The Olympic Games are held once in every four years with a total of 203 nations participating in the games. There are speculations that these are the only games that are able to bring together so many nations. Many countries participate in the bidding of the Olympic Games in an effort to boost their economy. This is due to the inflow of visitors to the host country. These visitors include high-level government officials, players, celebrities and ordinary fans. Hosting the Olympic Games improves the country’s economy because, among other things, it brings about a spike in tourism activities and businesses experience sharp rises.
Economic effects of hosting the Olympic Games are usually felt in the cities where they are taking place in instances of large countries and all over the nation in cases where the host nation is a small country (Hyde, 2016). These effects are felt before the games, during the games, and after the games.
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One of the positive effects include an increase in the demand for goods and services-After a country successfully bids to host the Olympic Games; it starts preparing for the games even several years before the games start. These preparations involve construction and refurbishment of sports facilities. This infrastructural development not only creates demand for construction equipment and materials but also creates employment opportunities for citizens of the nation. The increase in demand for construction equipment increases the profitability of companies supplying and producing the same (Hyde, 2016). This was evidenced by the Sydney Olympic Games which created great business opportunities in the tourism sector which have been consistent even after the Olympic Games. This is due to the fact that local people were trained on how to come up and sustain major projects.
Improved infrastructure is another great benefit. During preparation for the Olympics, it is common for the host nations to improve infrastructure such as the transport system. This helps ease transport even after the game which makes productivity more efficient thus improving the economy of the nation. After the 1984 Los Angeles Olympic Games, the city’s economy experienced a boom due to the efficient transport system that enabled for easier production and supply of commodities.
The multiplier effect whereby the money earned during the period of the games circulates within the country ensures improved growth within the host nation. During and after the Olympics, the money earned as a result of the games circulates within the country. This was evidenced by the 2000 Sydney Olympics whereby domestic spending increased after the games. There was the extra income as a result of the economic activities that took place during the games which meant that people had extra money to spend. This money circulated through the country, therefore, benefitting the economy.
Creation of employment opportunities helps in the growth of the economy. Numerous employment opportunities are created especially in the hospitality and construction industry in anticipation for a surge in activities in the two sectors. Numerous new hotels are constructed, and these require new staff, therefore, offering employment opportunities. All the past Olympic Games have created thousands of employment opportunities for the locals.
Hosting of such games opens opportunities to host sports events again in future. Rose (2011) suggests that due to the high standards of the sports facilities that are constructed for the games, the host nation is considered a good candidate for hosting future sporting activities. This has the effect of generating more revenues and therefore improving the country’s economy. After successfully hosting the 2000 Olympic Games, more sporting tournaments were carried out in the city.
Even though hosting the Olympics has great benefits to the host nation, there is a group of people who feel that it has some negative economic effects to the economy. One of the argument is that the high amount of money used to set up new sports infrastructure and also to renovate the old stadia usually slows down the economy of the host nation where public money is used as seen during the 1976 Montreal Olympics where the games brought about a recession that only ended in 2005(McBride, 2016). However, this is not always the case as preparations for the Olympic Games are now funded through grants by the International Olympics Committee and through endorsements by various companies and organizations.
Secondly, they argue that most of the sports infrastructure is often unused after the games and this brings about losses as a lot of money is usually used to put them up as seen after the Athens Olympic Games. This infrastructure, however, can still be used to hold other sporting tournaments thereby generating more income even after the Olympic Games.
Finally, they are of the view that due to the increases in crowds just before and after the games, prices of commodities may shoot in response to the increased demand making basic commodities unaffordable to the citizens. This was also observed in Greece as no major international sporting event has been hosted by the country after the Athens Olympic Games. This is, however, beneficial to business owners who make huge profits due to the increased market for their wares.
Conclusion
Hosting the Olympic Games is economically beneficial to the host country. This is due to increased business and employment opportunities it creates. Existing businesses also experience profits from the increase in the demand for their goods. Even though there are high costs incurred in preparation for the games, they are outweighed by the tremendous benefits. These benefits can either be short term or long term. Some Olympic Games have been highly beneficial to the hosts thereby making bidding host the games a very competitive process.
References
Olympics.mu (2016). The Olympics Effects on the Host Country’s Economy . Retrieved fro www.olympics.mmu/effect-host--country-economy
Kasimati, E. (2003). Economic aspects and the Summer Olympics: A Review of Related Research. International Journal of Tourism Research, 22 (5), 433-444
Hyde, T. (2016). Are the Olympics ever Worth it for the Host Nation? Retrieved from https://aeaweb.org/research/are-the-olympics-ever-worth-it-for-the-host-nation .
Rose, A & Spiegel, M. (2011). The Olympic Effect. Economic Journal, Royal Economic Society. 121 (553), 652-677
McBride, J. (2016). The Economics of hosting the Olympic Games . Retrieved from www.Cfr.org/brazil/economics-hosting-Olympics-games/p38148
