The cost of South Korea’s event-hosting obsession

This was originally written for Newsweek Korea for translation into Korean. — John 

By John Power

On its surface, the forgery scandal enveloping Gwangju mayor Kang Un-tae could be seen as just another of countless examples of corruption in Korean officialdom. Yet again, a public official stands accused of breaching legal and ethical boundaries to achieve certain ends. The alleged wrongdoing this time involves the forging of the signatures of a former prime minister and former culture minister to secure the city’s hosting of the 2019 International Aquatics Federation World Championships.

But the fiasco is also illustrative of a separate malaise within Korean bureaucracy: an obsession with hosting any international sporting event, no matter how costly, if it can be seen to showcase Korea to the world. Whether in relation to next year’s Asian Games in Incheon; the 2018, Winter Olympics in Pyeongchang; or the 2019 International Aquatics Federation World Championships, arguments for hosting international meets follow a familiar pattern. Hosting the prestigious event in question, we are told, will boost the local and national economy and enhance Korea’s image broad.

Pyeongchang’s Olympic bid committee and several private research institutes have put forward the economic argument, predicting that the Games will create billions of dollars worth of economic activity. Numerous other commentators have hailed the potential of the competition to boost national prestige. If all this wasn’t enough, the organizers have even claimed, with little elaboration, the Games will promote peace on the Korean peninsula. Similar arguments have been made for other upcoming competitions to be hosted here.

Yet the evidence from past events pours cold water on such lofty predictions. Even the 2002 World Cup, widely seen as one of the most successful events held here, was an economic dead loss, according to American economist Victor Matheson, who has studied the economic effects of international sporting competitions. He maintains that a modest increase in tourist numbers to the country was more than offset by the cost of new infrastructure for the competition.

“The overwhelming consensus of independent economists not on the payroll of the sports boosters is that stadiums, arenas, racetracks, etc. have very little long-run economic benefit,” Matheson told me in a recent interview I did for a related article.

As Matheson noted, the majority of the stadiums built especially for the competition at a cost of some $2 billion dollars are underused today. Were the finances of authorities bidding for such events in good shape, they might be accused of “only” wasting public money. But the state of local governments’ balance sheets, including those of Pyeongchang and Incheon, is such that bidding for such events seems positively reckless.

Yet one senses that economic arguments are not the primary motivator for many of those eager to see Korea host large sporting events, coming second to a much more visceral impulse: national pride. Korea, despite all its achievements at home and on the world stage, often gives the impression of a country highly concerned with what the world thinks of it. Successful bids such as Pyeongchang’s are constantly framed in terms of how they will project Korea to the world. Soon after Pyeongchang was announced as the host city for the 2018 Games, media here began discussing the so-called “Pyeongchang effect”– how the Games will improve Korea’s image abroad.

Koreans have much to be proud of in their country, and national pride is not without merits in measured doses. But it is worth asking who is served by costly competitions likely to leave future generations of Koreans in debt. The Korea of 2013 is not the same country of 1988, when it could be convincingly argued that the Seoul Olympics announced a little-known country’s arrival on the international stage. Korea today is the land of Samsung and Psy, and is probably close to being as well known to most foreigners as a middle-power crammed between China and Japan could expect to be. It becomes ever more difficult to justify spending billions of dollars in the service of abstract notions like national prestige as the country comes ever closer to a level of development comparable to the world’s wealthiest nations.

None of this is to say that Korea should never bid to host international sporting events. Events chosen with regard to the characteristics of their prospective hosts and submitted to rigorous cost-benefit analysis can no doubt benefit the country. But there should be no compulsion to bid for any and every international competition. Korea can afford to be selective. If anything, it cannot afford not to be.

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