AN ASSESSMENT OF THE ECONOMIC IMPACT OF THE 2012 OLYMPICS IN LONDON
A country has to overcome numerous challenges posed by the IOC or the International Olympic Committee to win the much envied right to host the world’s most lucrative sporting event, the Olympics (Kavetsos and Szymanski, 2010, p. 162). The process is in essence a critical process incorporating several rounds and stages of voting (Prayag, Hosany, Nunko. and Alders, 2013, p. 632). As such, the city of London started bidding for the opportunity to host the international event in 2003 and was granted the privilege seven years before the event actually began (Oxford Economics, 2012). The city of London had to prove over and beyond that it had the social and political goodwill to successfully host the event. Its overall infrastructure, proposed Olympic village, sporting venues, accommodation facilities, natural environment, security parameter, finances, transport system and legacy all had to appease to the IOC (Oxford Economics, 2012). The Olympic Games is in essence a sporting event with an unrivalled magnitude and as such, presents a vastly significant economic impact not only on the host city but to the host country as well (Prayag, Hosany, Nunko. and Alders, 2013, p. 632). This paper seeks to present an assessment on the economic impact realized by the UK for successfully hosting the 2012 London Olympics.
The UK economy as well as those of its constituent nations as well as regions indeed experienced a considerable boost from successfully hosting the 2012 London Olympics as well as the Paralympics Games (Prayag, Hosany, Nunko. and Alders, 2013, p. 634). The construction activities associated with the London 2012 games not only contributed to the UK’s GDP but also increased employment considerably. An estimate of the overall building costs can serve to present the contributions this had on the overall UK economy (Kavetsos, 2012, p. 1460). Data from the Olympic Delivery Authority will be critical towards offering accurate information concerning Olympic Park construction project expenditures (Oxford Economics, 2012). These Olympic Parks include the international Broadcast Center, the Athlete’s Village as well as the different competition venues. There were also a number of different Olympic Games associated construction projects like the Arcelor Mittal Orbit observation tower and the Westfield Shopping complex (Kavetsos, 2012, p. 1460).
It is estimated that the total expenditures on the London Olympics related construction projects from 2005 to 2017 stand at about 12 billion pounds relative to 2012 price indexes (Oxford Economics, 2012). These expenditures have benefited companies from all UK nations as well as regions. It is known that the ODA went on to award more than 800 companies construction contracts such that 7 of the 12 UK nations witnessed their firms receiving about 5% and above of construction project contracts (Oxford Economics, 2012). More so, the construction projects prior to and after the games are estimated to contribute more than 4.5 billion pounds to the UK’s overall GDP. It is important to point out that 70% of this GDP contribution occurred prior to the Games while the remainder also contributed to GDP relative to legacy builds (Oxford Economics, 2012; Weed, 2014, p. 105).
It is critical to analyze the multiplier effects associated with the construction projects. It is estimated that the multiplier effects indeed added about 5.8 billion pounds to the UK’s GDP from such activities as inputs procurement for goods and services relative to the supply chains exhibited by various construction oriented firms (Oxford Economics, 2012; Kavetsos, 2012, p. 1460). On the same note, the number of UK residents employed in the numerous construction projects as well as the associated supply chains contributed about 3.3 billion pounds to the UK economy by reason of their individual spending habits (Oxford Economics, 2012). While relying on the 2012 price indexes, the construction activity related to the London 2012 Olympic Games will in totality contribute more than 13.5 billion pounds to the overall UK GDP (Oxford Economics, 2012).
It is also important to point out that the total growth in GDP as a result of the 2012 London Olympic Games involves indirect, direct as well as induced effects. These are supported by the different phases of construction work before and after the Games and its subsequent legacy build (Weed, 2014, p. 107). For instance, site preparations as well as related infrastructure added more than 2.3 billion pounds to the overall GDP of the UK regions and nations (Oxford Economics, 2012; Kavetsos, 2012, p. 1460). On the same note, about 1.3 billion dollars added to the UK’s GDP resulted from the construction projects associated with competiti