The Beijing Olympics Economic Ramifications

Published on Author kavanaght16

In light of the current olympics in Russia, I thought this would be a good time to examine how the 2008 olympics effected the Chinese economy. The traditional argument for a developing nation hosting the olympics is that the influx of tourism and international attention will provide a launching point for the economy. In other words, the olympics are often seen as a catalyst capable of making developing nations international players. However, extensive evidence from the China games, as well as others, suggests that there is little international benefit from hosting the olympics.

The question remains, is there any economic benefit from hosting the olympics? Yes. Most host countries experience increased rates of growth for a period of a few years leading up to the olympics. This is caused by the significant increase in government spending associated with being a host nation. In China’s case, roughly $50 billion dollars were spent to successfully host the games. This naturally produced a sizable increase in China’s GDP. However, GDP returned to normal and growth rates stabilized shortly after the games. So while hosting the Olympics might bring some level of pride to a host nation, the economic benefits are insignificant.

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2 Responses to The Beijing Olympics Economic Ramifications

  1. Please take a look at my post about the Sochi Winter Olympics:
    The European Bank for Reconstruction and Development (EBRD) argues that hosting big events such as the Olympics does not benefit countries economically. It says jobs and infrastructure are created and will last for awhile after the events are over.
    For the Beijing Olympics, the cost was over 40 billion dollars. Although it created lots of jobs and introduced the country to many foreigners, it did not benefit China economically much. It is important to notice that the increases in government spending and jobs are temporary.
    Is there anyway to make these short term effects to long term effects?

  2. Further to the post and comments, given the magnitude of the expenditures relative to the size of the Chinese economy in the runup to 2008, would we expect a significant multiplier on an a priori basis? To make that calculation, you also need to net out infrastructure than would have been built anyway.
    We had an EAS Minor capstone paper on this topic at the time of the Beijing Olympics. What I’ve not seen is an ex post analysis of how much of the investment was in projects that are now white elephants or perhaps have even been torn down. One-use venues are current consumption, not “investment” in that they don’t produce any future gains to the economy. And Beijing is not a region of China that relies on repeat tourism for survival…