Economic Effects of the Seoul G20 Summit

The country is expected to reap economic benefits worth 18 billion to 20.6 billion U.S. dollars from the Seoul G20 summit Nov. 11, according to Samsung Economic Research Institute. This exceeds the 2.6 billion dollars generated by the 1988 Seoul Summer Olympics but is considerably less than the 30 billion dollars earned by China through the 2008 Beijing Summer Olympics. The institute said the G20`s generating effects will be comparable to those coming from the export of one million cars or 165 massive oil tankers or the creation of 112,000 jobs. Considering that the summit will last just two days and has only about 10,000 attendees, its economic effect is really huge.

The economic effects of an international event are measured by combining direct effects coming from consumer spending or expenditures for the event with indirect effects such as a rise in national image. Assuming that every foreigner will spend 1.5 times more than the average 2,777 dollars spent by foreign visitors in past international events hosted by the government, the attendees of the Seoul summit are estimated to spend a combined 415.5 million dollars. If the ripple effect on industries worth 53.3 billion won (45.8 million dollars) is factored in, South Korea will reap direct economic effects worth 102.3 billion won (87.9 million dollars) from the event.

South Korean companies will benefit from indirect effects. The country’s international image will rise more than it did in the 2002 FIFA World Cup soccer finals. Its national brand value will increase 1.3 to 1.5 percent, raising the image of South Korean companies as well, according to the institute. If 65 percent of foreign participants consider the summit a success, the rise in corporate image will be comparable to paying 1.7 trillion won (1.5 billion dollars) for advertising, leading to a rise in revenues worth 18.9 trillion won (16.2 billion dollars). If the successful hosting of the summit can remove risks from North Korea’s nuclear weapons development, South Korea will benefit from reduced interest rates worth 1.4 trillion won (1.2 trillion dollars). This will translate into a rise in economic growth of two percentage points in the mid and long term.

Such huge economic effects, however, are predicated on successful results. If the summit is hosted in a safe and clean environment and agreement is reached on meaningful agenda, it will produce the expected effects. If the summit is tainted by terrorism or demonstrations, however, its effect will be greatly reduced. Certain international events in other world cities were disrupted by violent and illegal anti-globalization demonstrations. The South Korean people’s cooperation is necessary to preempt terrorism and violent protests.

Editorial Writer Park Yeong-kyun (parkyk@donga.com)