April 2015 | www.selectasset.com
Japan expects economic gold in the 2020 olympics

As the buildup to the 2020 Tokyo Olympics gathers steam, a debate is boiling about the economic costs and benefits that this massive event may create. While there are many issues, both political and economic, that will affect Tokyo, its citizens and the entire country, the Olympics will also mostly likely ignite serious consideration of issues particular to foreigners and foreign workers.

For example, where will the 150,000 construction workers needed to build all new the Olympic infrastructure come from? Official estimates indicate half will probably be foreigners  —most likely from other Asian countries.

There are, however, likely to be much wider economic implications for Japan’s international population and foreigners coming to the country to work. Bringing these workers to Japan may necessitate relaxation of some of the country’s immigration restrictions, which could have implications for those seeking to work in other industries.

Will workers of the world unite in Tokyo?

On the surface, it all appears to tie in with the Japanese government’s broader economic aims, including deregulation and the establishment of “special zones” to encourage foreign companies to enter Japan and help make Tokyo more of an international economic powerhouse. The big question, however, remains: will the playing field change enough to allow for a sizeable increase of both blue- and white-collar job opportunities for foreign workers?

In the Japan Times, Minoru Matsutani cites what is known as the “dream effect” that the Olympics brings to its host nation . While this may sound vague or unscientific, economists have put a great deal of research into measuring the generalized increase in consumption that goes hand-in-hand with mega events, such as the Olympics. The Institute for Urban Strategies expects the dream effect to account for ¥7.5 trillion of their total ¥19.4 trillion economic impact estimate—a figure some analysts believe is conservative. Matsutani’s article estimates that the Olympics will create 1.21 million jobs.

At the cash register, that ringing you hear may be sales of high-definition display screens, which are projected to increase as the Olympics approaches, much as the 1964 Tokyo Olympics drove sales of color TVs. Increased demand is also eagerly anticipated in English school enrollment, as the international nature of the event arouses cosmopolitan interests and the economy gears up to receive an influx of foreign tourists and business partnerships. Meanwhile, the government is encouraging an expansion in the hiring of Assistant Language Teachers (ALTs) to work at Japan’s elementary and middle schools.

If you build it, will they come?

Tourism is another area where the economy is expected to accrue benefits. A 2014 Mizuho Research Institute report on the economic impact of the Olympics cites increases in tourism over the whole period running up to the Olympics in all of the past five host nations and projects that the number of overseas visitors to Japan to top 20 million, doubling the figures from 2013.  Mizuho also estimates tourism spending may add ¥3 trillion to the economy, and prefectural governments are eager to ensure that those benefits are spread around the whole country, not just the capital.

To handle the increase in visitors, the international airports at both Haneda and Narita are planning to add up to 40,000 additional flights each per year. No doubt, corresponding growth in hotel capacity and other tourism infrastructure should follow. Based on the experiences of 2012 host London, this infrastructure boost could feed a cycle of investment by encouraging international business conferences and conventions, leaving a legacy that will continue to benefit the city long after the Olympics are over.

The announcement that Tokyo would host the 2020 Olympics was made in 2013, and if trends in previous host nations are an accurate indicator, economic ripples should have already begun, particularly in the tourism sector. While other past hosts, most notably Athens, have been unable to capitalize on the Olympic legacy, others such as London appear to have emerged stronger from the games, and naturally is that model that “Japan Inc” hopes to emulate. If proposed government reforms and the “dream effect” on consumer behavior fully materialize, there will be enough benefits to go around for both foreigners and their Japanese hosts alike.