NO 217: The effects of the OLYMPIC GAMES on the economy

By CENGXIAO XIAO

        With the approaching OLYMPIC GAMES in the UK, the amount of interest in it has increased significantly.In most people's opinion,the OLYMPIC GAMES should benefit the economy of host countries.The games have positive effects in some cases because of the benefits obtained from tourism and retail selling.However,the costs for preperation may also reduce the amount of benefits gained,such as construction and operating these building.To explain in more detail,according to Markus Brückner and Evi Pappa:

       AS the diagram shows above,the exports of the host countries would increase significantly by selling the goods which are connected with the OLMYPIC GAMES and national speciality goods.But when the sports events finish,the demand for them may have a certain decrease.Regarding investment,more capital goods will need to be purchased because people require them for the preparation.However,similar to the output,after the events,the incentive for businesses for purchasing capital goods will not be as much as before which leads to a drop in the investment.

         As for the consumption,the majority should be the amount of tickets which can help the government to cover the amount of spending and the amount of profits gained by local businesses from tourism and selling goods may cover the costs. If there is an excess demand in the market, consumers must offer higher price for products and the inflation may increase.Interestingly,the influence , according to this diagram,also will last for a long time.Unfortunately, the reason for the exchange rates which are decreasing during the period of OLYMPIC GAMES is not given .

         Therefore, whether the host countries can make profits from OLYMPIC GAMES really depends on the situation of the rest of the world and the amount of money gained and spent.For instance,the OLYMPIC in Greece,according to PricewaterhouseCoopers European Economic Outlook June 2004 • 23,”the Olympic Games, estimates that Athens could receive an additional 450,000 tourists annually on average until 2011, giving a total boost to the Greek economy averaging 1% of GDP each year for the entire period 1998-2011..”During this time, the economic growth of other European countries was not very high with the average of approximately 1%.

          However,the economy in Greece seemed to work well during this time with economic growth of around 3.6%.That is the result of many reasons,for example,the reduction in the exchange rates but the influence of OLYMPIC GAMES also can not be ignored.

          However,as we know now, the economy of Greece actually is in deep trouble and the effects from OLYMPIC GAMES may also have contributed to that.For instance,there may be a certain drop in the number of investment because people reduce their demand for the capital goods,which may lead to the reduce in the amount of profits can be made by businesses.Also,the amount of money Greek government spent on the OLYMPIC GAMES may lead to opportunity cost.For instance,the amount of money could be used for education and unemployment.

            As for the effects of LONDON OLYMPIC GAMES,'the UK economy to benefit from a record breaking spending injection during London 2012 'and 'Consumer spending set to hit£750 million, the biggest ever consumer spend at an Olympic and Paralympic Games 'according to the prediction of Visa.And also we can know more details from the video from youtube.

             Generally speaking,the host countries of this games can obtain benefits from the goods and services connected to the games but the costs of that and the negative effects on the economy after the games may also reduce the overall benefits from the OLYMPIC GAMES.However,the economic growth of countries should not rely on these special events and the government should think about some normal methods to solve the problems existing in the countries' economy.And it also should be noticed,however,that countries want to host the OLYMPIC GAMES for many reasons ,for example, honour,which are not related to the economy.