Free Essay About An Assessment Of The Economic Impact Of The 2012 Olympics On London
An assessment of the economic impact of the 2012 Olympics on London
In July 2005, the IOC (the International Olympic Committee), voted to award the rights to the 2012 Olympics to London. This announcement was the culmination of a bid placed by the Organizing Committee for these games, under the stewardship of Lord Sebastian Coe (Oxford Economics, 2012, pp. 5-38). Founded by Baron de Coubertin in 1896, the Olympics take place every four years and are singularly the world’s largest sporting event (Horne & Whannel, 2012, p. 12). This announcement thus gave the city a 7-year window in which to prepare to host the world. Consequently, London was able to host what is considered arguably the most successful Olympics event in modern history (Thornton, 2013, p. 23). The impact of these games on the city is an area that has elicited a great interest, resulting in a lot of research by various scholars. This research has mainly focused on the economic consequences that came about because of the games, from the announcement in July 2005, throughout the games and in the aftermath. This paper assesses the economic impact of these games on London, particularly on the transport, labor, housing, retail, and tourism sectors.
The Impact on the Transport system
For a long time, London’s transport system was seen as the city’s Achilles heel in as far as successful hosting of the games would go (Blitz, 2012, pp. 1-5).The IOC had raised concern that much of the London transport system while extensive, was rather obsolete. In order to address these concerns, the Olympic Transport Authority was created (James & Osborn, 2011, pp. 410-429). This would specifically oversee transport matters throughout the games. This Authority was subsequently established in 2006, and it was charged with building transport facilities, organizing transport arrangements both to and from events, developing an Olympic Route Network, overseeing closure of roads and restrictions plus guidance on plan implementation. A budget of 17 billion pounds was allocated in order to cater for transport (London 2012 and the Transport Legacy, 2013). The Authority came up with a plan in which it indicated that it would improve and ensure that the 12 different services that serve the area around the Olympic Park. The transport system was revamped, in order to prioritize the athletes. According to the Transport for London estimates given in September 2012 after the games, the amount spent on the transport improvements in the Olympic Park region and around London city amounted to 6.5 billion pounds (London 2012 and the Transport Legacy, 2013). In addition, a sum of 200 million pounds was incurred on initiatives such as the Travel Demand Management Programme and the Olympic Route Network (ORN), which was a temporary road program for the duration of the games (London 2012 and the Transport Legacy, 2013). Reliability measures such as the preventative maintenance done on the tube as well as the establishment of rapid response teams for addressing issues on the tube Transport for London an estimated 19 million pounds (London 2012 and the Transport Legacy, 2013). The TfL also introduced a freight management program for adjustments of deliveries made via road freight. This program was estimated to have cost 4 million pounds (London 2012 and the Transport Legacy, 2013).
Impact on the Labor Market
The economic impact of the London 2012 games on the labor market can be assessed from various perspectives. One of these is the impact on the skill level of employees. This refers to how various people working in different sectors of the economy have developed or improved their skills as a direct result of these games (Oxford Economics, 2012, pp. 5-38). This improvement in skill then enables them to earn more money, which is the measurable aspect of the economic impact. Prior to the Olympic Games, the body established and mandated to oversee the games, the Olympic Development Authority was engaged in providing support and training (Oxford Economics, 2012, pp. 5-38). The Authority gave support to more than 4000 workers, operating mainly in the construction sector before the games started. This puts them in a position to earn more money. For individuals, having better skills also put them in a more favorable position in terms of securing employment. For the London economy, potential employers obtained a pool of better-qualified workers to choose from, and the better skills of these employees boosted productivity and hence profitability. The construction training was estimated to provide a wage premium at an average of 7.5% for the workers who obtained the highest qualifications (Oxford Economics, 2012, pp. 5-38). The probability of these employees obtaining employment also rose by 2.8%. Consequently, this resulted in the Net Present Value increase of 504 million pounds (Oxford Economics, 2012, pp. 5-38).
The second aspect is on the reduction in unemployment of workers. The London 2012 Olympics created many jobs in London and hence, helped to slash unemployment. The majority of these jobs were created in the construction sector. As at April of 2011, which was the peak period for construction during the London Games, there were 12,300 workers employed in the construction of the Olympic Park and Village (Oxford Economics, 2012, pp. 5-38). However, resultant jobs were also created from the supply chain of this construction industry. However, these benefits did not stop at the end of the construction period. This is especially so for the people who were unemployed prior to this period. It was established that of the employees who had found work in the construction industry; 3000 had previously been unemployed. This employment has helped to guard against the employment scar that results from the employees not having been employed before. This is estimated at 121 million pounds in actual figures (Oxford Economics, 2012).
Impact on the Housing Market
The assessment or evaluation of the economic impact on the housing market can be done in terms of the impact the construction of the house used in the Olympic Games has had. This is more so the impact on the poor people and the decent housing made affordable by the construction boom. Estimates indicated that over a third of the new houses that were constructed would be allocated to people who were doing less well financially (Oxford Economics, 2012, pp. 5-38). Poor housing has adverse effects on people who live there. Some of these effects are health related such as cancer, the increased risk of accidents and diabetes (Weed, 2010, pp. 1205-1206). Other effects include a limitation on educational achievement as well as an increased risk of engaging in crime. Thus, the spending of these people on such matters as health is reduced. The number of new houses constructed because of these games totaled to 3850 (Oxford Economics, 2012, pp. 5-38). The new and affordable homes that the poor families are expected to move into had quantifiable benefits assessed on improved health care, fewer working hours lost, and reduced criminal activity. The economic benefits of the shift into these houses amounted to between 50 and 130 million annually. Just like the houses, these are benefits that are expected to last for long, with 20-year projections showing flows of between 0.8 and 2 billion pounds (Oxford Economics, 2012).
The Impact on the Retail Sector
According to estimates, the quantifiable financial impact of the London Olympics amounted to around 561 million pounds (Centre for Retail Research, Nottingham UK, 2012). A large segment of this sum was left in London and was the result of shopping trips by the many tourists who streamed into the city for the games. These economic benefits came mainly from spending on souvenirs and from celebrations, including parties and alcohol. The control exercised over the use of the Olympic logo and the sale of mascots by the IOC somehow limited the amounts raised (Centre for Retail Research, Nottingham UK, 2012). However, about 70 million pounds worth of memorabilia was still projected to have been sold. A further 41 million pounds worth of books and games, as well as DVD’s based on these games was also estimated to have been obtained (Centre for Retail Research, Nottingham UK, 2012). Food, parties, and alcohol for the sports fanatics whose teams were doing well also amounted to a significant sum.
Another area where the retail industry benefited greatly was in shopping. Thanks to the UK government’s relaxation of trade laws on Sundays, there was an estimated increase in spending of 189.8 million pounds (Centre for Retail Research, Nottingham UK, 2012). Two areas benefitted the most from this, and these were clothes stores and food stores. The clothing stores were projected to have earned an extra 39.8 million pounds over the duration of the games. Food stores, on the other hand, saw an increment in sales of around 61 million pounds over the same period (Centre for Retail Research, Nottingham UK, 2012).
The Impact on the Tourism Sector
Projections before the Games kicked off had estimated that an estimated 10 million foreign and local people would attend the Olympic Games in London. This influx of tourism was seen to have five major impacts in the years before the event. First, there was an annual increase in local travel, and this hit a peak in the year when the games were held (Matthewman, Kamel, & Bearne, 2009, p. 35). The second impact was that there were above 18 million visitors attending the Cultural Olympiad events commemorating the London Games. The Olympic Torch also brought increased revenue, due to the people who followed it along its route. Another pre-games impact was the increased revenue from athlete in the camps held before the games. Some international arrivals were also expected to be displaced due to concerns over the infrastructural capability.
During the games themselves, there were an estimated combined total of 45,500 athletes, officials, and accredited journalists who had travelled to London (Thornton, 2013, p. 15). An overwhelming majority, 95%, were foreign. In addition to these people, there were spectators coming from all parts of the world to cheer on their countries. Although ticket sales figures by nationality were not available, there were 1 million tickets allocated to national associations. The amounts from ticket sales can be used to project the number of tourists, both foreign and domestic, who visited London (Oxford Economics, 2012, pp. 5-38).
The economic impact of these tourists is not limited to this. Due to the marketing of London by these games, an additional 10.8 million tourists were projected to visit the UK between the 2005-2017 periods. This resulted in the tourist spending of an extra 1.7 billion pounds. A large proportion or percentage of this sum will go to the London economy since this is the major entry point for tourists (Oxford Economics, 2012, pp. 5-38).
Hence, it is evident that the London 2012 games benefitted the City largely. From the boost to the construction sector to the reduction in unemployment, gains have been witnessed. A key sector, transport, which was a nagging problem before the Games also benefitted in a big way (London 2012 and the Transport Legacy, 2013). Though it is not possible to give an exact projection of the economic benefit, it is evident from the projections and estimates that London benefitted, and continues to benefit from hosting these games. Key to these benefits was the re-use of the infrastructure developed for the Games such as the houses. This economic boost has played a key role in the continued growth of London.
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