gE Blog Series: Winter Olympics Part 1 - Impacts of Major Sports Events on the Global Economy

With the lighting of the ceremonial torch in Sochi, Russia last Friday night, the 22nd Winter Olympic Games have officially begun. Beyond capturing the world's attention throughout the month of February, these Olympic Games, like other major sporting events, have profound economic and political effects that resonate throughout the entire international system. Therefore, as the world's eyes turn towards the showcase of some of the world's finest athleticism taking place in Sochi, this post will explore some of the less eye-catching, yet equally significant, aspects of events like the Sochi Olympics and their unique place within international markets and politics.

To begin with, countries competitively bid millions of dollars to host major events like the Olympic Games or the FIFA World Cup for various economic and political reasons. For example, with a developed country like Germany, which hosted the Olympic Games in 1972 and the World Cup in 2006, there is a major economic incentive to host such events due to the existing infrastructure that already exists and is needed for effectively hosting events with millions of international visitors. Due to already having modernized infrastructure, such as world-class stadiums, efficient public transportation systems, and sufficient hotels & restaurants for international visitors, the economies of developed host countries, like the United States who recorded a positive economic impact of over $4 billion USD after hosting the 1994 FIFA World Cup, are provided with an opportunity to create jobs and boost the country's economy without having to implement costly and large-scale infrastructure development projects.

For developing countries, however, hosting the same events comes at a significantly higher price. As economic, political, and cultural globalization has continued to progress and empower developing nations, there has been a noticeable trend in BRICS economies hosting large events in the 21st century, such as the 2008 Summer Olympics in China, the 2010 World Cup in South Africa, these Winter Olympic Games in Russia, and both the 2014 World Cup & the 2016 Summer Olympic Games being hosted in Brazil. What is surprising about this trend is that it makes very little sense from an economic perspective. Although more will be discussed on this topic in an upcoming blog during this series, the heavy investments that these developing countries have had to do in order to meet FIFA or Olympic Committee standards have resulted in little or no economic profit for these host countries. Clearly, the motivation to capture the world's attention lies elsewhere.

For those readers unfamiliar or confused by the term "international political economy," the past ten years of global games have provided excellent and clear case studies of how political agendas, global markets, and sports have fused together to make a significant impact on the international system. Russia has reported spending $51 billion USD on hosting these games, which contrasts sharply with the Vancouver Games that cost merely $6 billion USD, but the political motives appear worth the price. Capturing the world's attention for a month provides Russia, as well as the other developing countries listed above, the priceless chance of showcasing to the world their country's advances in economic modernization, attractive cultural traits, and greatly improving the international system's perspective of the host nation. The Chinese desired to be seen as one of the world's great powers, South Africa wanted to be viewed as the leading nation of the "African Renaissance," while Russia is clearly aiming for demonstrating to the world its advances as a nation in the post-Soviet Union era. Aside from hoping to draw more international business into their country following the games, these nations' have also desired an increased role in the international arena from both a political and economic standpoint, and have viewed hosting major sporting events as a key component of achieving these aims.

So, in conclusion, many of Russia's political and economic hopes are riding on the outcome of these games. With investments reaching over $50 billion USD, President Putin, like many other leaders of developing economies, has effectively gone "all-in" for a chance to immensely boost Russia's economic and political stance in the international system through a successful implementation of these Winter Olympics. Ladies and gentlemen, let the games begin.