Which countries spent the biggest share of GDP on the Olympics?

Put in context, Japan’s massive overspending doesn’t look so bad 

Despite promises of regenerated city zones, a boost to tourism and the creation of jobs, economists have repeatedly pointed out that hosting an Olympic Games is usually a net financial drain. 

Yet few countries have ever had as raw a deal as Japan, which has seen the Tokyo 2020 Games kick off a year late and with no spectators. 

The lack of fans could cost Japan’s economy $1.3 billion, reckons Takahide Kiuchi, economist at the Nomura Research Institute. Many businesses which expected a tourist influx will be hard hit. 

And while a recent study found Olympic budgets typically run over by 175%, Japan’s costs look set to run to $28 billion from an initial budget of $7.3 billion (that’s 284% over budget).

Reframing the Narrative 

Of course, $28 billion can be put in context to mean very different things. It’s more than the size of some countries’ entire economies. It’s about a third of the amount Amazon CEO Jeff Bezos increased his personal wealth by during the first year of the coronavirus pandemic. 

For an economic powerhouse like Japan, it’s actually not too shocking a figure when compared with national spending on other Games over the last 30 years. 

MoneyTransfers.com looked at Statista figures for the cost of hosting the Olympics from 1992 to 2021. We then calculated what percentage this figure was of the host countries’ national GDP at the time, using World Bank data. 

Out of the eight Games over the last 30 years, Japan was only on course to spend the sixth highest amount by this measure: 0.55% of its GDP. 

Beyond GDP

So is it fair to say the ballooning budget for Tokyo’s games isn’t so dramatic given the economic cushion it has to fall back on? 

Associate Professor of Public Policy and Economics at the University of Michigan’s Gerald R. Ford School of Public Policy, Joshua Hausman, commented: 

“While spending as a share of GDP will certainly be smaller when the Olympic games are held in a large economy versus in a smaller economy, it is hard to judge how large the overall economic impact of the Olympic games might be. 

“There are many possible effects beyond direct spending. There is not only possible tourism for the games itself, but also future tourism that might be inspired by the television coverage of the games. There are also possible effects on consumer and business sentiment.” 

Judith Grant Long, Associate Professor of Sport Management and Urban Planning at the University of Michigan, told MoneyTransfers.com:

“Cost relative to GDP addresses affordability but does not assuage concerns with opportunity cost. 

“$16 billion might not be a lot of money relative to the Japanese economy, but it is still a lot of money that might be spent on other things. 

“Even if the operating revenues and potentially insurance offset some of this total cost, opponents are right to point out that absent the Olympics, other public spending goals could have been addressed or taxes lowered – which depending on one’s economic stripe, could be argued to have led to a greater impact on GDP.”