Bonanza of the Baku European Games

Published 25.06.2015 22:20

These days the world's attention is directed at Azerbaijan and its capital Baku, where it is hosting the First European Games. Above all, the sports event provides a golden opportunity for the athletes representing different countries and cultures to come together and harvest the fruits of their hard work and thus to realize their dreams of gaining global fame. Meanwhile, the First European Games also carries great economic importance. The organization of the games has a direct impact on the host country's economy, including its macro-economic indicators as well as sustainable economic stability. First of all, the organization of the games significantly contributes to the macro-stability, further bettering various macro and micro indicators of the host country's economy. Second, it contributes to strengthening the financial stability. Third, the development of the existing infrastructure is important in terms of attracting foreign investments.

The tourism sector can be characterized as the most beneficial of the organization of the First European Games. A large number of tourists are expected to visit Azerbaijan. Based on international standards, a tourist's weekly average expenditure is $1,000. Taking into account the fact that the games will last for two weeks, each tourist visiting Azerbaijan will spend $2,000. Thus the tourism sector will be able to gain direct revenues from the games. Another sector that will benefit from the First European Games is small- and medium-sized businesses. Thanks to the First European Games, a number of visitors from different countries will boost the demand for various services. Obviously, most of these services are offered by small- and medium-sized enterprises. The bigger number of tourists will translate into a large number of users of different services including cafes and restaurants. The transport and banking sectors will benefit as well.The infrastructure costs constitute the lion's share of the funds allocated for the organization of these magnificent games. In other words, large amounts of funds have been spent on infrastructure and facilities with the purpose of improvement in Baku city and other regions of Azerbaijan. And this infrastructure is going nowhere. The infrastructure that has currently been formalized will allow Azerbaijan to organize future major sporting events with little expenditure and create an opportunity to achieve significant gains. It is sufficient to mention that Azerbaijan has already reached an agreement on hosting several spectacular sports events in the near future. Formula One, the Islamic Solidarity Games, the European Football Championship semi-final matches are some bright examples. That means the advanced infrastructure created for the First European Games will make it possible to take advantage of the organization of these competitions as well.

If the long-term use of this infrastructure is the first merit to mention, the second one is the promotion of foreign capital flow into Azerbaijan. Development of sophisticated infrastructure will definitely increase the country's competitiveness level and will make the Azerbaijani economy, particularly its non-oil sector, more attractive for foreign investors. Foreign investments landing in the non-oil sector will in their turn promote the expansion of domestic production and the increase of exports of non-oil products. In other words, thanks to the introduction through the Games, Azerbaijan will find a new momentum to attract foreign investments. Broadcasting of the First European Games through a variety of media channels is going to be another source of revenue. It is in the interest of local and foreign companies to carry out their own promotional campaigns during the Games. This trend is already being observed with the official partners of the Games. It will provide an opportunity that allows a portion of the advertising revenue of the companies involved in these games to be spent of the games themselves. On the other hand, the sale of tickets, broadcasting and advertising revenues will also add to revenues generated from the Games.

Besides the abovementioned economic benefits, the First European Games has its own abundant social advantages. First of all, the organization of the Games means that additional funds will be entering the host country. These funds will directly result in benefits to the entrepreneurs and their workers. Hence, the revenues will increase. Secondly, the additional spending will make an opportunity for increased tax payments to the state budget. Thus, the social obligations of the state budget will be positively impacted. Third, tourists coming to Azerbaijan are not expected to stay in the capital only, but to visit the regions of Azerbaijan as well, thus using various services that will generate a source of additional income for the local citizens. Lastly, the First European Games will contribute to the economy of Azerbaijan enabling the implementation of new initiatives. This will have a positive impact on the formation of the state budget for the coming years.

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