After hosting the PanAmerican Games in Rio de Janeiro in 2007 and having been chosen as host nation for the World Cup 2014, Brazil was recently announced to also stage the Olympic Games in 2016. In the midst of the governmental, public & media euphoria, this article intends to discuss the real impacts of hosting such hallmark events, as such impacts seem sometimes to be ignored, minimized, or overestimated.
According to the Financial Department of the State of Rio de Janeiro, the improvements of infra-structure in the city will cost around USD 10 billion for the federal government (thus, taken from the taxes paid by Brazilians), of which USD 7,5 billion will be exclusively for Olympics newly-built structures and operationalization (Globo, 2009).
A report released this year by the Fundação Instituto de Administração/Ministry of Sports on “Impacts of the Olympic Games in the Brazilian Economy” states that around R$ 102 billion would be generated by the event to the Brazilian economy, with continued benefits until 2027. It estimates a growth of 41,6% on the GDP of Rio and 120.000 new jobs per year until 2016 (and 130.000 jobs per year on the next 10 years). The tourism and hospitality industry would be benefited by 18.000 jobs and 8.000 new beds until 2016, according to Alexandre Sampaio, Chairman of the Union of Hotels, Bars and Restaurants of Rio de Janeiro (Globo, 2009). Moreover, only for the month of the World Cup 2014, 500.000 tourists are expected, which corresponds to 10% of Brazil’s annual international arrivals.
However, in the midst of many positive numbers and figures it is important to evaluate some similar situations that occurred in the past: in 2006, Germany expected that 100.000 jobs would be generated by hosting the World Cup, but a later study concluded that only half of it was actually created. Moreover, South Korea estimated 500.000 more tourists in 2002, but it was observed that only 50% of them really showed up in that year. Neither GDP growth assumptions should be implied: Japan had a 0,3% decrease of its GDP during the World Cup in 2002 (Veja, 2007).
Many Brazilians begin to reflect whether the estimations about numbers of tourist arrivals, job creation and other impacts over the GDP are in general exaggerated by the government and media. Interviewed by the newspaper O Globo, Rio-born and resident Elizette Bontempo showed preoccupation about what will happen in the future to the facilities built for the Olympics in the city. According to her, the facilities built for the PanAmerican Games in 2007, so successfully praised by the government and the media, are currently not being used by the local population (Globo, 2009). Not only these facilities are not being used, but they also represent USD 145.000 per month in maintenance costs (according to the COB – Brazilian Olympics Committee).
Recently this year, the Brazilian government created a website ‘Olympics Transparency’, through which the population will be able follow the investments, projects and the real costs of the Olympic Games to the country. The reason for creating this portal was to avoid the scandal perpetrated by the 2007 PanAmerican Games: with USD 290 million as initial costs announced by the government, the event turned out to be four times more expensive at the end (USD 2,3 billion). The real doubts of hosting such events is also reflected abroad: Chicago, which was also bidding as host city for the Olympic Games 2016, had 85% of its residents against the realization of the event in the city due to its costs – especially in times of economical crisis – according to an inquire done by the American newspaper Chicago Tribune.
In the case of Brazil, one more question should be added: is it worthwhile to host three global events in less than a decade period, in a nation where the basic needs and services are still not provided for most of its population, and where the public education & healthcare systems are collapsing? At the end of the games, will Brazil win or lose?
References:
- VEJA. (2007) Perguntas & Respostas: Copa do Mundo de 2014 [online] (cited 22 October 2009) Available from <URL: http://veja.abril.com.br/idade/exclusivo/perguntas_respostas/copa_do_mundo/index.shtml#1>
- Fox, M. (2009) World Cup 2014 plans generate environmental controversy in Porto Alegre, Brazil [online] (cited 21 October 2009) Available from <URL: http://www.fsrn.org/audio/world-cup-2014-plans-generate-environmental-controversy-porto-alegre-brazil/5290>
- Globo Esporte. (2009) OLIMPÍADAS 2016: Veja os desafios do RJ para a realização dos jogos [online] (cited 22 October 2009) Available from <URL: http://www.tvcanal13.com.br/noticias/olimpiadas-2016veja-os-desafios-do-rj-para-a-realizacao-dos-jogos-77232.asp>
- Globo Esporte. (2009) Chicago, candidata às Olimpíadas de 2016, enfrenta resistência de americanos [online] (cited 22 October 2009) Available from <http://g1.globo.com/Noticias/Rio/0,,MUL1321564-5606,00-CHICAGO+CANDIDATA+AS+OLIMPIADAS+DE+ENFRENTA+RESISTENCIA+DE+AMERICANOS.html>
- Globo. (2009) Olimpíada vai gerar investimento de R$11 bi, diz governo do estado [online] (cited 22 October 2009) Available from <URL: http://g1.globo.com/Noticias/Economia_Negocios/0,,MUL1336600-9356,00.html>
- Transparência Olímpica (2009) Available from <URL: http://www.transparenciaolimpica.com.br>
- Globo. (2009) Estudo mostra impacto das Olimpíadas na economia brasileira [online] (cited 22 October 2009) Available from <URL: http://g1.globo.com/Noticias/Rio/0,,MUL1319054-5606,00-ESTUDO+MOSTRA+IMPACTO+DAS+OLIMPIADAS+NA+ECONOMIA+BRASILEIRA.html>
- Globo. (2009) Rio 2016 vai reforçar vocação da cidade para turismo e hotelaria [online] (cited 22 October 2009) Available from <URL: http://g1.globo.com/Noticias/Rio/0,,MUL1326183-5606,00-RIO+VAI+REFORCAR+VOCACAO+DA+CIDADE+PARA+TURISMO+E+HOTELARIA.html>
- Globo. (2009) Rio 2016 precisa vencer desafio de hotelaria, transporte e transparência [online] (cited 22 October 2009) Available from <URL: http://g1.globo.com/Noticias/Rio/0,,MUL1311198-5606,00-RIO+PRECISA+VENCER+DESAFIO+DE+HOTELARIA+TRANSPORTE+E+TRANSPARENCIA.html>
Hey Julio
Firstly,we hope Brazil wins at the end of the Games,considering your article its really interesting to see how global events speed up the whole physical development of the country. The estimations are very optimistic but don’t you think it drives the tourism authorities to put their best for the specific events.As the saying goes Prepare for the worst and hope for the best.
Varoon Nasa (TDM)
Dear colleagues & readers,
I just want to point out a minor mistake on the second last paragraph of my article, it should be: “….with USD 290 million as initial costs announced by the government, the event turned out to be EIGHT times more expensive at the end (USD 2,3 billion)”
Thank you,
Julio
Hey Julio,
Nice article, it is a good sign the government opens such a portal so at least there is transparency. Without any doubt that will influence governments behaviour. I hope for Brasil that at the end of the games they will win, at least economically and then Belgium will win on the pitch. :)
Hello Julio,
I enjoyed reading your article, it sets me to thinking, which is a positive sign. I especially like the question you propose in your conclusion, as that is indeed what they should focus first at in my opinion. I would like to know what your own personal opinion would be on the question you proposed: “is it worthwhile to host three global events in less than a decade period, in a nation where the basic needs and services are still not provided for most of its population, and where the public education & healthcare systems are collapsing?” And do you know if this question is also currently addressed by the Brazilian government or are they mainly focussing on the benefits of these events and therefore in less amount concerned about the social system of Brazil?
In short, very well-written and I’d like to talk to you some more about this topic!
Nienke (TDM student)
Hello Varoon,
First of all, thank you for your comment. Regarding your question: my opinion is that those estimations do not drive the tourism authorities to put their best for the Olympics. The overestimated benefits that have been announced so far seem to be able to convince the population and those who are not sure whether hosting so many hallmark events in Brazil is really worthwhile. It could be great if an impartial study could also point out the possible negative impacts, based even on previous experiences in Brazil or in another countries.
Julio
Hello Allan,
Indeed, the transparency website is a great step forward. However, the portal functions only as a display of how the money is being spent – it is not a tool to keep the costs within the announced budget. Therefore, there is still no tool that ensures that the government is going to keep the expected costs.
Julio
Hello Nienke,
Thank you for your comment. Indeed I have not expressed my personal opinion on the final question. In my opinion, there are two point of views:
MARKETING / BRAND PERSPECTIVE: Global events seem to really highlight a nation in the tourism world. I do agree that these events will help to promote Brazil, strengthen its brand/image, and perhaps increase the number of arrivals (at least in that year). Thus, as per marketing and promotion, I guess there is a lot of good opportunities (unless something really bad happens during the event and, instead of strengthen Brazil’s image, it gets the opposite effect).
ECONOMIC/SOCIAL PERSPECTIVE: I do agree that many jobs will be created (though one should not ignore the high percentage of volunteers “employed”). During that month, surely the host cities will increase their economic revenues. But, restrictly on a social point of view, in my opinion it is a huge amount of money spent on what should not be the government’s priority. Brazil lacks good public schools, a decent wellfare system and criminality control. Most part of these issues are solved with public funds applied in an efficient manner, and the taxes paid by Brazilians actually exist to finantially support these facilities and help those issues.
So will Brazil win or lose? As a Brazilian citizen, I believe that we are already losing. I may sound utopic, but I am convinced that it is time to our government to understand what its priorities should be, and latter on, when every Brazilian have equal access to education, health and so on, then it is time to think about hosting three global events partially funded with our taxes. I also believe that it is necessary that some impartial international organization could prepare impact studies of these events, considering both negative & positive effects, without any under or overestimation.
I hope I replied well to your comment, do not hesitate to contact me if you feel to discuss more about this topic!
Julio