With the Olympic games being held in Sydney this year, I wondered if perhaps the performance of the economy was being affected in part by the fiscal stimulus provided by Olympic construction in Sydney and other parts of the country. Australia’s economy has been performing well recently, suggesting that there might be some effect. Over the last five years, growth in Australia’s gross domestic product has averaged 4.35%, almost a full point above it’s thirty year annual average of 3.5%, and the unemployment rate is near a ten year low. According to one estimate, the Olympics will tack on an additional six and a half billion dollars, about 1.6% of the GDP, to Australia’s GDP over the 1994-2000 period. A natural question to ask is if this growth is due primarily to the Olympic preparation, or if, instead, it is a result of some other change in policy, or perhaps just plain old luck.
One way to address this question is to see if other host countries have experienced increases in GDP around Olympic years. Below is a graph of one measure of the boost to GDP that countries receive from hosting the Olympics. Each point represents the average, over all of the host countries since 1952, rate of growth of GDP. What this graph suggests is that prior to the Olympics and during the Olympic year GDP growth is higher than average - maxing out at nearly 1.5% above average GDP in the 3rd year before the Olympics. This number seems consistent with the estimates for Sydney - at least prior to the Olympic year. However, the graph also suggests that growth rates are lower in the years after the Olympics, than in the years prior to the games.
The economic benefits of the 2000 Olympics can be classified as direct and indirect. Direct benefits include the impact of the Olympics on exports, investment and employment. In terms of exports, the main impact will be inbound tourism, sponsorship fees, media broadcast rights, and ticket sales. The staging of the Olympics will encourage more international tourists to visit Australia. Sponsorship fees received from international sources were strong leading up to the Olympics and according to the Reserve Bank of Australia (RBA), broadcast rights, approximately one billion dollars in value, were recorded as exports in September quarter 2000. Ticket sale sold to overseas visitors,...
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...tself. Importantly, the benefits will continue well into the new millennium as Australia gets more international exposure for its exports and gains from the transfer of technology and knowledge from the world’s best. Opportunity beckons for the athletes, for exporters, for artists, for scientists and for the whole Australian community.
Arthur Anderson / CREA (1999) “Economic Impact Study of the Sydney 2000 Olympic
Games”. January 1999. Arthur Anderson and the Centre for Regional Economic
Analysis, University of Tasmania.
Dabkowski, S and Ketchell, M (1999) “Olympic Dream May Not Deliver Riches.” The
Gittins R (1999) “Swifter! Higher! Richer? Sadly Not With Our Games.” May 8 1999,
Sydney Morning Herald.
Mules,T “The Economic Impact of Special Events .” Griffith University, Gold Coast
Olympic Co-ordination Authortiy (OCA) (1999) “State of Play: A Report to the People
of New South Wales” June 1999, OCA, Sydney.
Reserve Bank of Australia (1999) “The Economic Effects of Staging the Olympic
Games” Semi-Annual Statement of Monetary Policy, May 1999, Reserve Bank,
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