The UAE is bidding to host the World Expo 2020 in Dubai under the theme ‘Connecting Minds, Creating the Future.’ What does Dubai stand to win or lose from this bid and should the bid be welcomed?
Expo has a long history going back to the famed Great Exhibition of 1851 in the UK through to the last Expo in Yeosu, South Korea, in 2012. The Great Exhibition of 1851 was used to promote and celebrate the UK’s position then as the world’s largest and most advanced economy. It served its purpose both in terms of making the domestic population aware of economic success and making export markets and competing firms aware of the strength of UK products.
The Shanghai Expo of 2010 was also a success. To the outside world it transmitted an image of China’s economic success and the global stature China had achieved and to the domestic population it offered a showcase of success and prosperity that the government’s policies were producing.
Hosting Expo therefore has advantages. However not every Expo is remembered so well as the Great Exhibition or the Shanghai Expo. Who remembers Knoxville in 1982 or Hannover in 2000? Zaragosa in 2008?
Even if hosting Expo has advantages, do these exceed the costs? The Great Exhibition in the UK did leave a lasting legacy. The profits made were used to fund the establishment of one of the UK’s elite academic institutions — Imperial College — as well as the Natural History Museum, the Science Museum, the Victoria and Albert Museum and the whole area around Exhibition Road in South Kensington.
However, the majority of Expos and global events, such as the Olympics and the World Cup, end up providing a financial loss for the host nation. The normal outcome is of financial overruns on construction, modest increases in tourism revenues (with a common pattern being a concentration of tourism in one year at the expense of future years) and a legacy of unwanted infrastructure and buildings which are underutilised after the event as their main focus is no longer required.
LONG-TERM LEGACY
However, even if the financial contribution of an event is negative it may still be worthwhile hosting. There are a number of academic studies that show that although the long-run impact of hosting global sporting events on GDP is zero or negative, the general population are boosted and made happier by the event, its success and the global attention that comes with it.
So what does all this imply for Dubai? Firstly, care should be taken over the proposal, its financial control and its long-term legacy. Secondly, the benefits of hosting a global event should not be seen as directly related to the project itself but a wider symbolism.
Thirdly, an important aspect of the event is not just an external projection of the country but engagement of the local population with the success of the event and the wider economy.
On the first, financial control, Expos have several advantages over global sporting events. The infrastructure spend required is less and does not leave a legacy of unused swimming pools or stadiums.
If Expo is hosted in an area with good logistics or where the next stage of industrial development is required, the inefficiencies and deadweight loss of development are minimised. Given Dubai’s infrastructure and the current state of the property market, hosting Expo should give both a short-term boost to the economy and with relatively small long-run adverse effects.
On the second area — the symbolic value of hosting the Expo — Dubai stands to gain much. As Shanghai showed, with the world changing dramatically as globalisation leads to a shift of economic geography to the East, the value of hosting an Expo and symbolising your global connectivity and readiness has increased.
Just as 1851 and the Great Exhibition signalled a new and highly global world and placed the UK at the heart of it, Shanghai 2010 signalled China’s importance in a new global configuration. With the Middle East perfectly placed between West and East, with Dubai as a city focusing on its global connectivity and advantage as a place to do international business, the symbolic gains for the UAE hosting the event are substantial. These benefits are made even greater by the fact that Expo has never been hosted in the Middle East or Africa.
The final consideration is engagement with the local population. The UAE and Dubai can potentially get economic benefits from hosting Expo but non-economic benefits are also substantial. Engaging the population in an event of national pride, helping them participate and celebrate in the success of the country and its global connectivity and importance whilst enhancing national pride will serve both to develop Emiratisation and enhance national welfare.
The UAE and Dubai therefore stand to benefit more than most countries from hosting Expo. Here is looking forward to joining in the celebrations.
CREDIT: The writer is a professor of economics and deputy dean at London Business School. He was a speaker at London Business School’s Spring Celebration Event 2013 on June 11. The theme for this year was ‘Dubai — a global city’.
