Does hosting sporting events promote social and economic development?

In Rio de Janeiro, a fierce debate over preparations for the 2014 World Cup and the 2016 Summer Olympics is under way. Brazilians are proud to have been chosen to host these important sporting events and to have the world’s attention. But they reasonably worry that both competitions may end up being a bonanza for business and a boondoggle for the rest of the country.

Here’s the scenario I’ve heard repeatedly from Brazilian friends, mindful that the world soccer federation chastised Brazil for running behind schedule. The awarding of contracts for construction and modernization of stadiums and other infrastructure has been slow, which gives the upper hand to the handful of big construction companies that are perhaps the largest donors in Brazilian politics. They are now in a position to prolong construction until the last minute, and then present taxpayers with huge bills for cost overruns, arguing that Brazil’s prestige is at stake and that the country cannot afford to have its image besmirched, as India’s was as a result of the 2010 Commonwealth Games in New Delhi.

The 2007 Pan-American Games, which were also held in Rio, provide a cautionary tale. As part of its winning bid, the city promised to make major improvements in its infrastructure: cleaning up polluted Guanabara Bay, for instance, and extending the Metro by about a dozen miles to the Barra da Tijuca, the main locale for the games. Neither of those schemes ever got off the ground, but the games still managed to come in way over budget, with some projects costing 10 times their original projection. Others, like a baseball stadium, were so shoddily built that competition had to be suspended. Some streets in the area where Olympic events are scheduled are now sinking or cracking.

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