Taiwan Today

As the 2009 World Games got underway July 16 in the southern port city of Kaohsiung, Taiwan had plenty to celebrate, with the high profile event promising to have a positive effect on the nation’s economy. “We expect the games to deliver a wide range of tangible and intangible benefits to Kaohsiung and Taiwan, both during and after the event,” said Liu Shyh-fang, managing director of the Kaohsiung Organizing Committee July 14. “Holding the games is not just about making Kaohsiung a world class travel destination, we also expect them to trigger an increase in investment from overseas and have a positive effect on tourism, trade and national exports.” The impact of hosting “mega-events” on a country’s economy has long been an issue of interest for governments, academics and business leaders alike. Some state the cost of staging such events in terms of building hotels, public transport systems, roads and stadiums is not worth the return. Others counter that the long-term economic benefits of new infrastructure can be considerable, as can the tourism effect. In a study about mega-events and their impact on a host country’s economy released April 19, authors Andrew Rose of the Haas School of Business at the University of California and Mark Spiegel of the U.S. Federal Reserve Bank of San Francisco found the activities have a positive effect on national exports. They also suggest that hosting these events sends a strong signal to the world that a country is looking to boost international trade and investment opportunities. Using a statistical model, the authors show that nations hosting mega-events experience “robust, permanent, and large” economic effects. For countries that have staged the Olympics, International trade increases by around 30 percent. According to Rose, the World Games are on the cusp of being considered a mega-event—a term he reserves for the Summer Olympic Games, FIFA World Cup and until recently, world fairs and expos. “Still, [the games] will boost Taiwan’s exports, increase investor confidence and signal the government’s intention to pursue liberal trade policies in the future,” he said in an email July 13. “The economic impact of the games on Taiwan will be mostly indirect but positive. Hosting them is a sign that the economy is likely to stay open, which encourages trade and investment and triggers growth indirectly.” In terms of boosting the island’s sagging exports, Rose believes the games will probably have a small positive effect that will take “a while” to be discernable. “The event will increase two-way trade between Taiwan and the rest of the world, though the size should not be exaggerated. One would expect the effect to be long-lived.” An interesting aside from the study was that in hosting mega-events, governments send a strong signal to the world that they are ready and open for business. This commitment to trade liberalization is well documented. In 2001, China secured entry to the World Trade Organization just two months after Beijing was awarded the Olympics; Spain joined the European Economic Community the same year Barcelona was chosen in 1986; and Japan entered the International Monetary Fund and Organization for Economic Cooperation and Development in 1964, the year it hosted the Tokyo games. Rose sees the proposed cross-strait economic cooperation framework agreement between Taiwan and mainland China as an example of this linkage between mega-events and trade liberalization. “By holding the games, the central government is telling the world Taiwan is the sort of place willing to make long-lived commitments to trade liberalization for the betterment of its people,” he said. “An ECFA could well be part of this signal.” But Pan Ming-chu, an associate professor with the Department of Kinesiology, Health and Leisure Studies at National University of Kaohsiung, disagrees with Liu and Rose. She argues that as the World Games has a low international profile, hosting the event may have little or no effect on the economy, especially the tourism sector. “Previous research on mega-events show there is no strong link between staging such activities and positive effects on a host country’s economy and tourism sector,” she said. “In fact, it is more likely that the presence of athletes and team support staff in Kaohsiung will drive the city’s normal visitors away during the event. With an estimated 5,200 games attendees expected to visit Kaohsiung during the sporting extravaganza, Pan cautions that these visitors cannot be relied upon to lift the country’s economy. For Pan, the massive cost of staging the games—KOC estimates put this at nearly NT$10 billion (US$304.3 million)—negates and possible short-term benefits associated with the event. “The real gains may emerge in the long run,” she said. “The experience of hosting the games will lead to the establishment of Kaohsiung as a sports tourism destination that can seriously begin eyeing such events as the Asian Games, Asian Youth Games or World University Games.” “Another benefit could be the emergence of Kaohsiung as a strong meetings, incentives, conferences, and exhibitions industry player,” she said. “The MICE industry is one of the fastest growing segments within the global tourism sector, generating millions in revenues for cities and countries.” The associate professor said the games have left Kaohsiung perfectly equipped in terms of infrastructure to strengthen its position in the MICE market. “Compared to Taipei, Kaohsiung is a late bloomer in this industry, but given the city’s experience in hosting the games, there is no reason why it cannot expect to take a larger share of Taiwan’s MICE business.” Laurel Jhuang of PricewaterhouseCoopers in Taipei said overall, it is extremely difficult to estimate the economic benefits of staging the World Games. “These things are notoriously tricky to measure,” she said July 16. “It is expected Taiwan will benefit from the extra prestige of hosting the event. But will it give the country enough international exposure to positively impact upon the economy and make Kaohsiung a ‘major league’ city?” Liou Si-lin, director of the International Affairs Division at the Tourism Bureau under the Ministry of Transportation and Communications, certainly thinks so, adding that the central government welcomes and encourages the staging of mega-events in Taiwan such as the 2009 World Games. “These activities not only inject large sums of money into the cities fortunate enough to host them, but boost the country’s international profile and spur the tourism industry,” he said July 15. The director explained that the bureau keeps a close eye on large-scale events organized or sponsored by local governments and non-profit organizations, working closely with those involved to formulate supplementary schemes aimed at promoting such activities. “For example, the World Games and September’s Deaflympics were included in the [2008-2009 Tour Taiwan Years] campaign. As part of this initiative, the bureau is running a series of promotional activities aimed at luring visitors from Japan, Hong Kong, Malaysia and Singapore to visit Taiwan and experience both events.” Liou said in addition to mega-events, the bureau also includes smaller activities with international footprints in its tourism development policies. These include the Chiayi International Band Festival, Kaohsiung Container Art Festival, Taipei International Gardening and Horticulture Exposition, and Yilan International Rain Festival. “The government views mega-events as an important component of its ongoing tourism promotion schemes. Irrespective of whether they are staged by profit or non-profit groups, we are interested in supporting any activities that bring more tourists and greater economic benefits to Taiwan,” he said. Write to “Taiwan Today” at ttonline@mail.gio.gov.tw