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Of all the impacts of a bid that will be discussed in the remainder of this chapter, the area with most coverage in the literature is that of the economic benefits of bidding. It should be noted, however, that much of this research is not directly aiming to measure the economic benefits of bidding; rather, cities and nations with failed Olympic bids are often used as the control group to measure the actual impacts of hosting an event. The result of this approach is that there is a breadth of research providing information on the economic benefits of an Olympic bid. Given the nature of the economic data available to researchers, this has typically been directed towards the macroeconomic benefits, as it is rare for researchers to have specific economic information on individual cities.

The key, and most discussed paper regarding the economic impacts of Olympic bids is that written by Rose and Spiegel (2011). This research argued that bidding to host an Olympic Games acts as a ‘costly signal’ to other nations that a country is liberalising, and therefore open and willing to trade. The Olympic bid is appropriate to this, as the costs involved in bidding, and indeed in potentially hosting, are large enough to deter governments who are not liberalising from bidding. Rose and Spiegel found that cities involved in an Olympic bid saw exports rise significantly, and for a sustained period of time.

Indeed, Rose and Spiegel observed that the exports of all bidders increased, whether the bid was successful or not, and argued that it is the bid process that leads to increased exports, and not the hosting.

These results were supported by Demir et al. (2015), whose study found that failed bidders saw an increase in exports at a similar rate to hosts. However, Rose and Spiegel’s findings have been contested by Maennig and Richter (2012), and Matheson (2012), who argue that the results derive from selection bias. This is due to the fact that those nations who bid for Olympic Games are typically larger nations who are already leading exporters and are likely to experience trade growth anyway (Matheson, 2012). When Maennig and Richter (2012) controlled for this factor, they found that bid nations, no matter their economic state, typically did not experience an increase in exports.

Gains in trade are not the only economic benefit that can be gained from a failed Olympic bid. Brückner and Pappa (2011) found that a number of economic indicators all improve during the bid period, including output, private investment, and private consumption; however, this economic improvement did not continue once the bid had been lost. These initial economic gains are likely to have come about due to the private investment that a bid receives, which is then lost when the bid is unsuccessful (Brückner and Pappa, 2011).

A second study by Brückner and Pappa (2015) further investigated the impact that bidding for an Olympic Games has on an economy. Again, it was found that an Olympic bid has a significant impact upon an economy, as output and investment rises dramatically. However, as with the first study, Brückner and

Pappa found that there was little lasting impact on the economy. These results have been questioned by Langer et al. (2018), again due to selection bias.

While Brückner and Pappa (2011; 2015) found that there is little economic impact following a bid decision, research has investigated the impact of the decision itself. Mirman and Sharma (2010) studied the reaction of the stock market following Olympic host announcements. It was found that there is a stock market growth for all countries involved in the bid, whether the country wins the bid or not. However, Martins and Serra (2011) found that the day after the host was announced, there was a positive stock market reaction to the winner but a negative reaction to losing bidders. A similar study was conducted by Charles and Darné (2016), but this time the study investigated stock market reactions to World Cup host announcements. In this research, it was found that the stock market reacted negatively to losing bids in Morocco and Egypt.

It should be noted that these are two developing African nations, reinforcing Cornelissen’s (2004b) assertion that developing nations need to take particular care when considering whether a decision to bid is correct or not.

Indeed, Dowse and Fletcher (2018) take this further, questioning whether event owners have an ethical obligation not to award mega-events to developing nations.

The literature regarding the macroeconomic benefits of an Olympic bid have largely suggested that there may be benefits during the bid period itself, yet these dissipate once the bid is over. This echoes the idea of a ‘pregnancy period’, as discussed in Chapter 2; if a nation wishes to benefit economically from an Olympic bid, it needs to act during the bid process itself.

As demonstrated, much of the research regarding the economic benefits of an Olympic bid have been on a macro level. Kirby et al. (2018) do consider the bid phase in their study of how a mega-event can be leveraged to benefit micro and small businesses (MSBs). Drawing on Chalip’s (2004) model of event-leverage, Kirby et al. (2018) include a ‘bidding and selection phase’ during which MSBs should seek involvement from the start as this increases the opportunities of being a stakeholder in the event itself. However, it is recognised that MSBs may play a role in generating support for the bid, and therefore the bid committee should seek the engagement of MSBs at the earliest opportunity (Kirby et al., 2018). This could be accomplished through the creation of business networks, in a similar way to that identified by O’Brien (2006).

Much of the research has typically only considered the legacies of Olympic bids, and many of these impacts appear to be unplanned. Aside from the study of Kirby et al. (2018), no other papers have directly considered how bidders can actively leverage an Olympic bid for economic benefits (and the study by Kirby et al. does not consider the bid as an entity in itself; many of the managerial implications assume that the bid will be successful). It is entirely plausible, that if a nation sought to employ strategies specifically designed to use a bid to boost an economy, that the economic benefits may be felt beyond the period of the bid itself, regardless of its success.