When Rio de Janeiro, Brazil was first awarded the 2016 Summer Olympics, Brazil’s economy was evolving in impressive ways. The country was seeing economic growth, was more financially stable, and its democracy was strengthening itself. Yet in recent years as commodity prices fell, Brazil started seeing a very different situation in terms of national income. Add in the typically negative rate of return on hosting the Olympic games, and this may not help the country’s long-term situation economically, said Phil Powell, associate dean of the IU Kelley School of Business at Indianapolis and a clinical associate professor of business economics and public policy.
“Here you have the province of Rio, which is bankrupt. This is like the state of Indiana being bankrupt and hosting the Olympics. You couldn’t provide police services, roads can’t be kept up, and everything you’re doing is being slapped together with straw and band-aids. Brazil made this huge commitment, yet everyone now is expecting them to fall short,” Powell said. “Take Montreal or Athens. When those cities hosted the Olympics, they lost substantial amounts of money in facilities they never use. It didn’t help their long-term situation economically.”
Yet Powell, who has traveled to Rio, remains optimistic about the long-term future for Brazil. “Brazil has a lot of potential, but it’s stressed in terms of income equality. It’s a land of contrasts. Rio was exhilarating: the energy, the people, the entrepreneurship, and the beautiful beaches. But crime is high, so you have to be vigilant when traveling in certain areas,” he said.
“I think the long term trajectory for Brazil is good, but I think the Olympics may give Brazil a black eye. You recover from a black eye, but it hurts, it’s tender, and you don’t look that good while you have it,” said Powell.
To speak with Powell, contact Teresa Mackin at 317-274-2233 or email [email protected].
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