The main objective of this study was to examine the existing economic impact studies on London 2012 after understanding the shortcomings of traditional methods and exploring advanced approaches.
In a first step this work has therefore focused on basic economic frameworks, namely Leontief’s IOA and the CBA, which have long been used in the event impact evaluations (Levy & Berger, 2013; Preuss, 2004a). Despite their straightforward application, both models reveal significant shortcomings, including the exaggeration of impacts and inability to address opportunity costs (IOA, cf. Lahr & Stevens, 2002) or specific economic situations (CBA, cf. Késenne, 2005).
As most of the weaknesses can be traced back to the use of economic multipliers (Preuss, 2004a), this study examined adjustments to the traditional models in a second step. Despite a more complicated realisation and its origin in US-specific data the, RIMSII and IMPLAN models, if at all, reduce the negative multiplier effects (Lynch, 2000; Rickman & Schwer, 1995). On this account, the GCE approach emerged and has been hailed a panacea by a number of event-assessing authors (Dwyer et al., 2004, 2006; Partridge & Rickman, 2010), notwithstanding the fact that the approach still fails to reduce the degree of subjectivity in the evaluation (Kasimati & Dawson, 2009).
In a third step, the valuation method of Preuss (2004a, 2004b) has been introduced since its different approach to regionalise the primary impact best fits this studies’ objective to present a model that assesses the regional impact of the Olympics.
Concluding with a review of five London 2012 studies, this work reveals that several attempts have been made to assess the economic consequences of the event on the British capital. Although a variety of models, including CGE (Blake, 2005), CBA (ARUP, 2002) and IOA (Oxford Economics, 2012), has been employed, it is the author’s belief that the literature still lacks a sufficient investigation on the city’s regional impact.
Table of Contents
1 Introduction
1.1. Rationale for the Literature Review
1.2. Academic Objectives
1.3. Outline and Structure
2 Setting the Scene
3 Literature Review
3.1. Traditional Methods
3.1.1. Economic Impact Analysis
3.1.2. Use of Multipliers in EIA
3.1.3. Cost Benefit Analysis
3.2. Methods in Practice
3.2.1. Adjusted Input-Output Approaches
3.2.2. Computable General Equilibrium Approach
3.3. Advanced Methodological Concept
3.3.1. Regional Primary Impact
3.3.2. Regional Input-Output Table
3.4. Existing Studies on London 2012
4 Summary
4.1. Conclusion
4.2. Limitations and Further Research
Research Objectives and Thematic Focus
This study aims to evaluate the methodology of existing impact studies concerning the London 2012 Olympic Games to determine whether a holistic approach was employed to assess regional economic impacts. It critically reviews traditional evaluation models and explores advanced methodological frameworks to provide a more accurate assessment of mega-event impacts.
- Critique of traditional economic impact analysis and multiplier models.
- Examination of adjusted methods like RIMSII and IMPLAN.
- Exploration of the Computable General Equilibrium (CGE) approach.
- Investigation of Preuss’ advanced methodological concept for regional primary impact.
- Review and assessment of existing ex-ante and ex-post studies on London 2012.
Excerpt from the Book
3.1.1. Economic Impact Analysis
In broader terms, EIA is referred to as Input-Output Analysis (IOA) and describes a Nobel-prize winning economic framework, developed by Wassily Leontief in the 1930s (Miller & Blair, 2009). In its essence the model illustrates the interrelatedness of industries, households and the public sector in a given area (Stimson, Stough, & Roberts, 2006).
The basic assumption of the IOA is that “industries (…) both produce goods (outputs) and consume goods from other industries (inputs) in the process of producing each industry’s own output” (Miller & Blair, 2009, p. 2).
Rose and Miernyk (1989), however, argue that one of the major shortcomings of IOAs is their fixed structure. Grady and Muller (1987, p. 8), who take the same line, reason that assuming “proportionality between inputs and outputs, (…) income and its components, and between employment and output (…) can be particularly inappropriate”.
Johnson and Sack (1996) add that the model not only ignores resource constraints but also adverse and non-economic aspects. Leontief (1986), himself states that the concept aims at long-term analyses which led Porter and Fletcher (2008) to question the validity to predict event-induced, short-term demand shocks. In this context, Grady and Muller (1987) state that outcomes of event-situations have to be benchmarked against unaffected situations.
Summary of Chapters
1 Introduction: This chapter introduces the general issue of hosting Olympic Games and outlines the author’s academic objectives and the structure of the project.
2 Setting the Scene: This section provides the context of the study by discussing the various effects of the Games that have been identified in existing literature.
3 Literature Review: The main body discusses different methods of assessing the regional economic impact of sporting events and investigates specific studies related to the London 2012 Games.
4 Summary: This section concludes the work by summarizing the findings regarding appropriate impact analysis, the degree of holistic integration in London 2012 studies, and identifying the need for further research.
Keywords
Olympic Games, London 2012, Economic Impact Analysis, Input-Output Analysis, Cost-Benefit Analysis, Multipliers, RIMSII, IMPLAN, Computable General Equilibrium, Regional Economic Impact, Mega-events, Preuss Model, Legacy, Ex-ante, Ex-post
Frequently Asked Questions
What is the fundamental focus of this research?
The work focuses on assessing the regional economic impact of one-time major sporting events, specifically using the London 2012 Olympic Games as a case study.
What are the central thematic areas covered in the study?
The study covers traditional and advanced economic evaluation frameworks, the critique of impact assessment models, and an empirical review of studies conducted on the 2012 London Games.
What is the primary objective of this project?
The primary objective is to examine the methodology of London 2012 impact studies to see if they utilize a holistic approach to measuring regional economic benefits.
Which scientific methods are analyzed in this research?
The research analyzes Economic Impact Analysis (EIA), Input-Output Analysis (IOA), Cost-Benefit Analysis (CBA), the Computable General Equilibrium (CGE) approach, and Preuss’ advanced methodological concept.
What topics are discussed in the main body of the work?
The main body examines traditional evaluation models and their shortcomings, adjustments like RIMSII and IMPLAN, the benefits and weaknesses of the CGE model, and a detailed review of specific London 2012 ex-ante and ex-post studies.
Which keywords best describe this study?
Key terms include Olympic Games, Economic Impact Analysis, Multipliers, CGE, Regional Impact, and London 2012.
Why is the usage of economic multipliers in EIA criticized?
Multipliers are criticized for their subjectivity, reliance on fixed assumptions, and the failure to account for opportunity costs and negative event effects, often leading to overestimations.
How does Preuss’ methodological approach differ from standard models?
Preuss proposes isolating the regional impact instantly by assigning monetary flows to their destination and origin, rather than scaling a total national impact down to a regional level.
What is the significance of the London 2012 studies reviewed?
These studies demonstrate that while numerous attempts were made to forecast and evaluate the economic consequences, many models failed to provide a sufficiently comprehensive regional analysis.
What further research does the author recommend?
The author suggests investigating the reliability of the CGE model and Preuss’ approach to regionalization to conduct a comprehensive ex-post study on the regional impact of the 2012 Games.
- Arbeit zitieren
- Markus Bäder (Autor:in), 2015, Assessing the regional economic impact of one-time major sporting events. London 2012, München, GRIN Verlag, https://www.grin.com/document/323351
