What is the Creative Economy?

What is the Creative Economy?

November 19, 2017
  • From ‘creative industries’ to ‘creative economy’ – how the idea of creative industries and the creative economy has changed in the last 20 years

    How the term ‘creative industries’ began

    The term ‘creative industries’ began to be used about twenty years ago to describe a range of activities, some of which are amongst the oldest in history and some of which only came into existence with the advent of digital technology. Many of these activities had strong cultural roots and the term ‘cultural industries’ was already in use to describe theatre, dance, music, film, the visual arts and the heritage sector, although this term was itself controversial as many artists felt it demeaning to think of what they did as being, in any way, an ‘industry’.

    ‘Industries’ or not, no one could argue with the fact that these activities – both the narrowly defined cultural industries and the much wider range of new creative industries – were of growing importance to the economy of many countries and gave employment to a large number of people. But no government had attempted to measure their overall economic contribution or think strategically about their importance except, perhaps, the US government which, for almost a hundred years, had protected and fostered its film industry, not just because of its value to the US economy but because it projected US culture and influence around the world. Although they did not constitute an easily identified industrial ‘sector’ in the way that aerospace, pharmaceuticals or automotive are seen as sectors, one thing all these activities had in common was that they depended on the creative talent of individuals and on the generation of intellectual property. In addition, to think of them as a ‘sector’, however arbitrary the definition, drew attention to the fact that they were part of or contributed to a wide range of industries and professions, from advertising to tourism, and there was evidence that the skills and work styles of the creative sector were beginning to impact on other areas of the economy, especially in the use of digital technologies.


    The first attempt to measure the value of the creative industries

    In 1997, a newly elected Labour government in the UK decided to attempt a definition and assess their direct impact on the British economy.  Drawing on a study published in 1994 by the Australian government, Creative Nation, and on the advice of an invited group of leading creative entrepreneurs, the government’s new Department for Culture, Media and Sport published Creative Industries – Mapping Document 1998 that listed 13 areas of activity – advertising, architecture, the arts and antiques market, crafts, design, designer fashion, film, interactive leisure software, music, performing arts, publishing, software, television and radio – which had in common the fact that they “… have their origin in individual creativity, skill and talent and … have a potential for wealth creation through the generation of intellectual property”. The concept of intellectual property (in other words the value of an idea that can be protected by copyright, patents, trade marks or other legal and regulatory mechanisms to stop it being copied or turned to commercial advantage without the permission of the person whose idea it was) was seen as central to any understanding of creative industries – and continues to be so. 

    Critics argued that the study was creating false distinctions and that individual creativity and talent were at the heart of many other areas of activity, from bio-sciences to engineering. Of course, that is true but the study had deliberately chosen not to include the creative work of scientists and engineers that is built on systematic analysis and enquiry, and to focus instead on the more random drivers of creativity in the social and cultural spheres. Another criticism was that the study failed to acknowledge the difference between businesses that actually generated intellectual property value through the creative talent of individuals, and were typically small, under-capitalised SMEs or micros (‘small or medium enterprises’, meaning they had between 25 and 500 employees, or ‘micro-businesses’, meaning they had 10 or fewer employees), and businesses that benefitted from owning and exploiting that intellectual property that were typically large, heavily-capitalised transnational conglomerates, sometimes with very little evidence of ‘creativity’ in the way they operated. The two kinds of company could not be more different from each other and yet they were both being defined as part of the ‘creative industries’.  Despite these and other criticisms the study attracted considerable interest, particularly when a follow-up analysis in 2001 revealed that this arbitrarily defined creative sector was generating jobs at twice the underlying rate of the UK economy as a whole.


    How thinking about the creative industries has evolved

    Twenty years later, the concept of the ‘creative industries’, and their importance, is recognised by almost every government in the world and is beginning to give way to a much more inclusive idea of a wider ‘creative economy’. Of course, the desire to define specific industries as ‘creative’ persists, and will no doubt continue to be so.  In some countries the definitions revolve closely around the arts and culture. Other countries have broader definitions that include, for example, food and gastronomy on the basis that food and cuisine have both economic and cultural significance. Other countries have a definition that includes well-established business-to-business industries such as publishing, software, advertising and design; the 11th Five-Year Plan of the Peoples Republic had as one of its central themes the need to “move from made in China to designed in China” – a classic exposition of the understanding that generating intellectual property is more valuable in the 21st century economy than manufacturing products. Other countries, including the UK, have wrestled with the tricky question of where to locate policy development for ‘creativity’ within their government structures – is it economic policy, industrial policy, cultural policy, education policy, or all four?

    The more policy analysts and statisticians around the world thought about how to assess the true impact of the creative industries the more it became apparent that much more fundamental rethinking was necessary. For a start, the fusion of the arts and creative industries with digital technology was spawning whole new industries and skills that were not captured by the internationally recognised templates for measuring economic activity, the so-called ‘SIC’ and ‘SOC’ codes (Standard Industrial Classifications and Standard Occupational Classifications). This had the perverse effect of making important new areas of skill and wealth generation effectively invisible to governments and made international comparisons almost impossible. There were other obvious anomalies – not every job in the creative industries was ‘creative’ and many jobs outside the scope of the creative industries, however one chose to define them, were clearly very creative. The UK organisation Nesta, and others, began to explore this area, coming to the conclusion that the number of creative jobs in ‘non-creative’ industries was probably greater than the number of creative jobs within the creative industries. How could one begin to measure their impact? Moreover, the massive impact of digital technology was transforming every industry, creative or not, while the internet was opening up an ever-changing variety of platforms for new creative expression which, in turn, was generating all kinds of new and very obviously creative businesses. For example, within a decade and a half of its birth the videogames industry had surpassed the hundred year old film industry in value. And if ‘design’ was to be included as a creative industry, which it obviously was, where did that leave process design which was a creative discipline but one whose impact was felt across every other area of economic activity from retail to transport planning and health? 

    The more policymakers thought about the creative industries the more it became apparent that it made no sense to focus on their economic value in isolation from their social and cultural value. A United Nations survey of the global creative economy, published in 2008, pointed out that far from being a particular phenomenon of advanced and post-industrial nations in Europe and North America, the rapid rate of growth of ‘creative and cultural industries’ was being felt in every continent, North and South. The report concluded “The interface between creativity, culture, economics and technology, as expressed in the ability to create and circulate intellectual capital, has the potential to generate income, jobs and exports while at the same time promoting social inclusion, cultural diversity and human development. This is what the emerging creative economy has begun to do.” 


    The creative economy has a cultural and social impact that is likely to grow

    In a time of rapid globalisation, many countries recognise that the combination of culture and commerce that the creative industries represents is a powerful way of providing a distinctive image of a country or a city, helping it to stand out from its competitors. The value of widely recognised cultural ‘icons’, such as the Eiffel Tower in France, the Taj Mahal in India or the Sydney Opera House in Australia has given way to whole cultural districts that combine arts and commercial activity, from the Shoreditch district of London with its design studios, tech businesses, cafes and clubs to huge prestige projects such as the West Kowloon cultural district in Hong Kong or the cultural hub on Sadiyaat Island in Abu Dhabi that represent billions of dollars of investment. 

    Awareness of this broader significance was reflected in a UK government publication of 2009, Creative Britain, which argued that effective long-term policies for the creative industries depended on policy initiatives, many of them at city and regional level, that were social as much as economic and that included, for example, the need for radical changes in the way children’s education was being planned, if Britain’s economy was to achieve long-term success as a home of creativity and innovation.

    By 2014 staff at Nesta felt the debate had moved on so significantly that a new definition was was called for; a simple definition of the ‘creative economy’, rather than ‘creative industries’, as “…those sectors which specialise in the use of creative talent for commercial purposes”.  The same year, in an analysis of the UK’s cultural policy and practice, the writer Robert Hewsion observed in his book Cultural Capital– The Rise and Fall of Creative Britain, “It is the configuration of relationships that gives a system its essential characteristics. Thus, it is less helpful to define the creative economy by what it does, than try to understand how it is organised”.

    This, in turn, opens up a whole new arena for discussion. It seems that these industries, especially the thousands of small and micro-businesses that are at the cutting edge of creativity, may not only be of growing economic significance but, in some sense, are a harbinger of a whole new economic order, providing a new paradigm for the way in which businesses are organised, education is understood and provided, value is measured, the working lives and career prospects of millions of people are likely to develop and how the cities they live in will be planned and built. In particular, the rapid growth of automation and the use of artificial intelligence and robotics, which heralds the so-called “Fourth Industrial Revolution”, is certain to have a major impact on employment globally.  Researchers at Oxford University estimate that up to 47% of jobs in the US could be replaced by machines in the course of the next 20 years, while their figure for the UK is 35%. But a 2015 study by Nesta, ‘Creativity vs. Robots’ argued that the creative sector was to some extent immune to this threat, with 86% of ‘highly creative’ jobs in the US, and 87% in the UK, having no or low risk of being displaced by automation. 

    It is sometimes said that where oil was the primary fuel of the 20th century economy, creativity is the fuel of the 21st century. In the same way that energy policy and access to energy was a determinant of geopolitics throughout the 20th century, it may be that policies to promote and protect creativity will be the crucial determinants of success in the 21st. If that is true then we will have to rethink the way governments are organised, the way cities are planned, the way education is delivered, and the way citizens interact with their communities. So, thinking about what we mean by creativity and the creative economy could not be more important!

    BRITISH COUNCIL



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