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Samantha Edds* April 2012 Abstract After the financially profitable 1984 Los Angeles Olympic Games, some cities began to compete for and host the Olympics in part to garner economic growth and development. The purpose of this paper is to study current economic cost and benefit analysis, before quantifying if and when benefits exist for the 1992 Barcelona, 1996 Atlanta and 2000 Sydney Games. To assess the economic impact of hosting the Olympics, the host state/region will be compared to a same-country state/region that did not host the Games through the examination of infrastructure, prestige and general financial growth models over a nine-year period. Apart from one section—construction—from the 1992 Barcelona Games, all models appear to show that host states/regions do not have significantly different changes in growth compared to the control states/regions.
Contents 1 Introduction 2 Background: History and Economics 3 Literature Review 4 Methodology 4.1 Methodological Considerations 4.2 Ideal Data Collection 4.3 Independent Variable Ideal Data Collection 4.4 Data Collection 4.4.1 Spain Variables 4.4.2 United States Variables 4.4.3 Australia Variables 5 Model and Analysis 5.1 Model Implications Overview 5.2 1992 Barcelona Games Analysis 5.2.1 Spain Construction 5.2.2 Spain Tourism 5.2.3 Spain Financial Services 5.2.4 Spain Conclusions 5.3 1996 Atlanta Games Analysis 5.3.1 U.S. Construction 5.3.2 U.S. Tourism 5.3.3 U.S. Financial Services 5.3.4 U.S. Conclusions 5.4 2000 Sydney Games Analysis 5.4.1 Australia Construction 5.4.2 Australia Tourism 5.4.3 Australia Financial Services 5.4.4 Australia Conclusions 6 Summary and Conclusions 7 Policy Implications
References Appendix A: Comparison Explanations A.1 Spain A.2 United States A.3 Australia Appendix B: Methodological Changes B.1 Spain B.2 United States B.3 Australia Appendix C: Regressions C.1 Spain C.2 United States C.3 Australia
” Economic Papers: A journal of applied economics and policy 30. 2009: 160.edu * This is the official International Olympic Committee (IOC) designation. 4 . * Samantha Edds. The IOC solicits bids. it appears host cities bid away all or almost all future benefit because the IOC “can induce host cities and governments to underwrite most of the costs while keeping for itself a large part of the revenues. and as Syzmanski and Giesecke and Madden† show. 2 (2011): 230. further distorting the incentives to host. they use complicated modeling and do not account for the impact of the IOC to potentially induce cost coverage and distort incentives. Undergraduate. From this point forward in the paper I will employ similar terms. ‡ Szymanski.”‡ Given the IOC’s actions it seems that becoming an Olympic host city diminishes the positive economic effects originally anticipated at the beginning of the bidding process and detailed in the proposal. cities commission economic impact studies to estimate the seemingly vast economic benefits for different industries through hosting.§ Yet. cities have thus vied aggressively for the coveted hosting role.. the IOC has allegedly committed fraud and accepted bribes. Ellis Ave. § Ibid.158. 5801 S. IL 60637. No. To help entice their constituents and plead their case to the International Olympic Committee (IOC). which may lead the studies to incorrectly model the economic costs and benefits of the Olympics. † James A. Playbooks And Checkbooks: An Introduction To The Economics Of Modern Sports. Chicago. Princeton : Princeton University Press. e-mail: sedds@uchicago. and John R. University of Chicago. hosting the Olympic and Paralympic Games* has been considered highly desirable for host cities. Stefan. "Modelling the Economic Impacts of the Sydney Olympics in Retrospect ? Game Over for the Bonanza Story?*. Additionally. however. Madden. from increasing tourism rates to job creation. International Studies Department. prestige and other long-term benefits. Along with irresistible lure of economic prosperity. such as Olympics or Olympic Games. Giesceke. Economic impact studies attempt to measure the costs and benefits of hosting the Games. Introduction In recent memory.
eating. For example. Humpreys and Michael K. ** Jeffrey M. which exist because of the Olympic Games. all of which generates revenue. calculating costs and revenues for the Olympics is not just calculating all visitors’ spending throughout the Olympics and comparing it to the cost of construction and changes completed solely for the Olympics. http://www. Thus. The University of Georgia. because of the Olympics.pdf (accessed March 8. which generates revenue. for this study. First.edu/selig/docs/olympics. which is not registered by economic impact studies. 1133. This is a cost of the Olympics. mathematical inaccuracies further distort the studies’ stated benefits. economic effect and benefit need to be defined to provide a clear understanding of what this paper measures compared to other types of studies. and financial services. otherwise known as expenditures. some economists believe hosting the Olympics still has significant benefits. and shopping.†† However. as will be discussed below. People who come to the host city for the Olympics will spend money on activities such as hotels. As with any other structure. In addition to the IOC’s ability to skew incentives. tourism will refer to prestige and financial data will refer to financial services. †† From this point forward discussion of construction will refer to infrastructure. “The Economic Impact On the State of Georgia of Hosting the 1996 Summer Olympics” (diss.** Evaluating these benefits. the Games. are created by changes in the growth and development of infrastructure (construction). prestige (tourism). 1995). One way Olympic benefits are measured is through consumer spending. Economic effects of the Olympics include costs and revenues. leading to more construction activity that can be seen as a benefit of the Olympics. Additionally. Plummer. there are complicated pitfalls that can lead to overestimated benefits. the economic effects of the Olympics. otherwise known as benefits.terry..uga. people may later visit the host city and/or firms may move there. ones used for the Olympics will then be occupied. however. in order to host the Olympics there is often a large amount of construction completed solely for the Games. 5 . 2012). despite the IOC’s bidding process and overestimated benefits. has its own set of challenges.
Examining costs and benefits through post-Olympic models will allow authors to reconcile the differences in pre- ‡‡ Some people have visits that coincide with the Olympics. for another.1 (2002): 2. Because of this. impact studies will overestimate the positive economic effect of the Olympic Games on host cities. in this case watching an Olympic event. it is likely these studies could convince cities to bid for the right to host future Olympics based on falsities. §§ The Olympics acts as deterrence likely due to reports of potential crowding and congestion that divert visitors and spending away from the host city. no. If focusing on development and international awareness. 6 . In order to avoid these inaccuracies.§§ or mathematical multiplier*** calculations. Ibid. and thus do not count toward the money multiplier. Matheson.2. Mathematical overestimations. Studies often do not distinguish dollars that stay in the local economy and dollars that will go to corporations and nonlocal vendors. Victor. the visitors would have spent money on things such as eating. which does not require distinction between types of visitor spending and mathematical multipliers. acting as a stimulus. *** Money spent on the Olympics that circulates through the economy. “Upon Further Review: An Examination of Sporting Event Economic Impact Studies. misrepresent the predicted costs and benefits of economic impact studies because they incorrectly measure these effects. or were slightly altered to time the visit with the Olympics. economists have begun to run post-Olympic models.2.” Sports Journal 5. Ibid. which are often perpetuated when applied to the host city’s overall economy. but regardless these visitors would have traveled to the host city. The comparative model offers a more relative measure of economic effects. and it will avoid many mathematical measurement issues leading to a more accurate study. Therefore the visitors are substituting one activity. what they would be doing if the Olympics were not in the host city. is created into a mathematical multipler to account for the effect of each dollar that continues to circulate through the economy. the paper studies relative changes that look at the economic impact of specific variables with all things held equal and compares differences. Since modeling error and the IOC’s role are ignored or incorrect. hotels and tourist attractions independent of the Olympics. this paper uses a different form of measuring cost and benefits with a relative comparison model. such as the substitution effect‡‡ crowding-out effect. Instead. This leads to the question: how can the monetary impact of the Olympics be correctly modeled? To correct for inherent flaws.
230. For example.6 (2003): 433-44. "Economic Aspects and the Summer Olympics: A Review of Related Research. how can these studies best provide cities with a clear picture of the economic effects of hosting the Olympics? Given the issues and inaccuracies of current economic effect studies. parks and recreation or even on crime prevention that with the existence of the Olympics would not exist. While there are many studies that now use comparative modeling.††† Authors have moved towards precise comparison models with specific variable selection instead of general modeling such as Computable General Equilibrium modeling (CGE)‡‡‡ to account for model inaccuracies. creating a model that Kasimati notes is difficult to compute. ††† Ibid. so cities are able to better understand the difference between estimated and actual benefits when they consider bidding. Print. Kasimati. Olympic impact studies. Evangelia. accurate data and new models account for the issues Matheson stated. 7 . Knowing the true opportunity cost of hosting provides cities and developers. does measuring for changes in prestige. or to use money that would be spent on the Olympics on the next best alternative. hotels and other firms accurate information to either bid while acknowledging potential economic losses. funds spent on the Games could be used for other infrastructure. infrastructure." International Journal of Tourism Research 5. and general financial growth produce a more accurate picture of the economic gains that result for Olympic host cities? The purpose of this study is to make cities more aware of the discrepancy in projected benefits. as well as the actual economic costs and benefits of hosting the Olympics will allow constituents who stand to gain from hosting and cities to make decisions with eyes wide open. It involves studying the disaggregated forms of the economy through sector examination. transportation networks. Understanding modeling discrepancy patterns. ‡‡‡ CGE modeling is one of the main ways to estimate the potential economic effects a host city receives as a result of hosting the Olympics.
and Rose and Spiegel. Because methods of recordkeeping do not provide city level specific data for my dependent or independent variables. Compared to other models. by comparing similar Olympic Games’ host cities to same-country sister-cities at a statewide level to control for countrywide cofounding effects. After running the models. Since countrywide effects are held constant and each city is the largest within the comparable studied area. In a number of cases. my model aims to create greater specificity and accuracy. While there exists a number of post-Olympic studies and comparative model use. all other construction. 1996 and 2000 Olympic Games lead to essentially no positive economic growth. tourism and financial services models show either no difference or less change in growth from the control models. based upon case and definition. Giesecke and Madden. similar to the approach of Giesceke and Madden. the models may be able to see effects attributable solely to the Olympics Games. and in fact often hamper industry growth. particularly the works by Billings and Holladay. and Rose and Spiegel because there is less likely to be inaccuracies from data collection and mathematical modeling as with CGE modeling. the control model has greater change in economic growth than the Olympic model. Because there is likely an amount of inaccuracy due to measurement changes and the indication of identity variables. thus there exists no difference between them. they will be state or regional specific. my study model attempts to provide greater specificity through relative comparisons and greater accuracy with by holding countrywide effects constant and modeling that does not require difficult to calculate multipliers and effects such as substitution. I will use a comparison model.§§§ it is not possible to say with total certainty that the 1992. §§§ Identities happen when the independent variables are completely correlated with the dependent variables. 8 . results show that only the 1992 Barcelona Games construction model has a positive economic effect that could be attributable to the Olympics.
followed by a description of actual proxy data assessed in the model. model analysis. To best understand and analyze the study’s model of the economic effects of the Olympics. often through comparative modeling. including possible measuring inaccuracies and problems that may affect results. In my conclusion I will further discuss the limitations to my analysis. The historical background of the Olympics and current models provide a basis for the study’s model. followed by a description of ideal and actual data. results and a conclusion that describes further policy implications will help the constituents and cities considering bidding in the future better understand the costs and benefits of hosting the Olympics. After describing the study’s model. tourism. The literature review will focus on types of economic cost and benefits studies that look at the Games retroactively. 9 . with the aim of providing further specificity and accuracy. and financial growth. on which my model is based. results and implications. there will be a section on ideal data collection to better explain the shortcomings and aim of this paper. instead of predictive modeling to understand the actual costs and benefits of the Olympics. which aims for greater specificity and accuracy. first the historical background and current models will be described. My model is derived from these current comparative modeling studies. then an explanation of why this study is using a slightly different approach. before presenting a section on policy and research implications. The results section will interpret the study’s model in an attempt to better understand trends within the Olympics and a relative comparison of hosting the Olympics versus not hosting for changes in construction.
The Olympics Games began in 1896 as a small tradition fusing athletic feats and international unity. Israeli athletes were murdered. political and civil rights issues and assassinations in the U. are meant to show city and country power. University of Chicago. the only time in which a city did not face competition from other bidders. †††† Allen Sanderson.S. 2012). 1996 and 2000 Games. such as Beijing. **** Jeffrey M. In 1968 the Summer Games were held in Mexico City. “The Economic Impact On the State of Georgia of Hosting the 1996 Summer Olympics. Over time. January 6. IL. After World War II.†††† During the 1972 Games in Munich. Below is a short history of the past Olympic legacies to better understand how the Games have evolved and why the paper studies the 1992.”:1-2. This paper focuses solely on economic gains as the main reason for hosting the Olympics. Chicago.. the Games have evolved into a display of wealth and economic development. some. during 1968 there is the War in Vietnam and anti-war protesters. The legacy of the Games is not positive. which remains one of the host city focal points. thus the conclusions drawn about economic effects and feasibility will not be applicable to host cities such as Beijing. 2 Background: History and Economics Each Olympic Game takes place under different circumstances. “Olympics Lecture” (lecture. while others host for international awareness and yet others host for economic gains. there are a litany of reasons why cities host the Olympics. 1996 and 2000 Olympics are the most similar and represent a shift in reason for hosting to economic development. Understanding the ever-changing history of the Olympics will show the reader why the 1992. The myths of economic prosperity and development**** have become prominent only after the 1984 Los Angeles Olympics. Humpreys and Michael K. Plummer. the Olympics until 1968 had fairly low attendance as the world began to rebuild and adjust to changes. 10 . and general protests throughout the world.
IL. further contributing to the small. The 1976 Montreal Games will be remembered for overrun costs and the poor execution of the Games.‡‡‡‡‡ Similarly. ‡‡‡‡‡ Allen Sanderson. however because Los Angeles had so many Olympic. the 1996 Atlanta Games. Chicago. During this time. 11 . nature of facilities and maintenance costs. ***** Ibid. this is the first Olympic Games that urban and economic development was considered when bidding to host the Games. University of Chicago. “Olympics Lecture” (lecture. Los Angeles was the only city to bid. but inexpensive Olympics. as did the 2000 Games in Sydney. given the issues from Mexico City to Montreal.‡‡‡‡ Because of this. in 1978. albeit smaller than usually described. the host of the 1988 Olympic Games.***** Similarly. focused on development and economic growth. China and much of the West boycotted the 1980 Moscow Games because the Soviets invaded Afghanistan. the Soviet block boycotted the Games. keeping its costs for hosting low. 2012). Barcelona was able to realize their economic development goals by entering into the Common Market/EU and using the Olympics as a catalyst.††††† However. However. Ibid. ††††† Ibid. Los Angeles generated a profit. or near Olympic ready facilities. in Sydney most of the Olympic facilities have little ‡‡‡‡ §§§§ Ibid. when the 1984 Los Angeles Games happened.§§§§ Many of the structures constructed solely for the Olympics are rarely used again after the Olympics given their size. when the host city for 1984 was selected. Seoul. was too far into the building and planning process of their Games to consider the economic development and growth aspect of hosting. After Montreal. meaning it did not have to ‘out bid’ another city. hosting the Games was seen as a burdensome task instead of an honor. January 6. the cost of the Olympics was very low. while taking advantage of the high-quality university facilities from schools such as UCLA and USC. Unlike Seoul.
but have very high year maintenance costs. January 6. I chose the 1992. University of Chicago. Rio de Janeiro will be the host city in 2016. ****** Allen Sanderson.****** The next Olympics in the summer of 2012 are in London. Free Lance Star (Sydney). IL. A Year Later Sydney Areas Go Unused. 1996 and 2000 Games because they are the most similar Games and represent change and the focus on economic development. and the level of extenuating different circumstances. 2012). 2001. overrun costs from security concerns due to 9/11/2001 and increasingly elaborate and expense facility construction in an attempt to advertise the city as a tourist destination. “Olympics Lecture” (lecture. The 2008 Beijing Games had enormous costs and the government largely decided everything. September 16. to no use. §§§§§ Dennis Passa. §§§§§ 2004 Athens had crippling expenditures. to showcase the city and country. 12 . Given the shift in hosting reasons. Chicago.
Print. which may impact government willingness to †††††† CREA/Arthur Andersen. as indicated by the changes in predictor variables. Arthur Andersen’s report predicts economic effects of the Sydney Games. “Economic Impact Study of the Sydney 2000 Olympic Games. my study will be able to use greater precision and accuracy than current models. conducted a study the year before the Sydney Olympic Games.5 billion dollar extra economic activity in Australia. it appears there would be significant increases in tourism. The study claims a $6. tourism. with $5. current economic modeling studies guide my choice of a same-country state level comparative model of construction.1 alone in New South Wales at net present value. and financial services industry incomes in New South Wales compared to Victoria. and highlights past trends found in the Atlanta and Barcelona Games.” Sydney: Arthur Andersen (1999): 1-7. However. By examining current economic modeling. the study simultaneously notes NSW income (gross state product) is $77 million dollars lower in the 6 years after the Games than if the Games had not been held in Sydney. 13 . Arthur Andersen. which is often cited in later Olympic literature as a reliable source that presents the difficulty of distinguishing an Olympic effect. Atlanta and Barcelona models show the overall economic situation likely has a great impact on any Olympic effect. Arthur Andersen’s study will provide a framework to better gauge and study my results. financial services and manufacturing variables. While this will be important to consider when examining my results.†††††† Because of this. construction. 3 Literature Review Examining current economic modeling and Arthur Andersen’s consulting report provides the basis for this study’s model and results. meaning any affect attributable to the Olympics is too small to overcome larger economic trends. The study offers insight into some overarching economic effects that may be seen in my models comparing NSW to Victoria. a global consulting firm.
tourism. “Economic Impact Study of the Sydney 2000 Olympic Games. and furthermore. my models should not see a significant change in employment for New South Wales because of the Olympics.§§§§§§ Knowing that Georgia’s economy was already under pressure at the time of the Olympics may override any potential Olympic effect. if correct. Similarly. and financial services. While there appears to be an overall small net positive economic effect of hosting the Olympics. The Arthur Anderson study offers trends that. the idea that the Olympics leads to greater employment because more people are drawn to visit the area and live in the area where the Olympics took place may be misguided and the Olympics actually have a small. the province of Barcelona’s (a subset of Catalonia) employment rate went from 23.6% to 11. ******* ibid.7% from 1986 to ‡‡‡‡‡‡ CREA/Arthur §§§§§§ ibid. Because the models in this study compare autonomous communities within Spain. help fund projects. such as varying levels of increased GDP among construction. However. which likely had a large. In Atlanta. The Arthur Andersen study also describes some of the economic trends that the company discovered about the Atlanta and Barcelona Games. tourism. the Olympics were unable to overpower Georgia’s already struggling economy at the time. which before the Olympics was in an economic downturn. should be seen in this paper’s model results.5-6. Andersen. 14 . financial services or manufacturing industry in Catalonia compared to Madrid AC might be attributable to the Olympics. short-term effect. and a significant change in construction.******* Another possibility for economic stimulation is Spain entering the EU.”6. positive economic impact. the study claims there is a tight labor market.5-‐6.‡‡‡‡‡‡ According to the study. so the city could not maximize potential gains for employment. it is not equal in every industry. the EU effect is held constant. and in turn impact some parts of the construction industry. If the study’s employment numbers are correct. if true. in Barcelona. the study notes that the Olympics and economic activity need to host may have stimulated the economy.
two measure of Gross Domestic Product (GDP)******** and trade openness to best account for all economic indicators. “Glossary. however they are less able to account for countrywide confounding ††††††† CREA/Arthur ‡‡‡‡‡‡‡ James Andersen. Giesecke and Madden use a form of more accurate CGE modeling. Rose.§§§§§§§ yet using only one variable at the country level does not allow for the examination of more specific Olympic economic effects seen at the city level.”5-6. each Olympics Game takes place under different circumstances and larger economic shifts and activities may cover or amplify any potential Olympic effect. which is why I will examine current post-Olympic studies.‡‡‡‡‡‡‡ Rose and Spiegel use a more accurate model. 15 . While Arthur Andersen’s study is helpful in providing a framework with which to gauge results. Australian Board of Statistics. "Modelling the Economic Impacts of the Sydney Olympics in Retrospect. examining population. through post-Olympic analysis.” Australian Board of Statistics. such as the mathematical multiplier. “Economic Impact Study of the Sydney 2000 Olympic Games. tourism and financial services industries. examining trade openness through country level comparison to a candidate country.http://www. Spiegel.nsf/glossary/5220. yet their model derives data from different sources and has to account for difficult to accurately compute data.”: 230. A. A number of authors have created post-Olympic studies using different methods and variables to show the imprecision in economic impact studies and provide a better picture of the relative economic costs and benefits that host cities receive.0 (accessed March 9. ******** Gross Domestic Product: A country’s final output of goods and services produced within a certain timeframe. §§§§§§§ Andrew K." The Economic Journal 121. 2012). As the study shows. 1992. judging four major areas of economic activity.††††††† By holding countrywide effects constant it may be possible that significant employment change exists for the construction. and Mark M. Madden.553 (2011): 664665. Billings and Holladay use a city level comparison model of host cities to finalist cities.au/Ausstats/abs@. "The Olympic Effect*. and John R.gov.abs. Giesceke. it does not detail a model to create and interpret results.
Print. The study also derives data from multiple authors.” Economic inquiry (2011): 1-278. Their study is most comparable to pre-Olympic evaluations because it uses the same modeling methodology to best evaluate predicted and actual benefits. for accurate outcomes. but still requires complicated mathematical calculations. and given data availability. By using the same type of modeling post-Olympics. who might have different data collection and measurement methods. ‡‡‡‡‡‡‡‡ The comparison of the Olympic model to the non-Olympic model allows the authors to compute relative costs and benefits by providing outcomes for all possible scenarios. which makes it more accurate than predictive studies. which makes the data and variable interactions overall less reliable. although they have two scenarios: Sydney hosting the Olympics and Sydney not hosting the Olympics.1 billion for Sydney.230. Giesecke and Madden found a real consumption loss of $2. With such a complicated model there are many ways †††††††† Stephen B. Giesecke and Madden use CGE modeling for a post-Olympic study.†††††††† Because of this. effects. the authors are able to correct for modeling errors such as visitor spending methodology that cause inexactness in CGE models used for the final bid. 16 . §§§§§§§§ Ibid. my model focuses on a variety of state level variables thought to best see effects attributable to the Olympics through a same country comparison. "Should Cities Go for the Gold? The Long-Term Impacts of Hosting the Olympics. They examine whether predicted economic benefit exist for the 2000 Sydney Games by examining Australia and New South Wales state through CGE modeling. Scott Holladay. and likely generates some model inaccuracies. the same type of modeling typically used to conduct economic impact studies. their model requires very precise data measurement that otherwise exacerbates the multiplier.§§§§§§§§ While the authors are able to determine the monetary loss of hosting the Olympics in Sydney. “Modeling the Economic Impacts of the Sydney Olympics in Retrospect?” 230. one of the most important parts of the model. ‡‡‡‡‡‡‡‡ Giesecke and Madden. Billings and J.
(ii) construction of Games facilities and associated ﬁnancing. The variables are ones that “encompasses the four key economic dimensions of the Games: (i) Games operations. ††††††††† Receipts measure customer spend ‡‡‡‡‡‡‡‡‡ Victor Matheson. which is the main measure of a country’s economic growth. or built on a larger size and time scale. ********* Giesecke and Madden. However. “Modeling the Economic Impacts of the Sydney Olympics in Retrospect?” 225. For example. and uses data from different authors. given that almost every study is composed differently. and (iv) spending by foreign visitors in the Games year. Games operations will help measure the receipts and contribution to GDP by the Olympics. While Giesecke and Madden provide a comparison to most economic impact studies by using more accurate post-Olympic CGE modeling. Construction and financing variables help show the direct impact of the Games.”********* Examining four major economic dimensions allows the authors to test seemingly important costs and benefits that will evaluate overall economic effects from a variety of viewpoints. Additionally.”: 2. among others. “Upon Further Review: An Examination of Sporting Event Economic Impact Studies. never to be used again. collection methods for receipts††††††††† are often measured incorrectly because of the “crowding-out” effect. Spending by interstate and foreign visitors shows the effect of the Olympics in GDP from interstate visitors. Olympic facilities were often built solely for the Olympics. albeit in a very complicated model. data can be contaminated and lead to less accurate results. 17 . All of the variables measure the real levels of costs and benefits from the Olympics on the city and country in a financial sense. (iii) spending by interstate visitors in the Games year. Giesecke and Madden’s model uses variables that show the economic impact of the Olympics at both a city and countrywide level.‡‡‡‡‡‡‡‡‡ Overall the variables appear to measure all different aspects of the Olympics at both a city and country level. there could be some level of bias among the variables that could skew outcomes. which likely creates some inaccuracies in their model. their study still requires measuring for the substitution effect.
the authors are able to see the whether the benefits of hosting the Olympics are negligible if the candidate country receives similar benefits. trade openness. therefore bypassing more complicated mathematical modeling required for CGE. By comparing the country of a host city to the country of a candidate city. comparing trade openness at a countrywide level may cover up any effect from host and candidate cities that could be seen through a city level comparison. "The Olympic Effect*. because the country has other big cities and the Olympics is such a small percentage in city.********** Because of this.The authors find that trade openness increases about 20% for each country. Rose and Spiegel use a country-to-country comparison methodology instead of CGE modeling to provide a more relative evaluation for the economic effects of hosting the Olympics. Rose.553 (2011): 664-665. the cost of the Olympics becomes more apparent as well as the amount of benefit received by the host country attributable to the Olympics. Because of this. Unlike Giesceke and Madden. in their model to determine the relative costs and benefits of the Olympics.§§§§§§§§§ Rose and Spiegel show while trade benefits do exist for the country in which the Olympics take place. the authors’ model is more likely to have confounding factors that contribute to the country’s trade openness which are not caused by the Olympics and are likely more related to trade openness. While Rose and Spiegel’s model creates a relative comparison to a candidate country. The authors’ use of Andrew K. §§§§§§§§§ 18 . let alone state or country revenue that it will not be visible. Similarly. they similarly exist in countries with a finalist host city. Rose and Spiegel’s model is based on the country data.664. Rose and Spiegel examine the effects of the Olympics through increasing exports by quantifying the differences in trade openness between finalist and host countries for 1956-2006. ********** Ibid." The Economic Journal 121. Spiegel. and Mark M. Rose and Spiegel use only one variable. it is very possible that the Olympic or candidate city has little overall effect on the results. However.
Additionally. there are different types of economic costs and benefits. trade openness only tests a countrywide indicator. not city level ones that may provide more specific insight into how and what industries the Olympics significantly affect. such as countrywide events that effect one country and the costs or benefits outcome. While trade openness indicates international awareness and legitimacy. In general the model does not appear to be adequate because it is testing only form of economic growth. Billings and J. trade openness shows how active a country is on an international level. While the authors may need to better account for potential confounders in †††††††††† Stephen B. For greater accuracy.”:1-278.†††††††††† Their use of city level comparison provides the most direct picture of real economic costs and benefits relative to a control city. Billings and Holladay use city level comparisons to illustrate the relative economic effects of hosting the Olympics for specific variables. and trade is intimately tied to economic growth and GDP. but not the other. because regional and countrywide confounders are not included in the data. Scott Holladay. which cannot be measured that show a more full picture of the Olympics’ economic impact. One issue comparing host cities to finalist cities is potential confounding effects. but not a citywide scale. Trade openness may show relative costs and benefits attributable to the Olympics on a countrywide scale. "Should Cities Go for the Gold? The Long-Term Impacts of Hosting the Olympics. The authors compare host and candidate cities to test whether the host city gains long-term economic growth attributable to the Olympics. and measured at a countrywide level. which could hide or dilute the effect of the host and control cities. GDP and relative costs and benefits. It is a somewhat indirect way to show economic growth and GDP increase. because it is the only variable. 19 . Confounding effects make the Olympic or finalist city data seem more significant compared to the other. if that is the authors’ intent.
Scott Holladay. their model to produce the most accurate results their use of city level comparison provides the most specific relative comparison model.2.‡‡‡‡‡‡‡‡‡‡ The authors found there was little to no statistical significance between the two groups. comparing host cities and finalists. Stephen B. from the 1970s onwards because of escalating costs and the ability of the International Olympic Committee to further increase costs. The authors test two measures of population. cities to bid away benefits. Real GDP per capita measures the change in total goods and services produced in the country over a certain time span per person in the given population. §§§§§§§§§§ Ibid.”: 1-278. As mentioned in Rose and Spiegel’s model trade openness is another way to measure economic growth and real GDP. Again. Billings and J. Billings and Holladay use variables that are theoretically similar to Giesecke and Madden. which is a way to test if city and country income increased because of hosting. testing both city and country level economic effects. and at a country level with real GDP per capita and trade openness. the variables used all take slightly different approaches in an attempt to form a full picture and understanding of the relative cost and benefits of the Olympics at a city level with population measures. real GDP per capita and trade openness on the city-level.§§§§§§§§§§ The use of population is likely trying to examine either if employment increased significantly because of the Olympics or if more people moved to a city because of an increase in popularity and awareness. "Should Cities Go for the Gold? The Long-Term Impacts of Hosting the Olympics. statistic deemed important by many economists. ‡‡‡‡‡‡‡‡‡‡ 20 .
Giesecke and Madden’s model uses difficult to compute effects such as the mathematical multiplier and uses data from multiple sources. accounting for many different areas where the Olympic effect may be seen. but only use one variable. trade openness. The best model appears to be Billings and Holladay. My model attempts to similarly use a wide variety of variables in a comparative model. my study attempts to provide a greater level of specificity and accuracy. My study will still use comparative analysis instead of CGE modeling for greater precision because there is less chance of model error through the seemingly simplified approach and greater accuracy through relative comparison. Comparing host and same country sister states or regions offers a somewhat precise picture of 21 . I will quantify the economic value of prestige. which may affect their variables. except with comparative states or regions. 4 Methodology While the authors’ studies continually evolve in specificity through comparative modeling and accuracy through greater variable reach to explain the depth of economic effect attributable to the Olympics. the methods of record keeping does not provide the necessary data for city level comparisons. two measures of GDP and trade openness. Rose and Spiegel offer a more specific model through country level comparison of Olympic countries to candidate countries. comparing Olympic cities to finalist cities through population. and financial services to determine if there exists an economic payoff by comparing Olympic cities at the state level to same-country states. infrastructure. to measure the effects of the Olympics. but comparing host cities to same-country sister-cities to hold countrywide effects constant. While the study planned on providing greater specificity in order to produce a more precise evaluation of the Olympic Games’ economic effects through same-country sister city analysis.
edu/pages/docs/2744/1277904942_matheson_events. ††††††††††† Ibid. ************ Aside from intangibles. which are relatively more accurate. http://casgroup. “Mega-events: The Effect of the World’s Biggest Sporting Events On Local.” International Journal of Tourism Research 5 (2003): 433-44.10 ************ Ibid.ac.8-9. I initially chose control cities located in the same country as host cities based upon greatest similarity to host cities at the time of the Olympics in size.1 Methodological Considerations Economic impact studies are predictive and have inherent bias because they are created in favor of hosting the Games. misrepresenting and overestimating many benefits through theoretical and mathematical errors.” College of Holy Cross Faculty Research Series (October 2006): 131. ‡‡‡‡‡‡‡‡‡‡‡ Victor Matheson.††††††††††† Matheson’s work “Mega-events: The Effect of the World’s Biggest Sporting Events On Local. Modeling typically ignores or overstates the substitution effect. but ignore regression analysis that is used for behavior equations.” examines the main effects that the modeling used in impact studies ignores. but more recently economists have been using CGE models. http://people. growth rate. However. Evangelia Kasimati. and *********** Input-‐Output models (I-‐O models) use production and input-‐output tables.§§§§§§§§§§§ especially in already popular tourist destinations. “Economic Aspects and the Summer Olympics: A Review of Related Research. but still have a large number of deficiencies. and National Economies. Regional. §§§§§§§§§§§ Ibid.bath. and National Economies. and incorrectly calculates the effect of expenditures by overestimating the mathematical money multiplier. because countrywide effects are held constant. cities will often not obtain their desired outcome.‡‡‡‡‡‡‡‡‡‡‡ understates or ignores the “crowding-out” effect. the majority of cities describe their reason to host based on urban economic development. such as prestige or personal utility. Olympic impact studies used to be computed by simplistic Input-Output models***********. 22 .pdf. Regional. given modeling inaccuracies and the IOC’s role in bidding. economic effects attributable to the Olympics.pdf. or the potential to increase international awareness. which may offer a more precise model than Billings and Holladay.uk/ecpek/index_files/Paper1. such as substitution and crowding out effects. 4.fiu.442-444.
“Mega-events: The Effect of the World’s Biggest Sporting Events On Local. because the data are not available. The nine-year period is chosen based on the work of Matheson. and the variables still inherently control for countrywide confounders. †††††††††††† See Appendix A ‡‡‡‡‡‡‡‡‡‡‡‡ Victor Matheson.edu/pages/docs/2744/1277904942_matheson_events.fiu. However. an effect due to the Olympics may be visible. the year the Games occurred. which notes the Olympic effect eventually become ambiguous after the Games conclude. tourism and financial services. is still fairly theoretically similar to Giesecke and Madden.‡‡‡‡‡‡‡‡‡‡‡‡ This study’s use of dependent variables. as mentioned earlier. industry. such as Spain entering the EU in 1986. the dependent variables will instead be state or regional comparisons.†††††††††††† However. and four years after the Olympics to best judge both short and long-term effects.pdf. which are the most comparable. http://casgroup. with the aim of capturing any Olympic effects by studying the change and growth in a wide variety of industries. four years before the Olympics. Because the host or sister city is the largest city among the studied area. construction. 23 . The economic effects of the Olympics are evaluated over a nine-year time period. Regional.” College of Holy Cross Faculty Research Series (October 2006): 131. and National Economies. I will compare the states or regions.
even when cities such as Atlanta make up 65 percent of state GDP. change on a state/region level will be even harder to see. and financial services industry growth at a comparative city level.§§§§§§§§§§§§ which may not be enough to see Barcelona’s construction economic impact on the region. for all industries studied in this paper. Hotels.************* Overall. tourism. For example. at the same time Olympic development takes place. Thus. not because of the 10-day Olympic event. In construction. tourism and financial services GDP are in a sense held almost constant because they will similarly impact the industries before and §§§§§§§§§§§§ See ************* Appendix A See Appendix A 24 . Barcelona. compared to the main driving forces of the construction. for instance. restaurants and tourist attractions are constructed and used mostly for tourists visiting the city. If economic growth is hard to see on the city level. as well as financial holdings and investment. makes up 30 percent of Catalonia’s GDP.2 Ideal Data Collection While this paper aims to examine the monetary impact of the Games through the potential increase in construction. As all of the host and sister cities have large economies. However. the largest city in Catalonia. hundreds of other buildings and projects are happening at the same time. and financial services income. and financial services. tourism. If Games related construction is a small part of the city’s construction GDP. tourism. it will be difficult to see changes attributable to the Olympics. the Olympics has a very small impact that may not be visible at a city or state level. any changes attributable to the Olympics may be too small to see. The same idea applies to tourists visiting the city and spending money. the main factors that drive construction. it is likely. factors beyond the Games can also drive growth in construction. 4. the Olympics are only a small proportion of that industry’s GDP relative to other factors and the overall economy.
and move to the city beyond normal growth patterns and trajectories. however. This was later confirmed by a different Spanish economist Jaume Garcia. January 19. 2012. “National Regional Profile: Past and Future Releases. In the Spain. and Australia construction. there was not enough useable data to run complete models for any of the Olympic Games. Because these trends will likely be steady before and after the Games. Ralph Rodriguez. Most people will similarly visit and move to host cities completely independent of the Olympics. email message to the author.au/AUSSTATS/abs@nrp. any small variation in GDP may be due to them. Juame Garcia. which are most similar. tourism or financial services GDP caused by hosting there should be a significant difference between the changes in GDP from host to sister city because the Olympic city should have more people come to visit. after the Olympics. ‡‡‡‡‡‡‡‡‡‡‡‡‡ In an email message to the author on January 19. Levi Perez. January 17. as confirmed by government sources††††††††††††† and independent economists‡‡‡‡‡‡‡‡‡‡‡‡‡ in each country. tourism and financial services data were not available at a city level for any necessary 9-year periods.” Australian Board of Statistics. While city level data is ideal. state level data most similar to city level data is used.gov. as they did before the Games were announced. If there is a true difference in construction. the United States.nsf/Lookup/Past+Future+Issues20062010?OpenDocument&tabname=Past%20Future%20Issues&prodno=LGA17200&issue=20062010&num=&view=&(accessed March 9. §§§§§§§§§§§§§ The Australian Board of Statistics (ABS) confirmed that statistical area data does not exist for the necessary dates. 25 . email message to author.§§§§§§§§§§§§§ Because city level data are not available. A same-country sister city comparison methodology will best show if any change in studied industries is due to the Olympics. However. 2012 Spanish economist Levi Perez confirmed that municipality data likely does not exist for 1988-‐1996. email message to the author. 2012.abs. 2012). based on data availability. Australian Board of Statistics. ††††††††††††† In an email message to the author on January 17. the study will provide state/region proxies. http://www. February 6. 2012 the Bureau of Economic Analysis economist Ralph Rodriguez confirmed that GDP by metropolitan area series only exists from 2001-‐2010.2012. stay for longer periods of time. because other changes are in a sense constant. ideal data will also be described to best understand proxy data shortcomings.
as a longterm effect. they spend money on accommodations. special contractors include contractors hired for specific specialty building tasks. which is why it would be included in construction GDP. 26 . tourism. While tourism is used to explain prestige there are other measures which are also considered prestige. Opportunity cost is money that would have been spent elsewhere if the Games did not occur because the stadiums and facilities built solely for them would not be necessary. eating out at different restaurants. and special contractors’ construction income. When people visit a city to see the Games. and financial services. but it is important to consider because cities could have spent money used for the Olympics elsewhere. aside from money spent on the physical events. gaming. which can be seen through deviation in typical growth trends. the opportunity cost of building the infrastructure solely for Olympic use. Opportunity cost is often overlooked in Olympic economic modeling. it seems likely that if a city increases prestige and therefore awareness from hosting the Olympics. after the event. going ************** Heavy engineering includes highways and other infrastructure. restaurants. Tourism GDP would include income from hotels and other accommodations. there will be a large increase in visitors and tourist expenditures. and infrastructure that would be built regardless of the Olympics. heavy engineering. projects that would have happened are also counted in construction GDP to account for opportunity cost. and tourist attractions. such as trade and the number of new conferences. Construction GDP would include building construction. Thus. However. thus prestige will be narrowly defined as tourism. Data for these ideas do not exist for the necessary years at the state level.************** Within the variable there would be three costs: all infrastructure built solely for the Olympics. but may have been altered or created on an expedited timescale. Additionally. construction GDP may grow because. more people are moving to the host city because of Olympic awareness. Ideal dependent variable data would be aggregated GDP for construction.
the more people employed in the industry. Similarly. the more companies in the business will likely lead to an increase in GDP because the industry is more productive. All of this contributes to the study’s tourism GDP variable that captures spending due to the Olympics. These variables would help paint a picture of the changes in the city’s construction industry GDP. Higher property values may indicate a level of citywide growth and desirability to locate businesses and homes there. to see other events such as plays and local professional sports. as with any change in GDP. Financial services GDP would include income from financial services such as depository institutions and investment offices income. If the Olympics increase the change in tourism GDP. it will be visible through normal growth pattern divergences. hosting the Olympics leads to an increase in awareness and popularity. and visit various visitor sites such as museums and theme parks. thus the banks. as well as spending that would otherwise occur.3 Independent Variable Ideal Data Collection For infrastructure. Financial service is used as a long-term economic impact variable. the number of construction firms in business per year. 4. my predictor variables would ideally be city construction employment rate per year. implying more building starts and an increase 27 . In theory. and possible later on an increase in general growth because more people are moving to the host city and more people are visiting the area. residential construction permits. property values. investment and holding offices will have a significant change in GDP over time aside from usual growth trends. the more buildings and structures they can produce. Construction employment rate and the number of construction firms in business per year both drive construction GDP. Financial services tries to capture the idea that more people are moving into the area and possibly investing in the host city. and non-residential construction permits.
decreasing construction GDP. cities will likely 28 . which affect construction GDP. There are a number of other predictors. Because I am comparing same-country sister cities. restaurants. restaurants and attractions will have something for all types of visitors. there still may be differences between cities that need to be taken into consideration to make an accurate and unbiased comparison. and the number of flights to the city as a final destination. Control variables will hold constant outside effects that cause difference in construction GDP among comparable states due to non-Olympic effects. However. entertainment (amusement parks and tourist attractions) and recreation (sporting and entertainment events). and activities to keep them interested. will be held constant. which show the number of new construction projects for individuals and businesses. in GDP. All of the independent construction variables should show increases or decreases in construction GDP change. my predictor variables would ideally be city level employment and number of firms per year for the hospitality industry (hotels and accommodations). Employment and number of tourist related firms in business per year both raise tourism income because visitors need places to stay. If possible I would hold steady dissimilarities in land and material prices. Since wealthier tourists spend more money. Generally. countrywide factors that would influence construction GDP. A similar. a city with more hotels. For prestige. These variables would help demonstrate the changes in the city’s overall tourism GDP. and need to be held constant to isolate the effects of the chosen predictor variables. number of hotels and occupancy rate per year. such as Spain entering the EU. If they are significantly higher in one city compared to the other there may be a decrease in building and infrastructure creation. restaurants to eat. but more specific measure than property value is residential and nonresidential permits. which would likely effect factors such as construction material prices and trade openness.
number of major cities nearby. These variables would help show the changes in 29 . try to continuously upgrade or build new facilities. which will increase tourism expenditures. However. and number and type of investments made per year. The number of flights arriving in a city per day. To see if an Olympic effect exists for tourism. the number of banks and similar firms in business by year. trading firms. assuming the city is a destination city and not a connection city (for example a large percentage of international and domestic flights connect through Atlanta everyday where Atlanta is not the final destination) is another good indicator of visitors. one city may split the visitor market share because there are other similar popular locations nearby. countrywide factors such as flight prices and ease of travel for other EU member countries caused by Spain entering the EU will affect both Catalonia and Madrid AC and thus will not influence tourism GDP. If possible I would hold steady differences in substitute destinations. including depository and non-depository institutions. Substitute destination and number of major cities nearby are closely related because depending on location. because international and many out of state tourists will fly into the city. All tourism independent variables aim to demonstrate the change in industry GDP and hope to isolate any affects attributable to the Olympics. As previously mentioned. Because hotels are only built when there is need—also reflected by a high occupancy rate—an increase in the number of hotels and accommodations. For the financial services industry. should be reflected by an increasing economic growth rate. my predictor variables would ideally be city level financial services employment. and international banks. Controlling for outside between states not attributable to the Olympics will help isolate the potential Games related impact on tourism expenditures. while the other city dominates their market share. there still may be differences between cities that affect tourism related GDP. I need to control for other major factors that will affect GDP.
30 . Trading firms and hedge funds handle domestic and international investors. the number of investments per year made by individuals and businesses reveals an interest and commitment to economic growth. a city’s financial industry income. As with an increasing number of firms. which shows both domestic and international individual business economic growth. Economic growth drives all other industries such as tourism and construction that use financial services. it is already held constant through same-country comparisons. To isolate an Olympic impact on financial services GDP. and may imply an increased interest in a certain city or the overall state. which is used as a long-term indicator of hosting the Olympics. an increase in employment also indicates positive financial services and overall economic growth. Financial services independent variables should explain growth in financial services GDP. International banks may show the international awareness of a city or state. An increase in banking firms and employment (depository and non-depository institutions) reflects an overall demand from citizens and businesses to hold money. I will control for non-Olympic related effects that impact financial services GDP. Similarly. and increased state awareness at the national and international level. It may be that more people or firms chose to move to/invest in the host city because of the Olympics. The biggest potential difference between cities is economic growth.
Data from 1988-1996 are inflation-adjusted to 1990 Euros for best comparison.§§§§§§§§§§§§§§ adjusted gross added value*************** and adjusted factor income).abs. I will be using proxy data from states/regions.S. 4. Eurostat. “Glossary. ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ In 1990 the Euro did not exist. Similarly in Australia. 31 . For dependent variables in Spain I will use autonomous communities (Catalonia for Barcelona and Madrid AC for Madrid).nsf/glossary/5220. state ‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Also similar to the size of some U.†††††††††††††† In the United States I will study statewide dependent variables (Georgia for Atlanta and North Carolina for Charlotte). http://bea. 2012).eu/statistics_explained/index.au/Ausstats/abs@.0 (accessed March 9. In Spain all of the dependent variables for Catalonia and Madrid AC use 1990 euros‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ as the base year.” Bureau of Economic Analysis. For methodological changes to create the 1990 ‘Euro’ values see Appendix B. states §§§§§§§§§§§§§§ Value added in production by labor and capital within a state. *************** Output minus Intermediate Consumption at purchaser price (accounts for over 90% of GDP). †††††††††††††† In size similar to a large U.4. 2012).ec.http://www.” Australian Board of Statistics.europa.††††††††††††††† the terms GDP and income will be used to represent all different types of industry income.1 Spain Variables Below dependent and independent variables and sources are described for each Olympic Game.cfm?key=Gross%20domestic%20product%20(GDP)%20by%20state (accessed March 9.gov. 4.gov/regional/definitions/nextpage. ††††††††††††††† Equivalent to gross domestic product less taxes plus subsidies on production and imports.” Eurostat.S.http://epp. Australian Board of Statistics. I will examine variable data among state/territories (New South Wales for Sydney and Victoria for Melbourne). 2012).4 Data Collection Because data are not available at the city level. Bureau of Economic Analysis.php/Glossary:Value_added (accessed March 9. “Glossary: Gross Value Added at Market Prices. “Gross Domestic Product (GDP) by State.eurostat.‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Because the dependent variables are measured fairly similarly and all aim to show industry income (GDP.
rental of buildings. The financial variable is the gross added value at market prices of imputed production of bank services. and residential capital. The proxy infrastructure variable for Spain is construction and civil engineering works gross added value at market prices. “Spanish Regional Accounts. Dennis Fixler.do?type=pcaxis&path=/t35/p010/a1996&file=pcaxis. building permits can show growth in construction income.businessdictionary.” OECD Stats.ine.doc.ine. 32 . “Spanish Regional Accounts.v. “Net Capital Stock. 2012). Net capital stock is the sum of the written-‐down values of all the fixed assets still in use is described as the net capital stock.” http://www.” OECD. **************** ***************** Instituto Nacional de Estadistica. total gross investment‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ and total net capital stock for§§§§§§§§§§§§§§§§ construction.§§§§§§§§§§§§§§§ The prestige variable is a gross added value at market prices aggregate of recuperation. s. The predictor variables are new residential building permits.***************** As explained in the ideal data section. Instituto Nacional de Estadistica. †††††††††††††††† Interest receivable minus interest payments. “Gross Investment.es/jaxi/menu. Business Dictionary. which similarly suggests positive growth in the amount of businesses and people coming to the autonomous community for business and travel.do?type=pcaxis&path=/t35/p010/a1996&file=pcaxis (accessed March 9. “Measuring the Services of Commercial Banks in the Nipas: Changes in Concepts and Methods. accommodation.html (accessed March 12. http://stats. beverages.http://www.” Instituto Nacional de Estadistica. OECD Stats.oecd.†††††††††††††††† hereby known as the financial GAV. ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Public and private un-‐depreciated total invest value of business assets in this industry. 2012). hereby known as construction GAV. and tobacco.org/dataoecd/10/13/24333573.asp?ID=1752 (accessed March 9. The construction independent variables for Catalonia and Madrid AC demonstrate changes in construction GAV at the autonomous community level. www.” Instituto Nacional de Estadistica. Investment and capital stock investment imply a long-term commitment to economic growth for individuals and businesses through equipment and new structure creation.**************** repair. §§§§§§§§§§§§§§§ See footnote 57 for explanation of gross added value at market price. trade. 2012).http://www.com/definition/grossinvestment.org/glossary/detail.oecd.es/jaxi/menu. restaurants. foodstuff. engineering.
Investment and capital stock for credit and insurance institutions indicates overall economic stimulation and a long-term trend in growth and productivity for the autonomous community.” Bureau of Economic Analysis. and investment and capital stock for credit and insurance institutions. beverages. Financial independent variables for the autonomous communities of Catalonia and Madrid AC will determine change in financial GAV. 4. adjusted for inflation from 1992-2000 to 1997 US dollars. 33 . 2012). restaurant and related tourism sales which could be caused by an increased in destination viability. Predictor variables are the number of hotel establishments.2 United States Variables In the United States all of the dependent variables for Georgia and North Carolina are measured in real GDP by state. Investment and capital stock aggregated for tourism strongly imply long-term development and growth for major domestic and international tourism industries in hotels. hotels and restaurants. as well as the total gross investment and total net capital stock for food. heavy construction.4. The tourism independent variables for Catalonia and Madrid AC explain growth through change in autonomous community tourism GAV. The infrastructure variable for the United States is general contractors and operative builders.http://bea. As seen in the ideal data section the number of hotel establishments can show increases in tourism GDP change. The predictor variables include number of banks and credit institutions. “Construction. and special trade contractors. As seen in the ideal data section the number of firms can impact growth in financial income. Bureau of Economic Analysis.††††††††††††††††† ††††††††††††††††† Heavy engineering includes highways and infrastructure projects.gov/regional/definitions/nextpage.cfm?key=Construction (accessed March 9. special contractors include specific building projects not included under general contractors. except buildings.
2012). botanical and zoological ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Bureau of Economic Analysis.§§§§§§§§§§§§§§§§§ The independent variables that indicate changes in construction industry GDP are industry employment per year. transit and ground passenger transportation.%20commodity%20contracts. number of firms. and residential permits can indicate economic growth. and the number of hotels and occupancy rates per year. 34 .gov/itable/ (accessed March 9. “Interactive Data. the number of tourism related firms in business per year. securities and commodities brokers. arts. and special trade contractors.” Bureau of Economic Analysis. The independent variables that predict changes in tourism related GDP are tourism industry employment per year. The prestige variable is a real GDP aggregate of air transportation. http://bea.%20invest ments (accessed March 9. Employment and number of firms are based upon data aggregated from: eating and drinking places.” Bureau of Economic Analysis. heavy construction. Industry employment and number of firms includes general contractors and operative builders. spectator sports. except buildings. and accommodations. http://bea. Investments. http://bea. “Interactive Data. the number of construction firms in business per year.2012). and residential building permits.cfm?key=Securities. “Securities. amusement and recreation (performing arts. and lead to an increase in construction GDP. and holding and other investment offices. museums and related services). §§§§§§§§§§§§§§§§§ Bureau of Economic Analysis.****************** As discussed in the ideal data section employment.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ The financial variable is a real GDP aggregate of depository and non-depository institutions. Commodity Contracts. motion pictures. motion pictures.gov/regional/definitions/nextpage. museums.” Bureau of Economic Analysis.gov/itable/. ****************** Bureau of Economic Analysis. amusement and recreation services. hotels and other lodging places.
abs.††††††††††††††††††† The independent construction variables for NSW and Victoria show the change in industry income at the state/territory level through construction employment and dwelling unit ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Ibid. number of hotels and occupancy rates all can show growth or contraction in tourism GDP. “Glossary.” Australian Board of Statistics. 35 .‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ As shown in the ideal data collection. Independent variables that show changes in financial services GDP include financial employment and the number of firms in business per year aggregated from depository and nondepository institutions.nsf/glossary/5220. 4. Board of Statistics. number of firms. ††††††††††††††††††† Ibid.3 Australia Variables In Australia.0 (accessed March 9.4. §§§§§§§§§§§§§§§§§§ Australian Ibid. ******************* Ibid. and holding and other investment offices.au/Ausstats/abs@. employment and number of firms could lead to an increase in that state’s financial services GDP and reflects an overall economic growth among businesses and individuals.§§§§§§§§§§§§§§§§§§ The proxy prestige variable is the total factor income at current prices of accommodation and food services and arts and recreation services******************* by state. 2012). The proxy financial variable is the total factor income at current prices of financial and insurance services.†††††††††††††††††† As seen in the ideal data section employment.http://www. The proxy infrastructure variable is construction total factor income at current prices. gardens. the dependent variables for New South Wales (NSW) and Victoria are measured as total factor income at current prices from 1996-2004.gov. with a base year of 1996.
arts and recreation employment. Increases in employment may indicate an increase in businesses. it is hoped to see if short and long-term economic effects of the Olympics. In Spain. which might cause changes in visitors and firms who move to the Olympic area. By comparing relative changes. which leads to industry growth. and average length of stay at accommodations. exist. which are similar to residential construction permits. Independent tourism variables for NSW and Victoria show changes in industry income at the state/territory level through an aggregate of accommodations and food services. will show changes in tourism GDP. number of hotels. possibly driven by an influx of people moving to the area due to the Olympics. approvals. the United States and Australia all independent variables are used to show growth or contractions in dependent variables’ industry GDP. The average length of stay at accommodation implies people are spending more money in the state because they are staying longer. 36 . as reflected in financial services expenditures. The financial independent variables for Australia explain changes in financial services income through financial and insurance employment. As noted in the ideal data collection employment and construction permits indicate changes in construction income. Employment statistics and the number of hotels. as indicated in ideal data collection.
which. tourism and financial models. it is significantly different from all other years in change in GDP. models and diagnostic tests can be seen in Appendix C. data measurement switching from the SIC to NAICS—some regressions may exhibit influential outliers. if existent will still be visible with multicollinearity. which means the removal of that point will significantly change and normalize results. which will be disregarded based on study aims. Regressions are run on each state for construction. each of these Olympic Games has three types of linear regression models. Each model has a number of potential issues from mathematical changes to model assumptions. Mathematical changes that make data compatible for analysis can be found in Appendix B. the study is looking for an overall change in GDP due to the Olympics. §§§§§§§§§§§§§§§§§§§ Multicollinearity: two predictor variables are very highly correlated 37 . Because measurement adjustments made for the study or through country data systems—such as the U. may lead to autocorrelation—where data are dependent on time and space—which will be overlooked because autocorrelation will not inhibit any effect the Olympics have on change in industry GDP. each model ignores the linear model assumption of multicollinearity§§§§§§§§§§§§§§§§§§§ because while using highly correlated variables will not show the importance of the individual variables. the cases appear to be due to measurement differences and changes. particularly for Spain. sister-state models. Additionally. ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ An example: If the data 1995 Barcelona tourism GDP is an influential outlier.S. necessary mathematical compatibility changes might lead to autocorrelation and multicollinearity. 5 Model and Analysis In this study. meaning it is inherently different from the other data points. In this paper.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Some of these changes. All regression equations. Overall. and then compared to the same-country.
which should have a much larger effect on industries than the Olympics. meaning the predictors completely explain the outcome/ are the same as the outcome. Similarly the overall economic growth trend should be held constant. models with R-squared values above . which perpetuate throughout the country. does not seem logically possible. it is generally accepted that the other states within that country will experience a similar trend. email message to the author. While every variable combination is run in each model. 2012.95 or above R-squared values can be considered an identity and variables used in this study will not explain all of the outcome variables. all major differences between states from economic growth to countrywide effects will be held constant.”5-6. Other model considerations include the type and number of predictor variables.******************** Additionally. which given the variables tested. will be held constant because all states are within the same country. Allen Sanderson. only countrywide effects and variables in the model will be held constant.2012 Allen Sanderson noted models with .†††††††††††††††††††† at the time of their Olympic Game the state of Georgia and Spain are in cycles of economic downtown.95 were not considered because real-world data with numbers that high indicate an identity. †††††††††††††††††††† CREA/Arthur Andersen. Finally. “Economic Impact Study of the Sydney 2000 Olympic Games. As the Arthur Andersen study notes. March 10. Overall. many models will not include all possible variables. ******************** In an email message to the author on March 10. Because of the R-squared values and model comparisons. Effects such as Spain entering the EU. If one state is experiencing stunted or negative economic growth. since data are being compared across models each pair needs to use the same model for true comparison. 38 .
5.1 Model Implications Overview The study’s Olympic model results suggest that the economic effects of the Olympics to create positive economic growth may be a myth. Regressions run to see the economic impact of the Olympics through change in industry GDP unsurprisingly varied for each set of Games; as noted in the history section, while these Games are the most similar, at the same time each Game takes place under unique circumstances. Furthermore, because each set of regressions for the different Olympic Games do not have the same models, the models are not completely comparable. Overall, despite model differences, it appears the 1992 Barcelona Games could have lead to a positive change in construction GDP growth, but all other regressions and models for the Barcelona, Atlanta, and Sydney Games showed no difference or negative growth when compared to control state/region models.
5.2 1992 Barcelona Games Analysis 5.2.1 Spain Construction Spain Construction Catalonia Coefficient Final Model Year 406,197 P-Value (.05) .001 Madrid Coefficient 213,258 P-Value (.05) .031
Residential Construction Permits Adjusted R-squared Value
Catalonia experiences a significantly higher positive change in construction income compared to Madrid that may be attributable to the Olympics. Year, which tracks changes in time, significantly predicts some of the change in construction GDP for both Catalonia and Madrid. For Catalonia, with each year increase, GDP increases by 406,197 euro. Over the course of the model, from 1988 to 1996 GDP will increase by 3,249,576 euro, which accounts for 60.15% of the change in Catalonia’s 1996 GDP. While the effect of individual years cannot be examined due to model issues, overall, year accounts for a significant amount of the change in GDP when adjusted for inflation. If attributable to the Olympics, the GDP change could be due to Olympic building in pre-Olympic years, and increased awareness post-Olympics which may lead to an influx of tourists and people moving to the area, and, necessarily, more construction. Ideally, the model would allow a year-by-year breakdown, to look for specific trends, such as those described above. While year is a significant variable in the model, it must also be compared to Madrid to see if Madrid experiences a similar change, which would imply hosting
the Olympics does not have a significant impact on construction GDP, because both countries experienced similar growth. The corresponding model for Madrid also indicates that year has a significant impact on construction GDP. For every year increase, construction GDP increases by 213,258 euro, which over an eight-year change is 1,706,064 euro, or 32.88% of the change in Madrid’s 1996 GDP. Year account for about 28% more of Catalonia’s amount of change in GDP compared to Madrid’s change, which suggests that over the nine-year span Catalonia has more growth, which, holding countrywide indicators constant, could be due to the Olympics. While a yearly breakdown cannot be assessed, it seems Olympic facility construction, and possibly a rise in firms and people moving to Catalonia as a result of the Olympics, could account for some of the difference in growth. 5.2.2 Spain Tourism Spain Tourism Catalonia Coefficient Final Model Number of Hotel Rooms Total Gross Investment Adjusted R-squared Value 205.78 P-Value (.05) .017 Madrid Coefficient 380.40 P-Value (.05) .000
The number of hotels does not significantly impact Catalonia or Madrid change in tourism GDP growth. The model for Catalonia and Madrid tourism shows that for both regions, the number of hotel rooms explains a significant change in tourism GDP. Models including year were considered an identity of tourism GDP, and will not be considered. When the number of hotel rooms increases by 1%, GDP increases by 205.78 euro. Compared to overall GDP—at its
Similar to Catalonia. or far less than 1% of tourism GDP. or the equivalent of 202 new hotels. §§§§§§§§§§§§§§§§§§§§ Using 250 rooms=1 hotel 42 . hotels. Because hotel rooms explain less than 1% of the amount of change in tourism GDP. However. tourism GDP increases by 380. The number of hotel rooms accounts for a significant change in Madrid’s tourism GDP.§§§§§§§§§§§§§§§§§§§§ hotel rooms account for less than 1% of the amount of change in tourism GDP. it appears that the Olympics did not have an effect on hotel and possibly tourism growth.262 rooms to 271.294 euro. the number of hotels does not account for other major aspects of the tourism industry and results must be interpreted with caution.4 euro. which if one hotel is taken to be 250 rooms is an increase in 1. however. Madrid’s model will be examined to see if hotel rooms have a greater impact on the change in Madrid’s tourism GDP. lowest in 1988 is over 4 million euro—it appears that even a 50% increase in number of rooms (from 181. For a 1% increase in number of hotels. With a 50% increase in 1988 hotels rooms from 33.893 rooms. ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Hotel refers to a general place of accommodation that includes bed and breakfasts. motels. which suggests that the Olympics did not have a visible effect on the change in tourism GDP growth.516 rooms.677 to 50. and other places of accommodations.087 hotels‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡) is only an increase of 10. Madrid did not show that hotels account for some of the change in GDP growth.
or some other reason. but then declines over time.8351 Madrid P-Value (.294 euro. which then leads to a heightened demand for banking services.024 . more people and firms may come to Catalonia because of an increase of popularity. GDP increases by 230.2. which suggests that the effect of banking institutions is very small and can be discounted. Additionally.394 659 . 5. Over the nine-year period studied. Given the banking trends. Over the nine-year period Catalonia GDP increases by 1. it seems highly unlikely to have a more than a 10% increase in number of banks over a nine-year period (676 banks.001 . a 1% increase in the number of banking institutes (69 banking institutions for 1988) increases GDP by 659 euro.811 P-Value (. the results must be compared to Madrid to see the model in a relative context. international awareness. which account for 41% of the change in financial services GDP.3 Spain Financial Services Spain Financial Services Catalonia Coefficient Final Model Year 230. By the end of the nine-year period. A year increase leads to an increase in GDP by 641. Over time. and only a 6590 euro increase). Both year and number of banking institutes are significant variables for Catalonia. implying the Olympics could have hindered Catalonia’s industry growth. Madrid’s model shows year causes a significant amount of change in financial GDP. the number of banks increases by about 1000 at its peak. 43 .811 euro.842. For each year increase.7498 Coefficient 641. However.352 euro.05) .022 Number of Banking Institutions Adjusted R-squared Value The financial services model indicates that Madrid experiences 51% greater change in growth in nine years that Catalonia.05) .
financial services implied that Madrid experience greater growth without hosting the Olympics than Catalonia. Madrid’s much larger growth rate compared to Catalonia as seen by the impact of year on the change in financial services GDP might infer that the Olympics negatively impacted Catalonia’s financial services growth rate.2. no impact on tourism. which indicates the Olympics do not significantly impact the number of hotels. This is 51% more than in Catalonia. Finally. 5. At the same time. and through this a lack of tourism demand growth. Tourism models show no difference between Catalonia and Madrid. which implies that Madrid had a much larger growth rate over this period while not hosting the Olympics. and a negative effect on financial services for Catalonia. thus differences may be due to factors not considered in the scope of the study. the yearly change accounts for 92% of the change in financial services GDP.4 Spain Conclusions The Barcelona Olympics seems to have a positive influence the construction industry. Change in time accounted for about 38% more of the increase in Catalonia’s construction GDP growth than Madrid’s. it seems likely that the Olympics causing people/firms to move into an area and invest in local institutes may be small and therefore difficult to see on a regional level. 44 .
construction models show negligible significance on the change in construction GDP.000 North Carolina Coefficient 176. the U. Even with a 100% increase in permits. As seen by the small coefficient. which might be seen through 45 . any Olympic effect from the change in construction income does not exist.8954 P-Value (. which is vital to the Olympics and would likely explain more change in industry income.3.S. Construction Georgia Coefficient Final Model Number of Residential Permits Adjusted R-squared Value 179. which seems unrealistic for a 9-year period (there was about a 50% increase from 1992-2000). non-residential building is not measured. It appears that based on model constraints and the final model.05) .030 Based upon the narrow variable.3 1996 Atlanta Game Analysis 5.12 . This increase accounts for far less than 1% of change in construction GDP over the studied timeframe. Construction U.36 . residential permits.05) . A 100% increase in the number of construction permits.S. there will be no visible effect on the change in construction GDP. The North Carolina model shows similar results. it does not capture a potential Olympic effect from before the Olympics.S. or is not visible. a 1% increase in number of residential construction permits (499 new permits) produces an increase in GDP by 176 US dollars. still only leads to a 17.9010 P-Value (.900 US dollar increase. a 1% increase in number of residential construction permits (460 new permits for 1996) leads to a 179 US dollar increase in GDP.1 U. Thus. 5. Given that residential building permits only capture the long-term effect caused by people moving to an area overtime.
2 U.4412 P-Value (. there is a corresponding GDP increase of 380. and number of firms (from hotels to amusement industries). there may be better models to judge whether there is a short-term Olympic effect. the model predictor is number of firms.5 . yet the number of employees to create a new firm vary.5 US dollars. Tourism Georgia Coefficient Final Model Number of Firms Adjusted R-squared Value 380.S. While year appeared to have a large effect for both Georgia and North Carolina. However. For a 1% increase in the number of firms (205 new firms). Since the study is looking at changes in tourism GDP. every model with year appeared to be an identity.05) . Tourism U. especially number of hotel rooms. a number of variable changes logically occur over time.001 North Carolina Coefficient 191. employees. Given R-squared constraints and the levels of data. but that does not account for other tourism industries.7850 P-Value (.S. 5. they account for far less than 1% of changes in tourism GDP.3.05) .5 . or when variables are significant. an increasing number of firms (considered an identity). the number of firms should provide the most sensical. A 20% increase in the 46 .030 The number of tourism related firms leads to a insignificant change in industry GDP growth for both Georgia and North Carolina. concrete change. Most models run for Georgia and North Carolina either have R-squared values that imply an identity. or nonresidential construction permits. because an increase in hotel rooms eventually leads to new hotels.********************* While no difference can be seen between Georgia and North Carolina in the long run. and increases in employees will lead to new firms.
05) .232 P-Value (.3. Georgia’s modeling results are similarly mirrored by North Carolina.2% of the growth in Georgia’s financial GDP. Financial Services Georgia Coefficient Final Model Year Number of employees Adjusted R-squared Value .296 -295.9424 506. Based on number of tourism businesses the Olympics did not have any significant impact Georgia’s tourism expenditures. at the same time North Carolina did not experience significant growth by not hosting.9158 P-Value (.232 US dollar increase in Georgia’s financial GDP. Over time. people may choose to invest or move into Georgia as a result of the Atlanta Olympic Games increasing international presence and awareness.5% 47 .140. there is a 17. accounting for 37. which explains 91. 5.000 .S.S.296 US dollar increase in GDP.05) . Over the 9-year timeframe there is a 4.049.3 U. Each year increase leads to a 506.027 North Carolina experiences a significantly larger change in financial services growth over time than Georgia.000 North Carolina Coefficient 2.6 US dollars.368 US dollar increase in GDP. For each year change in North Carolina there is a 2.856 US dollar increase in financial GDP. Financial Services U.140. the GDP increase would still be less than 1% of the change in tourism GDP. For the study timeframe.122. showing no difference between the model.111 firms) would lead to a GDP increase of 456. number of firms (in 1988 4. If the number of firms increases by 100%. where the number of hotel firms also represents less than 1% of the change in tourism GDP.0 .
S. Conclusions Overall. Because the number of employees has such a small impact on change in GDP growth it will be considered insignificant.4 U. the Atlanta Olympics did not appear to create a positive change in economic growth for construction. compared to North Carolina. there is not a significant difference in tourism GDP change based on the number of firms. There are a number of model issues and identity variables. tourism or financial services. which are excluded from models.3% greater increase in financial GDP growth than in Georgia. 5. The lack of differences in construction GDP change due to residential construction permits indicates the Atlanta Games did not bring more firms and people to the area in the long-run. or about 1/10th of a percent decrease in change in GDP growth. For a 1% increase in employees (765 new employees. finally. which is 7 new firms)††††††††††††††††††††† there is a decrease in GDP by 295 dollars. it appears the Olympics may have stunted Georgia’s long-term financial services growth. financial services expenditures appears to be negatively impacted by the Olympics. 48 .451 employees or 765 new firms) there is still only a decrease in GDP by 29.3.500 US dollars. ††††††††††††††††††††† When 100 employees equal 1 new firm. With a 100% increase in employees (76. Overall. While the number of employees in financial services appears significant for North Carolina it is unimportant. and thus did not positively impact on the construction industry. showing the Games did not attract a significant number of new tourism businesses. of the change in financial GDP growth for North Carolina. This is a 54. Similarly.
49 . Because there is not a year-by-year model available.4.927 Victoria P-Value (. 5. pre-and post-Olympic trends cannot be quantified. although it seems construction would heavily increase in the years leading up to the Olympic Games because of facilities and infrastructure projects.927 Australian dollar increase in GDP.05) .05) . A change in year over time predicts 13. For each year increase from 1996 to 2000 there is a 515. and might drop back to normal rates after the Games. which accounts for 23.186 Australian dollars. implying that hosting the Olympics may have had a negative impact on Sydney construction growth.177. construction GDP increases by 522. Over the course of the study there is a 4. which suggest Victoria has a larger growth without hosting the Olympics. when compared to NSW.127.7702 Time series changes in construction income show Victoria has more economic industry growth than NSW.6% of the change in construction GDP growth. Over the course of the 9-year period there is a total increase in GDP of 4.5651 .186 P-Value (.6% more of the growth in Victoria’s construction GDP. Victoria’s construction expenditures indicate a larger change in growth than NSW’s.016 Coefficient 522.012 Number of residential construction permits Adjusted R-squared Value . which explains 37. For each year increase.2% of the change in Victoria’s construction GDP.416 Australian dollars.4 2000 Sydney Olympic Game 5.488 Australian dollar increase in construction GDP due to year.1 Australia Construction Australia Construction NSW Coefficient Final Model Year 515.
indicating a small difference between the regions.032 Australian dollars. every year increase leads to an increase in GDP by 245. had some other negative impact on visitor rates.2 Australia Tourism Australia Tourism NSW Coefficient Final Model Year Average Stay Adjusted R-squared Value .472 Australian dollars. which over the 9-year time period leads to a GDP increase of 1.559 P-Value (.4.007 Coefficient 202. However.559 dollars.6% of the change in GDP growth.966.754 Victoria P-Value (.9% less change in growth in tourism GDP than Victoria indicating the Olympics may have deterred visitors or somehow hindered growth over time.05) .754 Australian dollars.05) . Victoria experiences greater change in growth by 2.620.8812 Sydney experiences 2.9% over the course of nineyears. or 9.035 .7810 245. 5. The GDP change over the 9-year period accounts for 6. or Victoria was able to better capitalize on tourism over time. This indicates that the Olympic year and after the Olympics may have actually deterred visitors from visiting Sydney. A one-year change leads to an increase in GDP by 202. In NSW.7% of the growth in industry income. 50 . which is 1.
If year is a significant variable. which account for 37. If the Olympics lead to a change in growth in financial services GDP it seems likely that it is because of an increase in the number of people moving and investing in an area.399. 51 . The financial services model is already difficult to evaluate for an Olympic effect because it is solely a long-term effect. for NSW. 5. Overall.9573 1.0% over the 9-year study. while a year increase leads to an 845. or 40.820 Victoria P-Value (.870 Australian dollar increase in GDP. variable selection and the aggregate year variable may cover any potential significant differences between the two states.3 Australia Financial Services Australia Financial NSW Coefficient Final Model Year Number of Employees Adjusted R-squared Value .05) .4. which makes interpreting the values unnecessary because of real world constraints that indicate other variables better truly predict the change in financial services GDP.000 . Victoria shows a slightly higher amount of overall growth.05) .820 Australian dollar increase in financial GDP over the 9-year period.000 Coefficient 845. a year increase leads to a 1.9622 The Australian financial model for NSW and Victoria only has two predictors available.7% of the change in NSW’s financial GDP growth.399. which leads to more banking institutions and employees. modeling identity issues. all of which appear to be identities of financial GDP. which combined with the inability of the model to differentiate between year-by-year trends makes it difficult to see whether pre-and post-Olympic tendencies differ.870 P-Value (.
52 . 5. it is not possible to be completely certain that the 1992. overall. the control model accounts for greater change in growth than the Olympic model.4. Only the 1992 Barcelona Olympic Games model indicates a possible positive economic effect due to the Olympics through change in construction GDP. which implies the Olympics do not lead to positive economic change in those industries. prestige and financial growth that many cities vie for when submitting bids to host the Olympics. 1996 and 2000 Olympic Games lead to almost no positive economic growth. 6 Summary and Conclusions Overall the regression models run may show a narrow scope of results. Because there could be some amount of inaccuracy. tourism and financial services. it must be noted that only three industries were studied: construction. and interpretation must proceed with caution. As mentioned in the model and analysis section. However. and in some cases. All other models show that the Olympics does not have a significantly positive impact on the change in industry growth when compared to the control model.4 Australia Conclusions While there are some model identity issues. which try to represent the idea of infrastructure. thus non-economic reasons are ignored. the models indicate that Victoria experiences significantly more growth than NSW for construction and tourism industries. and in some cases hinder growth. there are a number of mathematical and model changes that could be problematic.
and the Olympics have a very small impact. it seems possible that no change exists between cities. all of the Games are not completely comparable. On the whole. it appears the Olympics did not have a positive impact on change in GDP for construction. Additionally. investing in projects other than the Olympics may bring more people to visit and move into the area. and building new facilities such as attractions and schools. With these issues in mind. tourism and financial services growth between states. The Barcelona. combined with potential error due to mathematical changes and variable issues discussed in the model analysis section. all of the financial services models and the Sydney 53 . While the variables have flaws as described above. 7 Policy Implications Policy implications may be limited because of the somewhat narrow scope of the project. 1996 and 2000 Olympic Games. if there is no overall difference in change in construction. Since tourism and financial services are long-term growth indicators. all interpretations must be examined with extreme caution. which means if the Olympics did not lead to that growth (at least through three major industries studied that seem to target economic development) the host cities should have chosen to construct facilities most needed that might lead to substantial economic growth. and pursue other ways to attract more tourist and people to the area such as renovating historic areas. Aside from the Barcelona Games possibly positively impacting the economic change in construction growth for Catalonia. because the variables across Olympic models differ. tourism and financial services for states/regions where the Olympics took place compared to states/regions where the Olympics did not take place for the 1992. Atlanta and Sydney Games were chosen for this study because all of the Games hoped to use the Olympics to achieve economic growth and development. aside from the 1992 Barcelona Games construction.
such as the World Cup or Super Bowl. This seems to confirm that if a city. restaurants and others involved. such as pride. developers. it seems constituents. Overall. and aims to open the eyes of potential bidders. From the analysis results. and hopes to help cities consider their reasons for wanting to host the Olympics and be open with all constituents. the results raise concerns about the economic benefit promised by impact studies to those with a vested monetary interest. showed that the control state/region leads to greater change in industry GDP growth. hotels and those who stand to make a profit (according to economic impact studies) should not take study numbers at face value that promise vast amounts of extra profit garnered by hosting the Games. showing off the city and all it has to offer. the studies greatly amplify the possibilities. while there could be profit for developers. and personal utility. tourism model. while the analysis results provides a red flag to cities considering bidding for the Olympics. and its state/region are hoping for economic growth and development. it does not capture non-economic reasons for hosting the Olympics. 54 . which could be considered the most complete tourism model. such as the fun of being in an Olympic city and watching the Games. the analysis does not account for non-economic reasons to host the Olympics. Additionally. In the end. as seen through the relative comparison between host cities and control cities. The economic impact studies are misleading. pursuing options other than the Olympics may lead to more growth and development. The purpose of this analysis is increase constituents’ awareness to the economic impact and development that can or cannot be expected as a result of hosting the Olympics or other mega-events.
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‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Charlotte makes up 28% of North Carolina’s economy. University of Chicago.§§§§§§§§§§§§§§§§§§§§§§ and although it is much smaller than Atlanta.” Censtats.do?type=pcaxis&path=/t35/p010/a1996&file=pcaxis.§§§§§§§§§§§§§§§§§§§§§ A. http://bea. as well as the largest and most traversed nationally and internationally. both are seen as premier tourist and business cities. “Georgia Demographic Profile 2000.pdf (accessed March 9. Appendix A: Comparison Explanations A. their growth patterns are similar. Atlanta and Charlotte were the largest part of the state’s economy.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Barcelona and Madrid are the biggest cities with their autonomous communities.ine.gov/data/NC/04037.” Censtats. with focuses on manufacturing and education. ********************** Allen Sanderson. http://censtats.gov/data/GA/04013. While Barcelona is 30% of Catalonia’s GDP and Madrid is 65% of Madrid AC’s economy. Chicago.” Instituto Nacional de Estadistica.pdf (accessed March 9.2002. Furthermore.6% growth rate.********************** According to the Bureau of Economic Analysis. §§§§§§§§§§§§§§§§§§§§§§ Ibid. Atlanta makes up 65% of Georgia’s economy.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Additionally. 2012). according to the Instituto Nacional de Stadistica. A. “Interactive Data.http://www. *********************** Ibid.http://censtats.census. accounting for 4% of state GDP. “Olympic Comparisons” (lecture. IL.gov/itable/.2 United States Georgia-‐North Carolina Comparison: Only southern states were considered for comparison given their city characteristics are inherently different from northern cities and states. 2011).†††††††††††††††††††††† with Savannah. November 12. §§§§§§§§§§§§§§§§§§§§§ Ibid. this is the closest match. 58 . “Spanish Regional Accounts.4%.” Bureau of Economic Analysis. ††††††††††††††††††††††† US Government Bureau. from 1990-‐2000 Georgia’s population grew by 26. ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Ibid.††††††††††††††††††††††† similar to North Carolina’s 21. in the earliest year measured. the next largest city area (Durham-‐Chapel Hill) account for 8% of the economy.census.1 Spain Catalonia-‐Madrid Comparison: Of the autonomous communities in Spain the most comparable to Catalonia is Madrid. From 1988-‐1996. †††††††††††††††††††††† Bureau of Economic Analysis. the second largest city.3 Australia ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Instituto Nacional de Estadistica. Catalonia and Madrid had the two largest GDP by autonomous communities in Spain. 2012).es/jaxi/menu. the states have similar industry breakdowns and growth.*********************** Compared to other city/state ratios. health and social services that make them most comparable. ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ US Government Bureau. “North Carolina Demographic Profile 2000.
http://www.pdf (acc essed March 9.abs.nsf/0/CA25687100069892CA256889000E7506/$Filefirstname.lastname@example.org. http://www. 2012).abs.au/ausstats/abs@nrp.§§§§§§§§§§§§§§§§§§§§§§§ The state populations are the two largest among all Australian states.” Australian Board of Statistics.gov.************************ §§§§§§§§§§§§§§§§§§§§§§§ Australian Board of Statistics.nsf/lookup/205Main+Features120062010 (accessed March 9.gov.” Australian Board of Statistics.” Australian Board of Statistics. “National Regional Profile: Melbourne (statistical Division). “2000 Year Book Australia. Sydney and Melbourne are the two largest cities in the country. Australian Board of Statistics. http://www.nsf/lookup/105Main+Features12006-‐2010 (accessed March 9.au/Ausstats/subscriber. “National Regional Profile: Sydney (statistical Division). New South Wales-‐Victoria Comparison: Within the states. they have the most air traffic. 59 . manufacturing and other industries. 2012). 2012). ************************ Australian Board of Statistics.abs. comparable construction.ausstats.
1992 number times average and the 1993 number times average. Multiply by 1986 dollar by 1.2 pesetas=1 US dollar. -’92-’94 Madrid credit institutions: I took the average between each year with a more than 1 bank change.and 1995 numbers. 1986 dollar to 1995 dollar. Convert to 1986 USD.000 off the 1995.1 Spain -Dependent Variables: Originally measured in 1986 pesetas. 1988-1990 trends averaged and applied to the 1990 number to create the 1991 number. then applied to all peseta years to create 1995 base euro for 1988-1996. I then took the average and applied it to the 1993 number to create 1992. Appendix B: Methodological Changes B.1996 numbers each because the overall trend/average trend is otherwise a small increase each time.2 United States -Note: Employment (CBP) and dependent variable data (Bureau of Economic Analysis) changes in 1997 from SIC (Standard Industrial Classification) methodology to NAICS (North American Industry Classification System) 60 . (average=1. 142. the peseta/euro equation average from above was applied to the new euro base to check for accuracy in equations. because one average was applied to each year. and so on to create the 1991 and 1990 value. which may shift on a year-to-year basis compared to the average. To check these values.1994. .38. there will likely be autocorrelation where data shows time/space dependent patterns. The euro/peseta equation was averaged among the two years. 1995 pesetas and 1996 were divided by 1995 euro and 1996 euro. due an unclear change in measurement classification system. -’95-’96 Barcelona hotel rooms drastically change. (Exchange rates based on historic Federal Reserve Bureau numbers tallied by day. if not by the same percentage change difference by year. and found a decreasing trend. I averaged changes between 1993. -’91-’92 Barcelona number of financial institutes. and averaged by months for annual rate). and decreasing hotel rooms by 35. then applied that to the 1995 value to create the 1996 value. 1993-1996 trends averaged and applied to the 1993 number to create the 1992 number.043) B.000 followed the original trend. (See above exchange rate note) Given that 1995 and 1996 euro (base 1995) were available from the INE’s website.66. -1996 dependent tourism numbers did not exist.’90-’92 Madrid house construction orders: I took the average between other years to look for trends. which had a similar trend. Multiply by 124. these numbers were used to determine 1988-1994 numbers for each dependent variable. I took 35. then vice-versa. However. applied 1991 number times average. 1995 dollar to 1995 peseta.
-Dependent variables: Each 1997 dependent variable was measured by both the SIC and NAICS. Using the SIC as base numbers. I applied the difference between the SIC and NAICS 1997 numbers. I took away the subset Insurance and Real Estate sections so the variable would be only financial data. (This change was applied after all numbers were adjusted for a constant year 1997). to the 1998.3 Australia -Dependent Variables: Adjusted to 2000 values 61 . Comparing those numbers showed differences with all data adjusted to 1997. -Data was adjusted… “Many individual NAICS industries correspond directly to industries as defined under the SIC system.” Employment data is similar enough for no changes. B. and I subtracted the Insurance subset from the NAICS numbers to make them comparable. most of the aggregate NAICS grouping do not. -For category differences in SIC and NAICS numbers I took the category called Finance.1999 and 2000 NAICS numbers which puts them in SIC form. Insurance and Real Estate compared to Finance and Insurance.
Appendix C: Regressions C.1 Spain 62 .
C.2 United States 73 .
C.3 Australia 85 .
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