Estimating the Cost and Benet of Hosting Olympic Games: What Can Beijing Expect from Its 2008 Games?

Abstract

Cities who host the Olympic Games must commit to significant investments in sports venues and other infrastructure. It is commonly assumed that the scale of such an event and the scale of the preparation for it will create large and lasting economic benefits to the host city. Economic impact studies confirm these expectations by forecasting economic benefits in the billions of dollars. Unfortunately these studies are filled with misapplications of economic theory that virtually guarantee their projections will be large. Ex-post studies have consistently found no evidence of positive economic impacts from mega-sporting events even remotely approaching the estimates in economic impact studies. For the 2008 Summer Olympic Games in Beijing, it appears China will take these massive investments in venues and infrastructure to a new level. If organizers of the Beijing Games base their expectations on economic impact studies from previous Olympics, they are sure to be disappointed. The potential for long term economic benefits from the Beijing Games will depend critically on how well Olympics related investments in venues and infrastructure can be incorporated into the overall economy in the years following the Games.