http://www.economist.com/news/briefing/21595428-conspicuous-dazzle-games-masks-country-and-president-deepening-trouble-sochi
The glitz and glamour associated with the olympic games are masking Russia's deep seeded issues. In the article, the author highlights the similar situation Russia was in when it hosted the 1980 Moscow Olympics. While major governmental and social changes have occurred, economically speaking, the country is in a familiar position.
After having modest economic growth in 1980, Russia's regime began to crumble. One of the biggest reasons for the collapse was a reliance on oil and other imports. At that time gas and oil made up roughly 67% of all exports. Today gas and oil make up 75% of Russia's exports. Furthermore, the country lacks domestic production and relies very heavily on imports.
These parallels led the author to conclude that Russia is in a very unstable economic position. How the olympic games will effect them is unknown, but it is known that hosting is more expense than ever. The cost on the country is estimated to be $50 billion.
5 comments:
The Sochi Winter Olympics have already exceeded the costs of the Beijing 2008 by $10 Billion. While they only made a profit of $16 Million. Many concerns of terrorist threats and anti-gay attitudes may affect the participation of some western nations, possibly cutting into their profits.
I highly doubt Russia will even come close to break-in with profits that the Olympics brings in. Christa's article "The Olympics: A Costly Feel-Good Moment" talks about how countries that host the Olympics rarely see economic success. In addition, there are many concerns that will outweigh anyone who doesn't know someone competing from making the trek. Moreover, there have been recent pictures over social media about how unprepared Sochi was for the start: construction still not completed, hotels in disarray, etc.
There is no way that Russia will break even on their $5 billion investment. That is a staggering amount of wealth that could have been used in many other ways to help their countries schools, roads, hospitals, or the poor. While I know that it would be an honor to host the Olympics, it is strange to me that a country in poor economic condition can spend $50 billion to make very little return on investment.
Russia won't be able to make up 50 billion dollars they invested, but i think Olympics is an opportunity to make some changes in Russia. They can revive local business by building accomodations for tourists and improve local infrastructures like roads. I thought World events like World cup, Olympics always bring economic profits to hosting nations...
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