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Olympic Run-Up, Brazil

November 9th, 2009

rio-de-janiero-2016Not only will Brazil host the World Cup in 2014, the world’s most popular sporting event, and two years later in 2016 the Olympic Games will be held in Rio de Janeiro. Both will be enormous challenges to Brazil’s organizational abilities.

Brazil has long been a candidate to host the World Cup, last held there in 1950, as well as the Olympic Games, never before held in South America. The fact that the Brazilian economy is strong and the country has fared relatively well during the financial crisis, combined with President Luis Inacio Lula da Silva’s charisma and the backing of very professional lobbying, has contributed to the success of its latest attempt to host the Olympics. The choice of Rio de Janeiro, one of the world’s most beautiful cities and the second-largest in Brazil, was widely expected. The fact that the budget of $11.6 billion was the largest of the four cities competing may also have contributed.

Rio Risks

Each year, Rio de Janeiro hosts two major events–the Carnival and the New Year’s Eve fireworks party on Copacabana beach, watched by 2 million spectators–and enjoys considerable experience in this area. However, the specter of the 2007 Pan-American Games, which ended up costing $3 billion–10 times the original budget–hovers over plans for the Olympics. In theory, the International Olympic Committee has powers aimed to ensure the agreed timetable is adhered to, and the various undertakings Brazil promised in its bid are fulfilled. However, Brazil’s byzantine bureaucracy remains a concern, as does the crime rate in the densely packed city.

Fringe Benefits

Although the preparations for the Games themselves were costed in Brazil’s bid, reports prepared by several European governments suggest that up to $50 billion will be spent over the next seven years in preparing for the two events, about 2.5% of Brazil’s GDP. It is estimated that 120,000 jobs will be created each year from now on, many in construction.

In addition to buildings and roads, $700 million has been earmarked for upgrading the electricity system, and $500 million for improvements to communications infrastructure. Most will be financed by the federal government, involving amounts far exceeding normal annual infrastructure spending. Millions of trees are to be planted, but few details have emerged as to how to address the city’s most important problems–sanitation and pollution–as well as improving health and education facilities, far inferior to other large cities.

If properly spent, funds could allow hospitals, schools and leisure facilities to be built, as well as improvements to the slums housing one in seven of the Rio’s 7 million residents. However, there are fears that local interests will squabble over the allocation of funds. Moreover, most events will take place far from where the majority of residents live, so apart from short-term jobs, the Games may not improve life in the city as a whole, with funding merely transferred from other projects.

Spur for Sport

Although Brazil is one of the world’s leading football nations, its athletes won only 15 medals at the Beijing Olympics. Sport now accounts for just 2% of GDP, but it is planned that funds for new facilities and for training athletes will be allocated to the Ministry of Sport.


If all goes well, the Olympic Games could result in Rio de Janeiro gaining a new lease on life. However, the magnitude of its problems, coupled with the poor quality of public administration, may mean little change for the better. Because the World Cup events will be dispersed around 12 cities, prospects for a positive impact are greater.

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