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The Globe and Mail

For Tokyo, Olympic pride – but at what cost to Japan’s economy?

Tokyo’s Shinjuku skyscrapers and the planned construction site (bottom) for the new national stadium for the Tokyo 2020 Olympic Games in Tokyo on Nov. 16, 2015.


Noriko Kano was 14 when Tokyo first played host to the Olympics in 1964. She was living in Saitama at the time, just outside Tokyo, and remembers being deeply impressed and full of pride as an economically booming Japan rose from the ashes of the Second World War to impress outsiders with its rebuilt capital and its brand-new bullet trains.

"I saw the people running, saw the torch relay," said Ms. Kano, now 65. "At the time, I didn't know anything about budgets or what it would all cost."

Now, like others in Japan, she is watching skeptically as Tokyo attempts to boost the country's faltering economic growth, while simultaneously paying the enormous price tag of hosting the 2020 Summer Games.

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"I'm for the Olympics, but it's costing a lot of money," she said. "The stadium is going to cost a lot. And what are we going to do with it after? It's not just that stadium. They have to build many more. I wonder if all these buildings are really necessary."

The Tokyo government says hosting the Olympics will generate trillions of yen of economic activity and that the benefits will far surpass the costs associated with building the facilities. But a University of Oxford Said Business School study found that, over the past 50 years, hosting the Games has meant costly price overruns "with 100-per-cent consistency" – far in excess of other megaprojects.

Host countries face the risk of paying off enormous debts when building costs outstrip returns, and cities from Athens to Beijing have found their capital regions cluttered with costly, underused sports facilities.

There is also the chance of costly embarrassments, such as the Japanese government's decision to start again on its national stadium after the original design by Iraqi-British architect Zaha Hadid soared to an estimated cost of $2-billion (U.S.), roughly four times that of Beijing's extravagant "Bird's Nest."

The stadium about-face created additional political difficulties for Prime Minister Shinzo Abe, who has struggled to revive the economy and was already facing intense public anger and opposition over his efforts to enable Japan's military to be deployed abroad. There were calls for the sports minister to resign, and Mr. Abe was forced to apologize.

"As a result of the decision to go back to the drawing board, precious public funds have been spent," Mr. Abe told Japanese lawmakers in August. "I apologize deeply to the people of Japan."

Still, like many Olympics, the Tokyo Games have already been imbued with a strong sense of national purpose. In Japan's case, there are even echoes of the country's triumph over adversity in the lead-up to the 1964 Games, given that the latest Japanese bid was assembled in the shadows of the 2011 earthquake and tsunami that destroyed the country's Fukushima nuclear reactor, a triple disaster that claimed more than 15,000 lives.

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"The earthquake and tsunami of March, 2011, deeply affected the Japanese people, and we are in need of a dream we can share that will strengthen our solidarity," Tokyo governor Naoki Inose wrote to the Olympic Committee in 2012. "A dream can give us strength, and with strength we can build a future."

To the Tokyo metropolitan government, the Olympics are a chance to go on a spending spree to upgrade and update aging infrastructure, as the Games have been for other municipalities. Visitors are justifiably impressed by Tokyo's spotless – and seemingly endless – subway system, the smooth asphalt roads in even the most remote rural areas and the 50-year "no fatality" record of the shinkansen bullet trains. But, as with Japan's population, which boomed after the war and is now greying rapidly, a lot of the country's infrastructure that was built during the postwar boom is now deteriorating.

Those problems are exacerbated in Tokyo, which received the bulk of early investment during the boom years – and was then starved for investment as the Japanese economy slowed and the government shifted public expenditures to the depopulating countryside.

Worries about crumbling infrastructure were highlighted in 2012, when more than 100 concrete roof panels – weighing roughly 1.2 tons apiece – fell from the ceiling of the Sasago tunnel on the Chuo expressway heading into Tokyo, killing nine and trapping many others.

Yoji Kobayashi, a senior consultant at the Nomura Research Institute think tank, said in a 2015 report that Japan should look beyond the Olympics by not only rebuilding aging infrastructure, but by showing the world how to transform one of the world's largest mature cities – with a population of about 36 million – into a greener, more sustainable city. He also said that Tokyo needs to overcome its isolationist tendencies by attracting more foreign residents – in line with London or New York – as well as making Tokyo a better place to base multinational corporations with operations in Asia, instead of losing out to Singapore and Hong Kong.

"As 2020 approaches, Tokyo and Japan as a whole should set about dealing with those problems that have been put off up to now," Mr. Kobayashi wrote.

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The Japanese government expects the Games to generate roughly $13.8-billion in economic activity in the Tokyo region and a further $10.5-billion across Japan, and generate about 150,000 full- and part-time jobs.

The Tokyo Metropolitan Government is expecting to pay roughly $2.5-billion to build various facilities. (The national government is paying for the main stadium.) But the country also hopes the Games will benefit Japanese businesses, which will be able to build venues and profit from tourists visiting Tokyo and Japan. The total budget, as estimated in Japan's bid for the Games, is $8.4-billion.

"We consider that the 2020 Tokyo Games are the perfect opportunity to make Tokyo's industrial might widely known to the world," said Koichi Yajima, director for planning and co-ordination of the Games for the Tokyo government.

For Shoji Chida, an 80-year-old real estate agent who focuses on Tokyo's Ginza and Yurakucho neighbourhoods, some of the most expensive property in the world, the Olympics already have begun to have a slight impact on the economy. He said commercial real estate prices have jumped about 10 per cent since the announcement.

"Things are changing slowly because of the Olympics in Tokyo, though we're not talking about the rural areas," Mr. Chida said. "This is one way to let the world know about Japan."

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