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According to Investopedia. Experts reason that direct net economic benefits are hardly any while non-economic benefits are difficult to quantify and raise the fundamental question if there is actually good use of public money in funding sports events of Olympic scale. Yet, several countries fiercely compete to win the hosting rights of mega events such as the Olympics, revived by Baron Pierre de Coubertin after several centuries, FIFA world cup and et al, prompting a few experts to probe if economists are missing to identify the long term benefits which are immediately intangible.
Despite these mind boggling costs, a few pundits differ with the view that the most ancient and largest carnival of sports is an unnecessary extravagance, spanning just a fortnight. Spiegel , senior policy adviser of the Federal Reserve Bank of San Francisco note that countries bidding to host the Olympics send a signal that they are ready to open up trade. The advantages of hosting Olympics can be broadly categorized under four heads of economic benefits in the long term, infrastructural transformation, international limelight, soft power, and tourism among others:.
According to Andrew K. Rose and Mark M. In their studies, Rose and Spiegel found out that there was strong evidence of Olympics having a large positive effect, north of 30 percent, on exports. The expert duo underscored that Olympic trade effect remains positive and significant throughout, including similar effects emanating from other mega events such as world cups and world fairs, once of which is currently underway in Dubai, EXPO In fact, the Paris Universal Exposition, which attracted 32 million visitors served as a platform for Pierre de Coubertin to organize the first congress on physical education and scholar competitions, including assembling a network of educators, politicians, aristocrats and leaders in commerce, culture and sport who later enabled him to found the modern avatar of Olympics.
In other words, one mega event, Paris world exposition, helped a visionary, Coubertin, to give birth to another regular super global event, the quadrennial Olympics, whose five rings logo emerged to be one of the most recognizable symbols across the word. Connecting hosting Olympics to trade liberalization aspect, Rose and Spiegel highlighted that Beijing won the rights to conduct Olympic in July and two months later, the economic powerhouse successfully negotiated its commitment to trade liberalization with the World Trade Organization WTO , a global body which deals with the rules of trade between nations.
After being awarded the Olympics for Rome in , Italy took steps towards currency convertibility, joined the United Nations a couple of years later and commenced parleys for the Treaty of Rome and carving out of the European Economic Community EEC , which later evolved into the present day European Union. Likewise, Spain joined the EEC in , the same year summer games were awarded to Barcelona while awarding the Olympics to Seoul enabled South Korea to embrace democracy.
Inferred from their studies, both the economists strongly endorse that countries hosting massive sporting events such as the Olympics simultaneously liberalize their trade, manifesting the Olympic trade effect. As per their study methodologies, not only successful bidders stand to profit from the Olympics but also unsuccessful bidders. Rose and Spiegel found that the very act of bidding for the games had a positive impact on trade which was almost equal to hosting the games.
According to the economists, donning the role of a serious bidder, whether fruitful or not has the advantage of signaling impact as these bids are followed by moves aligned to trade liberalization. An Olympic bids sends across a message that the interested country is in favor of liberalizing trade. The economists drew a parallel that mega events and big trade liberalizations are rare expensive developments with long lead times but the ensuing future economic benefits outweigh the short-term bidding and hosting costs.
Besides bidders and successful hosts, manufacturing industries which produce electrical gadgets like modern televisions, cameras, security equipment and hospitality players among others also stand to rake in a lot of business. Cities hosting the Olympics experience massive transformation infrastructure-wise. Thousands of new temporary jobs will be created in the run up in to building infrastructure of Olympic scale.
Similarly, thousands of spectators, media contingents, athletes, sponsors and other visitors descend on the venues, resulting in more revenues for the host. From the time of bidding to the culmination of Olympic games, the host city and country will be keenly tracked by global media.
Over the decades, cities which hosted Olympics basked in global limelight with unique recognition to emerge as Olympic cities. Since the advent of modern Olympics in , only 49 cities organized or will go on to host the games till A few select cities managed to host the games two times and a few three times as well.
Athens hosted the inaugural modern games and the Olympics. So did Tokyo, and London did thrice, , and So will Paris, , and and Los Angeles, , and Why some cities never miss a chance to host the Olympics? Because the long term economic benefits and the lofty global standing are the pull factors here.
Olympic torch relay, mascot, venues and other aspects will occupy prime space in the media world, bringing in global attention and incessant fame for a long time before and after hosting the games. Opportunity to host Olympics has emerged as a proving ground for capable cities and countries with an aspirational element attached as the infrastructural requirements are quite demanding.
Though not as large as the Olympics, this is a little akin to hosting a Formula 1 race too. It signals the economic coming of age of a country. Attracted by the international appeal, many national leaders aspire to organize events like the Olympics, especially several emerging nations have also set some domestic goals to host the games in so many years.
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