The Negative Economic Impacts of World Expo 2010 in Shanghai, China - Essay Example

The negative economic impacts of World Expo in Shanghai, China Date: Executive Summary Many international events are held in different cities in countries every year; the United Nations plans some of them while various bodies and international groups organize others. International events come along with different positive and negative outcomes on the people, environment and other sectors of the hosting country (Collins & Flynn 2008). Before a country undertakes the mandate to host an international event, it has to make various considerations relating to its ability and the perceived benefits it stands to get from it. In addition, a country has to analyse any negative outcomes that can arise from the particular events. If the negative outcomes outweigh the benefits, it is always prudent that the country resists from hosting the event. Some of the considerations that a country considers among other things include environmental effects, economic benefits, social impacts as well as its ability to host the event successfully. It is always important that a country ensure that it has the necessary infrastructure to host large international events, failure to which, it may end up to engage in internal and external borrowing, something that may have far reaching economic impacts (Chalip, Breen & Hill 2003). This paper examines the economic impacts that were associated with the hosting of the World Expo that was held in the Shanghai city of China in 2010. This is an event that is organized under the United Nations umbrella and happens on a rotational basis in major cities of the world, after a successful bidding by the respective countries. It focuses on the effects the event had on the various macroeconomic economic of China, as well as that of other hosting cities for the same event. Introduction The World Expo 2010 was held in China, in both of the banks of Huangpu River; the event took six months, running from the start of May to October of 2010. The event was marked as one of the major World Expo in the customs of international and world fairs and Expositions. The event was the first of its kind that the city was hosting after 1992, something that influenced prior proper planning before the actual event was to take place. During the Expo, the theme that was settled at was, “Better City – Better Life;” the choice of the theme was to portray Shanghai as the next great city of the world (Abelson 2011; Crompton 2006). Indeed, many of the people that attended the Expo lived to ascertain the fact that Shanghai has been developed as the major city in the world, competing with other major cities in the world (Brcalente 2011). The World Expo 2010, has been recorded as the most successful event to have been hosted by China, the event is said to have recorded the highest number of people who came as visitors and participants in the event. More than 240 countries are also recorded to have participated in the Expo, something that portrayed China’s ability to host major events in the world. By the time the event came an end in October, the total number of people that are said to have participated in the event was about 72 million (Stuebe & Stuebe 2011). The average number of people that attended the event was estimated at 1.03 million, signifying the importance of the event to all people and countries that took place. Issues and challenges in hosting major events like the World Expo 2010 In any country, the advantages associated with the hosting of major world events cannot be underestimated. These events are described as important catalysts essential in triggering the growth of local development as defined by a country’s micro and macroeconomic policies and strategies. Major events come along with various tangible and intangible benefits that are essential for the growth of a country’s economy, among these benefits are that they are important catalysts for the host country’s economic development (Jones 2008; Dwyer 2000). In addition, these events are essential in upgrading the urban infrastructure in the cities while at the same time, the boost the international image of the city and country. Major events play an essential role in accelerating the implementation of various desired policies that are designed for developed of the urban centres hosting them. The World Expo 2010 is said to have brought many advantages to Shanghai city and the republic of China in general (Lu 2012). It played a great role in improving the face of the social amenities and other infrastructure that were necessary for the successful hosting of the event. Prior to the event, much planning and assessment of the potential micro and macroeconomic implications was done, this included an analysis of the merits that the city was going to have and the negativities that would be associated with it (Dwyer & Forsyth 2009). By gaining a comprehensive analysis of the benefits and potential challenges, the city leaders and manages of Shanghai city managed to make plans that led to the successful event that transformed the general image of shanghai City and China as a whole. Generally, city planners make many evaluations and assessments of their ability to host major events, before making up their decisions to do so. In these evaluations, one of the major considerations include, the appropriateness of playing the host to the event, this enables them to assess the economic implications that the particular events are expected to have. In addition, they also consider the environmental impacts that are also bound to arise. This includes an assessment of pollution effects and how best to solve the challenge (Hao 2011). Another important consideration is often made on the city’s ability to mobilize the needed resources in hosting the event successfully. It is evident that from one city to another, the challenges faced by city planners and managers in the process of hosting major events are always varying (Bonn 2008). This is because of differences that exist in terms of development, overall structure and the macroeconomic policies existing in the particular countries. Two important elements stand out in this analysis, the first is that cities are increasingly become active players in determining some of the macroeconomic issues that relate directly to the country’s national economy (Gratton & Preuss 2008). Cities are now important players in setting and determining the quality of life for its residents, they can influence environmental, cultural, as well as social and economic factors for the particular countries. The second issue of concern is that poverty, sustainability and other micro and macro economic factors can be solved effectively by concerted efforts from the government and all other players in the private and public sector. Before a major activity like an international event of the magnitude of the World Expo takes place, there is always enough reason for having proper arrangements and alignments of the macroeconomic policies and how the events will help solve perceived problems in the short and long run. A good understanding of the macroeconomic issues in a country is important so that the steps taken to address the highlighted issues can be effectively directed towards solving unemployment, increasing national output among other essential factors evident in the macroeconomic analysis. Mega Cities as catalysts to urban transformation In order to have a clear understanding of the importance of mega cities as catalysts to achievement of macroeconomic policies, we can take a focus on a simple analogy from the world of business (Andereck 2005). In this perspective, often, companies that wish to accelerate their respective growth have to create and pursue various strategies that can achieve the final goal effectively. One of the approaches is merging with other companies, establishing new partnerships or even acquiring new technologies and infrastructure. To the companies, these options play an essential role in helping them to access and exploit new opportunities in new markets and sustaining them. In the same a way, a city also has to make such arrangements in order to create itself macroeconomic advantages. Some of the crucial questions that city planners and policy makers have to ask themselves include, how does a city increase its foreign investments for the benefit of its residents and the country at large? In addition, they also ask themselves the question of what has to go into the process of creating new infrastructural development, transportation systems and other aids to economic development. In this analysis, cities that are seen to be the most successful are those that have leaders who understand the important of creating and fulfilling macroeconomic policies in hosting major world events and other related events. These leaders invest in major public events, projects and various initiatives that can generate and capture huge and significant amounts of public value and utility. In addition, these cities create quality in public goods as well as increase efficiency in the creation and delivery of essential services. A mega event with the magnitude of the World Expo presents such an initiative where all these things can be achieved effectively (Huang 2007). In hosting these events, there has to be cooperation from other international investors, the government and other talents (Kaplanidou 2012). Shanghai City – China Shanghai is counted as China’s largest city in terms of population; it also ranks as the largest in the world in the same classification. The city was estimated to have about 23 million people in 2013, something that has made it a major attraction not only in China, but also in the entire Asia. Shanghai became the host of the World Expo that was held in 2010, recording the highest attendance in the history of the event. During the event, more the 240 countries from all over the world attended the event in order to display their distinct cultures in the event that was designed with the theme of sustainable development (Brcalente 2011). This event was essential not only to Shanghai as a city, but also to the entire China as a growing global economy. By having such a large population, planning for the hosting of the event had to undergo comprehensive evaluations and assessments, something that is characteristic of all similar processes in other large cities. Macroeconomic assessment of the city In many major cities of the world, large international events have become a highly sought venture, in the process of uplifting their economic growth and development. These large cities have to participate in the comprehensive bidding process that decides on the kind of city to host every event (Baade & Matheson 2006). In the recent decades, there has been a rapid growth in the number and profile of international sporting events like football, the Olympics as well as the World Expo. One of the major tasks that these cities are forced to content with is the bidding process; in this case, a city has to prepare the entire infrastructure that is necessary for the success of the event (Hao 2011). In consideration of the many positive externalities that are often associated with these events, many large cities and countries have started to adopt different policies that outline the main objectives in hosting the particular events (Gratton, Shibibli & Coleman 2005). In addition, these cities prepare adequately for the funding of the events, which includes upgrading of the already existing facilities that are essential for the events. In preparation of the World Expo, China had to set aside a budget of around 83 million that were raised through public and private sector partnership. The economic impact assessment was necessary for the justification of the various tangible and intangible benefits that the city and the entire country were going to have. The elevated interest in China’s preference for hosting the event was motivated by the success that had been witnessed in hosting of the 1990 Asian Olympic games, as well as the success of the 2001 summer Olympic that the city hosted after making a successful bid. There seems to be numerous advantages that the city has been benefiting from hosting some of these major events including the World Expo in 2010. The World Expo and other events that the city has been hosting have been instrumental in fulfilling major macroeconomic policies set by the city and country’s policy planners (Crompton Lee & Shuster 2001). For instance, these events have helped to reduce unemployment by giving the local an opportunity to sell various goods and services to the visitors that are always present in millions of numbers. In addition, these events have always had a good effect on the general prices of goods and services in the city and country. Many businesspersons increase prices for their goods because of the increased demand, which is a common observation in any large city hosting major events. In hosting the World Expo, Shanghai was supported by other cities like Beijing, which added impetus to the city’s bidding process. The hosting of the event was an important activity to boost the macroeconomic policies of the republic of China. The enormity of the World Expo 2010 was important in increasing the tourism prospects for the other places in China because of the huge number of visitors that came for the event. in addition, the media coverage of the event across national and international platform was a good opportunity for the country to advance its macroeconomic plans and ambitions. In general, host cities for major events often face major macroeconomic issues in the planning of major events. In this case, it is always a good idea for the respective countries to evaluate the benefits and consequences of the events before taking the bidding process. It is important to understand that China is quite different compared to other cities in Europe and other places. In China, the savings rate culture is high in comparison to Europe, this has been necessitated by the fact most of the Chinese people have a tendency to save their finances (Chamon & Prasad 2010). The World Expo 2010 was considered an important strategy that would stimulate the rate of consumption of goods and services produced in the economy. This approach was important because most of local firms got a chance to display and sell their products. During the time the event was being held, these firms and other businesspersons got a rare chance to make and establish networks that have continued to increase their economic activities. This macroeconomic condition was essential, considering that the ultimate aim of any government is to create an atmosphere that encourages the growth of economic activities, which raises the country’s output level and overall GDP. Literature Review Economic impacts are one of the most reliable ways of evaluating the impacts of large international events to the hosting cities and countries. This analysis includes the events that are held in the sporting arena, as well as those that are designed to highlight cultural aspects of countries like the World Expo 2010 that was held in the Shanghai city of China. Some scholars have explained that host countries are always better placed to benefit immensely from the hosting of these events considering their effects on their various micro and economic policies (Huang & Zhang 2012). Economic impact has been cited as an important consideration in many areas; it is often described as the effect on the economic policies activities and programs that are designed to improve a place or region. Economic impacts of an event or a place are arrived at by a careful consideration of the jobs that are created by the particular event, as well as the other factors that lead to the increase in the economic growth of the place (Brcalente 2011). With reference to the World Expo 2010, the economic assessment considers the net sum of the total economic activities that were realizes during and after the event in the Shanghai city in China. In addition, macroeconomic analysis considers the impact of this event on the general economic policies that have been established by the country’s policy planners. The impact assessment does not include non-market values that are associated with the event and others that are often in other cities and countries hosting the Expo and other events internationally (Gursoy & Kendall 2006). The key concept in the analysis of economic impacts of a major international event considers the monetary payments as they are transferred from one economic region to another. This is often done with the main objective of estimating subsequent changes that of the happen in reference to the overall spending, output as well as income and employment, which are the main macroeconomic factors in a city or country. The economic impact assessment of the World Expo 2010 in China puts its focus on quite a number of factors. First, it evaluates the direct impact that were felt during the time of the event, this includes the express revenues that were generated by the government and locals in the city and its surroundings where the event was held (Garcia 2004). Secondly, it focuses on the indirect impacts that were associated with the event; this includes the extra input purchases that were made by the locals and business firms that were not necessarily involved in the event directly (Hodur & Leistritz 2006). The third point of focus is on the induced impact; these are brought about when the local businesses and individuals are made to spend their extra income that they have earned from the direct and indirect impacts. The economic analysis of the World Expo 2010 in Shanghai China considers the new monetary flows that were brought about by the event to the city and country in general. This analysis is estimated by a consideration of the expenditures that were made by event organizers, the various exhibition agencies and other organs that were essential in the making of the event. In the process of translating these factors into economic impacts and measures, the monies generated from these assessments are first assigned to either of the many categories that include shopping, accommodations and transport among others. In addition, they are aggregated the respective industry that each of the factors belong to, this makes it easy to apply an economic model in order to determine the particular impacts. In terms of the new monies that were generated from the World Expo 2010, they refer to the actual expenditures that would not have been realized in the absence of the event. The new money is often stemming from three main sources that include; facilities constructed by the government, the operations made for the success of the event and the expenditures that resulted from the attendance and participation by visitors into the event. Macroeconomic aspects of urban life Sustainable Development The ultimate goal of urban development strategies and management are for the improvement of the welfare of people in the particular place. However, it is important to understand that the quality of life is a concept that comes in various multiple levels (Bull & Lovell 2007). The concept has different meanings depending in the various disciplines involved. The quality of life in an urban centre comprises of various meanings that are designed in special layers; however, most of them are divided into two main categories (Huang & Zhang 2012). The first is the objective category; here, the main determinants are made up of factors like economic productivity, health of the people, law and order and other determinants that have direct effects on people’s lives. On the other hand, the subjective category comprises of the particular experiences that people have from the interactions with the various systems established by the objective perspective (Huang & Lou 2010). In addition, it also includes their comments and feedbacks that are given after interacting with the particular systems. Fig 2. Urban Quality Life (Huang 2007). The economic impact assessment of the World Expo 2010 considers the impacts that the event had on the quality of urban life. First, it is important to realize that the people of Shanghai city and China in general achieved most of their macroeconomic policies during and after the event. from the foregone discussion, it is evident that employment opportunities and economic growth benefited immensely from the event since most individuals and firms produced good s and services to cater for the millions of visitors that came for the occasion. Macroeconomic externalities from the World Expo 2010 In as much as many positive attributes have been cited because of the World Expo 2010 event in Shanghai China, positive and negative externalities have likewise been cited. First, positive externalities experienced from the event included constructions of state-of-the art facilities that were used for the event, and remained at the disposal of the citizens. During the course of the event, many economic activities were evident in areas around shanghai city. This improved people’s economic welfare and that of the country as a whole. In addition, also, other indirect influences arose from the event; Shanghai City and China in general used the opportunity from the Expo to develop and expand their economic prospects (Gratton, Shibibli & Coleman 2005). The World Expo presented a prime opportunity for the country to market its economic ability and capacity to host world-class events, something that will increase its prospects of hosting other similar events in future (Xua 2010). China has increase the number of people that are now coming to take advantage of the tourism opportunities that exist in the country and make their investments, thus increasing the economic growth and development of the country. Fig 2. World Expo’s direct and indirect influences on the quality of life (Huang 2007) Negative effects With the large numbers of people that attended the event and the increased rate of economic activities, Shanghai city had to deal with the problem of increased environmental concerns. During this time, lots of noise and fumes from cars was evident in the city because of the increased need for travelling from one place to another. In addition, there were traffic snarl-ups on most of the roads because of the many people that were moving around various areas in shanghai and China in general (Gratton, Shibibli & Coleman 2006). However, the increase number of people assigned to ensure smooth flow of traffic and safety rules on highways and other roads were essential in ensuring that no major threats and other unexpected incidents arose. Periodicity and disequilibria The World Expo 2010 was characterized by incidences of periodicity and equilibrium; it is important to realize that the World Expo is often considered as major resource for the economic growth of the hosting country and city. Starting from the bidding process, to the preparation and actual hosting, the Expo economy is often felt. With reference to the actual conditions in Shanghai China, the economy can be examined in three main ways; first is the period that preceded the actual experience (Bull & Lovell 2007). This period was characterized by widespread mobilization for savings and investment into the event. Policy planners and event organizers had to lobby various local and international sponsors to put their money in the process, with promises of bigger returns for their businesses and firms (Wu & Zhang 2011; Chalip & Costa 2005). During this period, there were several consideration of the most strategic venues for each of the events that were to be included in the Expo. Then came the World Expo stage, this is the year that the actual event was being hosted; this period was marked by increased expenditure on very many issues. Traveling increased by a higher percentage, business grew and flourished as well as telecommunication (Bucquoye 2010). People needed to communicate and link with their friends in their homelands and establish networks, something that meant much communication, traveling and hospitality services. The third was the time after the Expo, this time was marked by a sudden decrease in the demand for goods and services from different companies. This development meant that producers and suppliers brought down the prices of their goods in order to make sales from the reduced demand. People had to come to terms with the sudden loss of revenue from the departing visitors and adjust to their normal lives. In this stage, the major losses to companies related to those that had over produced their goods in anticipation of profits from the crowds as the Expo. It is evident that equilibrium exists in the kind of influence caused by the World Expo (Collins & Flynn 2008). First, the World Expo is essential in providing an important economic stimulus just as it was the case with shanghai – China. This is an important and much-needed step with reference to the macroeconomic needs of the city and the country as a whole. Secondly, with reference to shanghai city, the Expo was essential an essential impetus needed for the optimization of the ecological urban environment in the city. The event was essential providing the framework needed for further development in the ability of the city to host similar events in the future. The Expo played an important role in influencing the quality of healthy life; here, it is important to note that negative externalities experienced in the in the city related to pollution and the overall quality of healthy life of the people (Gursoy & Kendall 2006). Alternatively, the event played an important roe influenced the quality of education systems in terms of growth and development of talents of people. This is expected to enhance the participation of the county in future associated events in China and other cities that will be hosting the Expo and other similar events. Fig 3. Intension of World Expo’s influences on Shanghai’s life (Huang 2007) It is important that an equilibrium strategy be developed to ensure that the operations of the World Expo and improvements in people’s quality of life are established. This will be essential in reducing some of the negative externalities that are often associated with the event in many of the hosting countries and cities. Conclusion The World Expo is an important event to the achievement of most of the micro and macroeconomic policies that are set in a country. The opportunity to host such an event has several short and long-term positive externalities that countries stand to get by play as hosts to the cities (Aerts 2011). In this case, countries are supposed to set aside heavy financial investments for hosting the event. In addition, investment in policy planning and strategizing for the success of the event is also important; this has to be preceded by lobbying for support in the bidding process, followed by sourcing of investors who are essential in laying the infrastructures for the success of the event (Huang 2012). The local people are supposed to be empowered to take up various economic activities, which are always lucrative with better returns during the time of the event. Generally, major cities and host countries should give due attention to the increase in public finance investment in activities like education, sanitation and others that are important in the reduction of negative externalities like pollution. After the World Expo 2010, shanghai city has positioned itself strategically to toke on other similar events that will be coming in the future (Xub 2010; Chen 2010). The city has also displayed its windows of opportunities to entrepreneurs and investors in the local and international business environment, something that other major cities can learn from effectively. References Abelson. P. (2011). Evaluating major events and avoiding the mercantilist fallacy. Economic paper, 30(1), 48-59. Aerts, D. (2011). Worldviews, science and us bridging knowledge and its implications for our perspectives of the world, proceedings of the workshop on Times of Entanglement, Minsheng Art Museum, Shanghai, 21-22 September 2010. Singapore: World Scientific. 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