Readers Question: Evaluate the arguments for and against the view that major sports events are good for the economy? (15)
Major sports events such as the World Cup and the Olympics are often seen as a potential source of economic regeneration. Yet, there presence often invokes powerful opposition. These are some of the economic benefits and potential costs of major sporting events.
1. Encourages Investment in infrastructure.
Major sporting events usually require upgrades to transport and communication links. This investment leaves a lasting legacy for the whole economy. Better transport links reduce congestion and helps to improve efficiency for local business. It can help increase productive capacity and shift AS to the right.
2. Influx of Foreign Visitors.
A major sporting event like the Olympics can attract 10,000s of people for the month of the duration. These foreign tourists bring a boost to the local economy. In particular the local tourist trade, shops / hotels will benefit from the surge in visitor numbers. However, it is worth noting that these visitor numbers tend to be temporary. The major sporting event only lasts for a few weeks; potentially there could be many empty hotel beds in the future. On the other hand people argue a major sporting event can lead to a long term growth in visitor numbers. e.g. China hopes that the forthcoming Beijing Olympics will help create a new idea of China as a tourist destination. Barcelona saw higher visitor numbers continue after the Barcelona Olympics.
3. Job Creation.
Typically, major sporting events require investment in building stadium and hotels. This creates jobs for the local economy for upto 4 years before the event. These extra jobs help create a positive multiplier effect amongst the local economy. It is hoped that the London Olympics will help regenerate the East end of London.
4. Higher Economic Growth.
It is estimated that the ‘Olympics Effect’ leads to a boost in economic growth due to the higher investment and foreign visitors. This leads to higher tax revenues for the government
