This summer, fresh off of hosting the FIFA World Cup in 2014, Brazil is anticipating being home to the 2016 Summer Olympics in Rio De Janeiro. Many American mega corporations have skin in the game as sponsors of this summer's Olympic Games. Coca-Cola, GE, P&G, McDonald's, Dow Chemical Company, to name a few, are some of the Rio's largest Olympic World Partners. Dow is especially invested in this summer's Olympics as its Official Carbon Partner, a title which commits the company to helping host a sustainable Olympics and reducing carbon emissions. That said, all of the Games' sponsors certainly stand to benefit from the Olympics' smooth occurrence. To some, however, that is not yet certain. Although Brazil has already won the bid to host the Olympics, there are still a few crucial lingering factors that could prevent the mega event from materializing. For one, the nation is currently experiencing a political crisis. President Dilma Rousseff, scapegoat for the tanking Brazilian economy amidst allegations of bribery during her tenure as chairwoman of Petrobras, is facing an ongoing impeachment process. For now, an interim president sits in the seat of a suspended Rousseff. Another growing concern that has produced discussions of postponing the Olympics is the Zika virus. Cause of rare birth defects, the virus can be transmitted sexually or through mosquito bites and has accumulated 91,387 reported cases between the short time span of February to April this year. Many point to the relatively low proportion of tickets that have been sold to date (55%) as evidence of concerns surrounding Zika virus deterring tourists.
Many commanding sources firmly believe that the games will proceed unaffected, however. In regards to the timing of the ongoing political crisis, the suspended President Dilma Rousseff stated that, "These kinds of political issues have much less influence than other stages of organizing the Olympic Games." The IOC seems to be in agreement with Rousseff; the country has already prepared too much for the Games for the political atmosphere to hinder the Olympics' occurrence. In regards to concerns over the Zika virus, Professor Mark Dyreson of Pennsylvania State University's College of Health and Human Development expressed that the level of the World Health Organization's and the globe's concerns over the virus have already peaked. Professor Dyreson also commented, "Right now it is certainly a fear but it would have to ratchet up considerably" in order for the virus to prevent the Games. For Brazil, although there has been concern, it looks as if the show will go on.
The cost of preparation for Brazil's hosting has already proven to be massive, with some estimates claiming that the country's expenditures on infrastructure alone will exceed $25 billion. Although the pride and nationalist sentiment hosting the Olympics creates for a country is by no means valueless, any event that spends such a large sum of private and taxpayer funds must not go without an economic cost-benefit analysis. Many argue that hosting the Olympics, especially the Summer Games, inevitably benefits the host's economy. There is significant empirical evidence backing this claim of the positive "Olympic Effect". Professor Andrew K. Rose of the University of California, Berkeley and Mark M. Spiegel of the San Francisco Federal Reserve analyzed the export levels of host nations of both the Summer and Winter Olympics between 1948 and 2004 and discovered that the Games raised hosts' exports by an average of 30%. Additionally, the export levels of nations that made failed bids to be hosts reflected similar increases as the actual host nations.
Besides the effect hosting may have on a nation's trade pattern, however, it is also important to analyze economic effect on businesses and firms on more of a local level. It is no secret that the construction of professional sports stadiums and fields have done well for cities' economic well-beings, especially in Boston, San Francisco, New York, Baltimore, and St. Louis, to name just a few, in the United States during the 1970s and 1980s. The rationale behind the success of such venues and related events is that not only do they spur economic development, in the form of restaurants, malls, etc., immediately surrounding the stadium, but that they also attract sports fans from outside of the city to come and spend their money around the stadium's location. A similar argument can be made for the support of a country's hosting an Olympic Games; the games will surely attract tourists from outside the city and even outside the country who will consume from the host's local businesses.
But has this argument truly panned out in the recent history of the Olympic Games? Past examples reveal that the benefits of hosting Olympics actually may not outweigh the massive costs. A look at the 2012 Summer Olympic Games in London reveals just that. Although spending from the pockets of tourists and visitors undeniably increases during a mega-event such as the Olympics, it is difficult to quantify exactly how much. That said, a good measure of net effect on a host city or country is to see what disappears as a consequence of the Olympics. In London, for example, the West End's famed Adelphi Theater was forced to suspend performances of "Sweeney Todd", due to lack of interest. The British Museum's visitor count decreased significantly from 480,000 in the August of 2014 from the previous August's 617,000. It is easy to forget how much of a country's established tourist attractions are overshadowed by the presence of the Olympic Games. Evidence from longitudinal studies of the economic effect of the 2002 Salt Lake City Winter Olympics, the 2004 Athens Summer Olympics, and the 1988 Seoul Summer Olympics, to name a few, reveal the net long-term effect of the hosting the Olympic games. Partially due to the fact that the Olympics overshadows other tourist attractions within a host nation, these studies reveal that the net effect on long-term trade and employment has been quite modest in the past.
To apply these findings to the 2016 Summer Olympic Games, it is worth noting that perhaps Brazil isn't primarily focused on the economic impact of playing host. As an emerging market and world power, Brazil may be more interested in the prospect of improving its image to the rest of the world. By hosting the Olympics, Brazil will appear as a more inviting member of the global community. Even in that realm, however, Brazil must be weary of the image it creates for itself. Looking back at the 2000 Sydney Summer Olympics, one group of Australian researchers discovered that the perceptions of people from Hong Kong, Malaysia, South Africa and the United States towards Australia were affected little to none. Although hosting the Olympics may seem like an accelerated path to world recognition and economic might, Brazil may be sorely disappointed by Games' effects on its reputation and economy in the long run.
