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IFP: Olympics make people happier
5 Feb 2014 Flash News
THE OLYMPIC Games do not usually bring long-term economic benefits to the organising country, but they do make the population feel happier, an analysis by the governmental think tank Financial Policy Institute (IFP) reads.
Slovakia has teamed up with Poland in a joint bid to host the 2022 Winter Olympics. The estimated costs of organising the Olympics reach billions of euros. For the currently organised Winter Olympics in Sochi, dubbed the most expensive games ever, costs are estimated at over $50 billion (€37.04 billion), which is more than half of Slovakia's annual GDP, according to TASR.
“It's possible to do it for less, but the Olympic Committee rarely chooses a city that offers low-cost games,” the IFP analysis reads, as quoted by TASR, adding that the past 17 Olympics were, compared to initial estimates, overpriced by 179 percent on average. The Olympics in Sochi are already overpriced by 500 percent, and this figure is not final yet.
The IFP draws on a theory that the Olympic Games affect the economy in multiple ways. The related investments could create new capacity and scope for faster economic growth. However, if the infrastructure built for the games is left unused after the event ends, it becomes more of a burden.
Supporters of the Olympics argue that the games make the country more attractive and boost tourism, thereby permanently increasing consumption.
"On the other hand, it's possible that this growth is offset by a decrease in other sectors of the economy, as the majority of overall economic activity is generated by the domestic population, which bears the costs of the games," the analysis reads, as quoted by TASR.
According to IFP, the positive effects on the economy are therefore uncertain and the overall effect is rather negative after all of the costs are included. Empirical studies show that employment growth is limited to the duration of the Olympics. Meanwhile, in the case of Salt Lake City, growth in revenues for hoteliers and restaurant owners was outweighed by a decline in other consumption.
"Is there any chance that the Olympics could benefit the country in the long term? There is, but only if the games are organised very efficiently or if there is some undiscovered potential in the place where the games take place," stated IFP.
Compiled by Michaela Terenzani from press reports
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