What is the impact of Olympic Games on Poverty?

At a first glance, the benefits of the Olympic Games and other mega sporting events seem to outweigh the drawbacks. Economic growth, infrastructure legacies, and image promotion are among the top benefits of hosting the Games.

For instance, as seen in this article, from October 1986 to July 1992, the general rate of unemployment fell from 18.4% to 9.6% in the host city of the 1992 Olympic Games, Barcelona.

In South Africa, Poverty reduction strategies associated with the 2010 FIFA World Cup included a commitment to construct facilities in disadvantaged areas, job creation, provision of affordable housing, small business support, provision of an integrated transport system and community consultation.

An investment of $2 billion was made in Olympic-related projects between the 1990 Olympic announcement and spring 1996 to Atlanta, the host city of the 1996 Olympic Games, a region where 30% of the population lived below the poverty line according to this study. As a result, over 580 000 new jobs were created in the region between 1991 and 1997.

Nevertheless, the existing literature does not offer much evidence that hosting mega events has a direct effect on poverty reduction; on the contrary, the use of mega sporting events to achieve social goals for socially excluded groups is heavily contested, as this article demonstrates.

The 1996 Atlanta Games serve as an illuminating case of the negative social impacts of a mega-sporting event. Between 1990 and 1995, 9500 units of affordable housing were lost, and $350 million in public funds was diverted from low-income housing, social services, and other support services for homeless and poor people to Olympic preparation during the same period.

In Sydney, in 1998, when the Olympic-related infrastructure was at its peak, house prices rose 7% above inflation, compared to the usual 2%, according to studies. Moreover, in Sydney’s Olympic corridor, an area which was primarily occupied by low-income tenants and where unemployment was as high as 38%, rents increased up to 23% in the period 1997-1998, as shown in this PDF.

The book “Inside the Olympic Industry: Power, Politics, and Activism”, available at this link, gives further details regarding the Australian situation.

Brazil hosted the Summer Olympic Games in 2016 and, with the Games over, Brazilians were asking “what now?“. “The Olympics were fun, but it was a sideshow” said Flavio Mattos, a 37-year-old fitness instructor from Rio who was interviewed by Fortune. “We now have real problems to fix“.

There is plenty of evidence for critics to say that the mega-event caused more harm than good: massive spending on stadiums at a time when the government could barely afford wages for doctors and teachers, a huge security presence that protected rich foreigners at the expense of poor residents and massive inequality between the £700 a day payments to International Olympic Committee executives and the £10 a day earnings of cleaners in the Olympic village, as this article shows.

Students say the Games could have led to investment in poor communities, but they instead exhausted Brazil’s development reserves. Lucas Rodrigues Alves, from Escola Superior de Marketing e Propaganda in Rio de Janeiro, said in an interview: “I see the millions and billions spent on overpriced Olympics construction, which should be spent on education, health and projects for people of the favelas to have opportunities to grow and participate in the development of the whole city”.

Michel Silva, a journalist from Rocinha, Brazil’s largest favela, has the same opinion: “A huge amount of public money was spent on the 2014 World Cup in Brazil, and although sport can be a tool for social inclusion, what we really need is investment in education, health, security and many other things”, said in an interview with The Guardian.

In addition to the missed investments for poor people, the latter also experienced intimidation, violence and lighting evictions from local police agents.
The modernist city doesn’t have space for the poor”, affirmed Clarisse Cunha Linke, Brazil Country Director of the Institute for Transportation and Development Policy (ITDP), in an interview.
As people from the favelas said in an interview conducted by Al Jazeera, “One of the times they tried to remove us, long before the Olympics, we were given the justification that we are a visual aggression. We are ugly. Poverty is an ‘aesthetic damage’ to the area“.

When asked whether the Olympic games were having an impact on poor communities, Simon Worrall, National Geographic said: “The change I was seeing was superficial. The face of the city was changing but not the faces of the people who gained from these processes. Time and time again, when I looked at big infrastructure projects, what I saw was that the people who had always benefitted in Brazil – the wealthy parts of town, the big development companies – were the ones who would benefit from what was being put in place. The Olympic plans were laid out in such a way that the people who were already wealthy became wealthier and the people who were already on the margins, like the favelas, were pushed further to the margins“. More information can be found at this link.

Moreover, as we can see from an article of The Economist about a Book written by Andrew Zimbalist, the revenue from the summer Olympics was not equally distributed between the International Olympic Committee and the Local Organizing Committee.

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In conclusion, it appears that Olympic games are negatively correlated with Poverty Reduction and positively correlated with Inequality within the city which hosts the Games.
It seems right to wonder, then, how a well-grounded programme of urban development (initiated well before the event) could take root and be sustained well into the future, with multiple spin-offs for all city dwellers, in particular the poor and marginalised.

People rising out of poverty need more than short-term economic gains to truly leave poverty behind.
Cities can adopt an equitable development model for urban planning, which ensures that all city residents have a chance to benefit from major sporting events.
For example, the 2012 London Olympic Games included a proposal to turn the Olympic Village into 6,000 units of affordable housing.
According to this article by Stanford University, if we change the approach to development, large sporting events like the Olympics can reduce, rather than drive, inequality.

Matteo Grosso, 3610

Master in Management

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