Winter Olympics 2014: The Economic Impact
International Business Times
Published Feb 08, 2014 02:14PM ET
Updated Feb 08, 2014 02:45PM ET
Winter Olympics 2014: The Economic Impact
By Christopher Harress - The Sochi Winter Olympics kicked off in glorious style on Friday with an elaborate opening ceremony for what is expected to be the most expensive Olympics games in history, costing in excess of $50 billion and far exceeding the Beijing Olympics, a record many said would never be beaten.
According to a report by the European Bank for Reconstruction and Development (EBRD), this astronomical cost will not boost Russia’s economy in any way, but it may create a lasting legacy for the city of Sochi and the Krasnodar region of Russia, which will benefit from improved services that may attract business to the region in the future.
It’s largely unclear whether this will actually give Sochi a boost. It has worked for other host cities of Olympic events, including Atlanta and Vancouver, but they are being held in developed nations. Before the 21st century, all but four Olympic Games were held in progressive economies. Only Mexico in 1968, Moscow in 1980, the 1984 winter games in Sarajevo and Seoul’s summer games in 1988 have been otherwise.
More recently this trend has been changing and large sporting events have been hosted in emerging economies. By 2016, major sporting events will be hosted in China, Brazil, Russia, South Africa and Ukraine, with another World Cup to come in Russia in 2018.
And while the EBRD report says that countries do not stand to benefit economically from hosting such events, infrastructure and jobs are created that last well after the games have moved on.
This is especially important for emerging economies, because in general they tend to spend far more on hosting games than developed nations. In short, they are improving the lives and business prospects of the population in those regions.
Get The News You Want
For example, of the 235 projects undertaken in preparation for Sochi, 37 were road projects and the athletes quarters will be turned into affordable housing for local residents once the games ends.
On a national level, Russia is unlikely to benefit from the games, but it will also not impact on its current debt. It’s cost them a relatively small 2.4 percent of GDP, which is now worth $2 trillion. This compares favorably with the Greek Olympics in 2000 which cost about 7 percent of national GDP.
Olympics also create jobs, although most are not permanent. Russian currently has low unemployment but operates a tight labor market, which, as the report suggests, leaves limited scope for creation of new employment.
Written By: International Business Times
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.