Vancouver, Canada; London, United Kingdom; Sochi, Russia… but who’s next? It is no doubt that the International Olympic Committee faces peer pressure when deciding upon the city that will host future Olympics, but why so much competition between nations?

The potential benefits to host Olympic Games extend beyond beatification projects and a jump in tourism in the host city. One paper by Andrew Rose and Mark Spiegel finds that hosting mega-events like the Olympics has a significant positive impact on a country’s exports. Trade is around 30% higher for cities who hosted the games. Even unsuccessful bids to host the games have a similar positive impact on exports.

But is it causation or merely correlation? Are economically sound countries more likely to submit a request to host the Olympics, or does the branding of being a potential host city boost interest and thus trade in the country?

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