Economic performance seems to be a curiously good predictor of successful Olympic bids

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The latest edition of the Olympics will begin at the end of this week in Rio de Janeiro. The sporting extravaganza will take place against the backdrop of a deep economic crisis. The International Monetary Fund expects the Brazilian economy to shrink for the second year in a row. Inflation is close to double digits. The sharp decline in the Brazilian currency means that the dollar value of its economy has fallen by nearly a third since 2014.
All this is in striking contrast with the situation when Brazil won the bid to host the 2016 Olympics nearly a decade ago. This Latin American country was one of the stars of the global economy, not only for its rapid growth but also the way it had used government spending to tackle inequality. The Rio Olympics would have been an opportunity to showcase Brazilian economic success.
Economic performance seems to be a curiously good predictor of successful Olympic bids. Several countries other than Brazil have previously used the Olympic Games as an opportunity to signal their economic success to the rest of the world. One of the best examples of this was the Tokyo Olympics, which Japan used to both advertise its economic resurgence as well as tell the world that it had left behind its recent militaristic past.
“The autumn of 1964, when the Olympics came to Tokyo, was to be the greatest ceremonial celebration of Japan’s peaceful, post-war democratic revival. No longer a defeated nation in disgrace, Japan was respectable now. After years of feverish construction, of highways and stadiums, hotels, sewers, overhead railways, and subway lines, Tokyo was ready to receive the world with a grand display of love, peace, and sports,” writes Ian Buruma in his 2003 book on the rise of Japan, Inventing Japan: From Empire to Economic Miracle.
China did very much the same thing when it hosted the 2008 Olympics in Beijing. It was a statement that it had arrived on the world stage. Everything from the magnificent Bird’s Nest stadium where the opening ceremony was held to the super-fast trains to carry football fans from Beijing to Tianjin to the calls to citizens to make visitors feel welcome in their city was part of a bigger attempt to showcase Chinese economic success. It was the same story in Seoul in 1988, just as South Korea was ready to join the league of rich nations.
In fact, there has been an interesting pattern to Olympic bids after World War II. As I had pointed out in a column written before the Beijing Games, economic resurgence and hosting the Olympics seem to go together. The astonishing database of global incomes since the dawn of the common era that was built by economic historian Angus Maddison is a good place to see what has happened.
Most countries have hosted their first post-war Olympics when their per capita income in terms of purchasing power parity (PPP) was between $4,000 and $8,000, in terms of 1990 dollars. This is not restricted to developing countries alone (see table).
There is also a parallel Olympics curse, of some countries tumbling into an economic crisis around a decade after hosting an Olympics. Look at the South Korean economic crisis in 1997, the Greek meltdown after 2008, the collapse of the Soviet Union in 1991 and the current economic travails in Brazil. Some bears may even say that China will be brought down by this affliction in a couple of years, a decade after its coming-out party in 2008.
That brings us to an interesting question. When should India host its first Olympics? India has already reached the Olympic zone in terms of its per capita income in PPP dollars (even though the IMF estimates of PPP incomes are not strictly comparable to the Maddison estimates that end in the year 2010; the IMF uses current dollars while Maddison used 1990 dollars). India’s average PPP income is now $6,162, going by IMF data. Tokyo has already won the rights to host the 2020 tournament.
The winning bid for the next edition in 2024 is to be decided in September 2017, or just a little more than a year from now.
Should India throw its hat into the ring? India already makes the grade if one goes by its current per capita PPP income. It could very well cross the $10,000 mark by 2024 if it maintains its current rate of economic expansion. In other words, going by only economic indicators, India could be well placed to bid for the 2024 Olympics, as long as it does not allow the economy to go down the road that Brazil unfortunately took. And such a bid will be beautifully timed with two important political milestones. India will complete 75 years as an independent country in 2022. And it will begin celebrating its 75th year as an independent republic 2024.

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