lasted well beyond the Games.
Short Term Economic Boost
One of the most obvious advantages to hosting the Olympics is the short term benefits it provides. The influx of foreign visitors expected for the duration of the games is impressive, with these events often attracting thousands of people to the host nation. While the high numbers tend to be temporary, it does offer a big boost to the local economy.
The local tourist trade, including hotels, shops, and restaurants, will particularly benefit from this big surge in activity in the area. Of course, host nations hope that they will see the same benefits that countries such as China and Spain enjoyed for years after hosting the games.