The Economic Impact Of Olympics

Every two years, cities from around the world will submit their bids to vie for the prestigious honour to host the Olympic Games which take place every four years. Apart from the opportunity to showcase the city to the entire world, there are some economic considerations when it comes to such a decision. With guidance from your economics tutor Singapore in your economics tuition Singapore class, discuss the positive and negative impact of the Olympics on the hosting cities.

Positive Economic Impact

The Olympic Games, as one of the most popular sports events in the world, will usually draw millions of athletes and tourists from across the globe to the hosting city. This will generate billions of dollars in term of revenue for the tourism and related sectors. The revenue from ticket sales itself will amount to hundreds of millions of dollars. In the past 20 years, an average of five million tickets were sold for each Olympic Games. The positive impact is not limited to the two weeks during the event. In the years leading up to the Olympic Games, the hosting city will typically increase spending on infrastructure development, such as facilities, transportation, and communication networks. As a result, millions of jobs will be created. To understand more about the positive impact of a high-profile event on job creation, you may consult your economics tutor Singapore in economics tuition Singapore. Mr Edmund Quek is a highly regarded economics tutor Singapore who has over 20 years of experience teaching economics tuition Singapore. His economics tuition Singapore centre is located near the Raffles Institution, within five minutes’ walk from the Bishan MRT station.

The positive impact is likely to continue after the Olympic Games. You may discuss with your economics tutor Singapore in your economics tuition Singapore class the various intangible benefits of hosting the Olympic Games. For example, the Beijing Olympics 2008 successfully raised the stance of its hosting city Beijing as a sought-after tourist destination rich in history and culture. Therefore, Beijing continued to see growth in tourist numbers in the years after the Olympic Games. Similarly, Barcelona also saw higher tourist numbers after the Barcelona Olympics in 1992.

Negative Economic Impact

Like a coin has two sides, Olympic Games also have negative implications on the hosting city. Firstly, it costs the hosting city billions of dollars to host the Olympic Games which is unlikely to be recovered from ticket sales and sponsorships. For example, Rio Olympic Games 2016 cost US$13 billion. Previously, London Olympic Games 2012 cost US$14.8 billion. Beijing Olympic Games 2008 holds the highest record so far with a hefty cost of US$45 billion. In consultation with your economics tutor Singapore in economics tuition Singapore, compare the costs and benefits for Beijing to host the Olympic Games in 2008.

Second, as the Olympic Games have stringent requirements on its various event facilities, some hosting cities need to invest heavily to build new facilities or upgrade its existing facilities. However, after the Olympic Games, these purpose-built facilities may not be fully utilised. Moreover, high maintenance cost may be incurred to upkeep these under-utilised facilities. Last but not least, the Olympic Games may also cause disruptions to local economic activities. The heightened security may also cause inconvenience to the local residents. You may brainstorm with your economics tutor Singapore in your economics tuition Singapore class on other possible negative effects.

In conclusion, whether it is beneficial to host the Olympic Games will depend on the hosting city’s ability to generate income and control cost. For the case of the current Tokyo Olympics 2020, the negative impact is likely to outweigh its positive impact. According to Reuters, the postponement of the Tokyo Olympic Games from 2020 to 2021 is estimated to cost US$3 billion. Further, the tight Covid-19 restrictions will also result in the loss of ticket sales estimated to be US$800 million and tourism revenue in billions of dollars as no spectators are allowed.

Linda Geng

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