By: Chuting Bi

Introduction
The Olympic Games is an international multisport event comprised of summer and winter games. Each seasons games are hosted every four years, two years apart. By 2010, the Olympic Games will have been hosted by 41 cities in 22 countries. Since the 2008 Summer Olympic Games will be hold in Beijing, which I am very interested in, and the 2010 Winter Olympic Games will be held in Vancouver which most Canadians are interested in, I have selected a topic relating to the hosting country and the Olympic Games.

In recent years, there have been more and more competitions among cities, regions and countries to host Olympic Games.
Number of Cities Bidding for Olympic Games
12 10 # of Cities 8 6 4 2 0 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 Olympic Year

While the attractions of hosting the games are many, I think the biggest reason many countries bid for the Olympic Games is the economic advantages.

 What economic advantages can make many countries want to host the Games? How does hosting the Olympic Games affect the states economy? To find the answers, we can predict the benefits that

China and Canada will get in 2008 and 2010 Olympics.

Hypotheses: Hosting the Olympic Games promotes the states economic development.

Research Methodology
In order to get an accurate outcome, I will take two steps to do the research. Step 1. Overall Research - How does hosting the Olympics affect different countries economy? - Whether hosting the Games always give a positive effect to the states economy? Step 2. Specific Research - How does the event affect different aspects of a particular countrys economy?

I took

and

2000 Sydney Games

2002 Salt Lake Games

as samples since they were held not too long ago, and the size of the hosting countries are similar to the size of Canada and China.

Review of Material
Financial Balance of Olympic Games Organising Committees (millions of dollars)
Olympics 1972 Munich 1976 Montreal 1984 Los Angeles 1988 Seoul 1992 Barcelona Operational Costs 546 399 467 512 1611 Revenues 1090 936 1123 1319 1850 Balance 544 537 656 807 239

1996 Atlanta
2000 Sydney

1202
1700

1686
1900

484
239

The 1988 Seoul OGOC has the highest financial balance of 807 million dollars, Barcelona and Sydney both get a balance of 239 million dollars which is the lowest balance in the 7 countries. The empirical probability of getting a negative balance is zero.

The mean balance of the 7 countries is:

n 544+537+656+807+239+484+239 = 7 =501(million dollars)

Olympic Impact of GDP and Employment

Olympics 1984 Los Angeles 1988 Seoul 1992 Barcelona 1996 Atlanta 2000 Sydney Impact as % of GDP 0.47 1.4 0.03 2.41 2.78 New Jobs 73375 336000 296640 77026 90000

Impact as % of GDP
ImpactAsPercentage...
Data 3 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Dot Plot

1984 Los Angeles

1992 Barcelona

Olympics

2000 Sydney

1996 Atlanta

1988 Seoul

If we assume the 1992 Games as an outlier, there is an increasing tendency on the Olympic impact of GDP respect to year.

The mean increasing percentage of GDP is:

X

n 0.47+1.40+0.03+2.41+2.78 = 5 =1.42(%)

The effect on employment has a huge difference in some countries compare with the others. The Olympics brings Korea and Spain much more new jobs than the other countries. The mean number of new jobs is:
X

n 90,000+77,026+296,640+336,000+73,375 = 5 =174,608

2000 Sydney Summer Olympics Note: Pre-Event is the phase 1994-1999; Event year is 2000; Post-Event is the phase 2001-2005
Effect of Tourism (millions of dollars) Phase Pre-Event (average year) Event year Post-Event (average year) Indirect Tourists 281.6 513.9 413.4 Olympic visitors 2 146.9 0
Data 4 Dot Plot

In the event year, the tourist expenditure is much higher than the annual average in the per-event phase. Although after the event, the expenditure is going down, it still has a high amount. The Olympics do not only contribute profit to the tourism in the event year, but also during the years before and after the Games.

IndirectTourises

500 450 400 350 300

Eveent Year

Pre-Event

Phase

Post-Event

Effect of Australias GDP and Employment

Phase Pre-Event (average year) Event year Post-Event (average year) GDP(% change) 0.168 0.307 0.009 Employment(% change) 0.187 0.484 0.005

GDP vs.Government Deficit 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00

Dot Plot

Phase

The Games make Australias GDP increases 0.168% every year during the pre-event phase. In the event year, the Games make the GDP increase 0.307% which is almost twice of the amount in pre-event phase. But after the event, the Olympic effect on GDP is only 0.009%. From this we see that hosting the Olympic Games can increase the states GDP, especially during the event year.

GDP

Event Year

Pre-Even

Post-Even

Effect of Australias GDP and Employment

Phase Pre-Event (average year) Event year Post-Event (average year) GDP(% change) 0.168 0.307 0.009 Employment(% change) 0.187 0.484 0.005

In order to find out the Olympic effect on the employment, I did a twovariable analysis between effects of employment and GDP. If there is a positive linear correlation between them, we can say that the Olympic effect on employment is similar to the Olympic effect on GDP.
GDP vs. Employment 0.50 Scatter Plot

Employment

0.40 0.30 0.20 0.10 0.00

The correlation coefficient is 0.853, there is a strong positive linear correlation between the two variables. Therefore, hosting Olympic Games does have a positive effect to employment rate, especially before and in the event year.
0.00 0.10

0.20 0.30 GDP Employment = 1.60GDP - 0.032; r^2 = 0.97

Use the same way, we can find out the strong positive linear correlation also exits between Australian export /import volume and GDP.
GDP vs. Export Volume 1.8 Scatter Plot
GDP vs. Import Volume 0.8 Scatter Plot

ExportVolume

ImportVolume
0.00 0.10

1.4 1.0 0.6 0.2 -0.2

0.7 0.6 0.5 0.4 0.3 0.2

0.20 0.30 GDP ExportVolume = 5.31GDP - 0.27; r^2 = 0.80

0.20 0.30 GDP ImportVolume = 1.83GDP + 0.099; r^2 = 0.73

0.00

0.10

Therefore, hosting Olympics also effects states export/import volume in the same way.
GDP vs.Government Deficit -0.05 Scatter Plot

-0.10 -0.15 -0.20 -0.25 -0.30 -0.35

0.20 0.30 GDP GovernmentDeficit = -0.982GDP - 0.087; r^2 = 0.81

0.00

0.10

However, a strong negative linear correlation exits between the government deficit and GDP. That means hosting Olympics decreased Australian government deficit. The effects increase before the Games and decrease after the Games.

GovernmentDeficit

2002 Salt Lake Winter Games

Salt Lake Olympic Related Employment (by Year)
Olympic Related Employment
14000 12000

Employment

10000 8000 6000 4000 2000 0 1996 1997 1998 1999 2000 2001 2002 2003 Year

The highest amount happened in 2001, the year before holding the game.

StateTotalEmploym...

Olympic-Related Employment vs. State Total 1450000 1400000 1350000 1300000 1250000 1200000 1150000 0 2000

Scatter Plot

4000 6000 8000 10000 12000 14000 OlympicRelatedEmployment StateTotalEmployment = 9.79OlympicRelatedEmployment + 1285000; r^2 = 0.23

Correlation Coefficient = 0.480925

Instead of a strong positive linear correlation between the Olympic-related employment and total employment, there is a moderate positive linear correlation between them. But since After the Games, the number of Olympicrelated jobs drops, we can treat the amount of 2003 as an outlier.

If we remove the outlier, the correlation coefficient becomes 0.864, which presents a strong positive linear correlation.

StateTotalEmploym...

Olympic-Related Employment vs. State Total ( w ithout outlier) 1450000 1400000 1350000 1300000 1250000 1200000 1150000 0 2000

Scatter Plot

4000 6000 8000 10000 12000 14000 OlympicRelatedEmployment StateTotalEmployment = 16.4OlympicRelatedEmployment + 1230000; r^2 = 0.75

That means as the amount of Olympic-related jobs increases, the state total jobs increases. The Olympics does have a positive effect on the employment.

The hosting countrys industry also gets benefit from the 2002 Games.

Industry Output 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 1996 1998

Line Scatter Plot

Industry Earning 600000 500000

Line Scatter Plot

Earning
2000 Year 2002 2004

Output

400000 300000 200000 100000 0 1996 1998 2000 Year 2002 2004

As the graphs show, during the 6 years before the Olympics, the output and earnings caused by the Games in U.S. is increasing every year. But after the games, both of the amounts drop.

Estimated State and Local Government Fiscal Impacts (Thousands of Dollars)

Year 1996 1997 1998 1999 2000 2001 2002 2003 Total Revenue 709 9249 19878 60820 103759 147323 106167 2222 Total Expenditure 466 7825 16726 54839 96828 135778 59982 1744 Net Revenue 243 1424 3152 5980 6930 11546 46185 479

The Games also contribute a high profit to the state and local government, especially during event year. The mean government net revenue in the 8 years before and after the Games is:
x X

n 243+1424+3152+5980+6930+11546+46185+479 = 8 =9492 (thousands of dollars)

Net Revenue vs. Year

Here shows the regression between the Olympics net revenue and the year. The coefficient of determination is 0.4267. However, we can treat the 2003 amount as an outlier since after the games, the net revenue drops.

50000 40000

Net Revenue

30000 20000 10000 0 1995 -10000

1996

1997

1998

1999

2000

2001

2002

2003

2004

y = -716.57x 3 + 4E+06x 2 - 9E+09x + 6E+12 Year R2 = 0.4267

Net Revenue vs. Year 50000 40000

Net Revenue

30000 20000 10000 0 1995 -10000

1996

1997

1998

1999

2000

2001

2002

2003

The coefficient of determination without outlier is 0.958. From this graph, we can also see a big net revenue increasing happened between 2001 and 2002.

y = 890.06x 3 - 5E+06x 2 + 1E+10x - 7E+12 Year R2 = 0.958

Conclusion
After analyzing the data, it is clear that hosting the Olympic Games does have a positive effect on states GDP, employment rate, tourism, export /import volume, industry output /earning and government finance. However, this is only the 6 aspects that I researched. I believe the Olympics affect other aspects of the hosting countries economy as well. Therefore, the Olympic Games do promote the hosting countries economic development. The results support my hypothesis.

Since I collected data both in an overall stage and a more specific place, and all the data came from credible sources, the evidence should be convincing. However, the investigation can be improved. There are limitations on my conclusion since some of the results were just about one sample. The sample may not reflect the characteristics of the population. It may be a sampling bias. To improve the research, all the data of the 6 aspects of economy should be provided in the overall research. This way, the average Olympic impact of different countries can be determined more accurately. The data of all the 6 aspects should also be collected for the two samples by year, so that the tendency of the increasing will be presented more clearly.

After do the research, I believe that the 2008 and 2010 Olympic Games will make big profits to China and Canada, not only in the event year, but also during the years before and after the games.

.END...........

Hope you didnt feel sleepy!