The Olympics and Infrastructure Development: Does it Last?

All eyes will be on Rio in the coming weeks as the 2016 Summer Olympic Games get underway with the Opening Ceremonies taking place tonight. While there have been numerous reports of facilities that are either incomplete or in disrepair, the games will go on, and Brazil is hoping that the Games will help give its economy a much needed boost. While officials have stated that all construction and infrastructure projects will be ready in time for the games and the influx of tourists they are hoping for, but with less than a week before the Opening Ceremonies, Rio officials are working under a tight deadline, and even if all projects are not ready in time for the Games, Brazilian officials hope that the improvements to the nation’s infrastructure will pay dividends down the road… But will they?

Like Beijing and Sochi before it, Rio is using the games to invest heavily in public works projects that, in theory, will help improve the city years after this year’s Closing Ceremonies later this summer. China, in particular, was praised for the development and investment that it made in its Summer Olympic Games in 2008, while Sochi has seen much less of a lasting impact. If one judges the infrastructure improvements developing or emerging markets make in preparation for a global event such as the Olympics, data from the GBTA Foundation’s latest Global BTI Outlook – Annual Global Report and Forecast indicates that event-driven projects do not always live up to their billing in years following the Olympics.

According to The World Economic Forum’s Global Competitiveness Report, China ranks 51^st in overall infrastructure, Russia ranks 64^th and Brazil ranks 123^rd. While all three of these nations fall outside of the top 50 in terms of the quality of their infrastructure, both China and Russia do comparatively better with respect to their railroad infrastructure. When it comes to roads, Brazil and Russia both score close to the bottom – at 121 and 123, respectively – while China ranks 42^nd.

Clearly one event – even a massive one like the Summer Olympics – will not propel a country’s infrastructure from 123^rd into the top 10. If, however, there can be enough of an improvement to make travel throughout a country safer and more convenient for both leisure and business travelers, then that is a benefit of hosting the Olympics that will help a host nation for years to come. Considering the majority of the travel to Rio for the Olympics will be leisure in focus, it is hard to tell if it will lead to a great impact on future business travel, but given Brazil’s recent struggles, having even marginal improvements to their infrastructure could help them attract more travelers and generate more economic activity.