Megaevents, Urban Management, and Macroeconomic Policy: 2007 Pan American Games in Rio de Janeiro

Abstract

The growth of megaevents is related to changes within urban management paradigms and the corresponding economic analysis. As such, urban management and macroeconomic policy must be investigated together. This paper focuses on the relationships between the hosting of the 2007 Pan American (Pan Am) games, the budget management of Rio de Janeiro city, and Brazil’s macroeconomic policy, considering both the economic impacts and exploring possible alternative uses of the public resources. The games required a newly built infrastructure, demonstrating that hosting megaevents in developing countries requires more sacrifices than for cities in industrialized countries. These expenditures did not change the control policy of public debt, because the city’s management followed the principles of government policy. Therefore, the adjustment of the municipal budget occurred in other expenditures, especially health and education. Finally, Rio de Janeiro municipality did not have enough resources to host the Pan Am games, and the federal government had to promise financial support. Planning megaevents has a new dimension not usually discussed in the economic impact literature: the consequences of megaevents on the federalist equilibrium.