Friday, October 5, 2012

Why Defining the Creative Economy Matters

Let's talk about defining the creative economy and then look at why it matters.

From a national perspective, there is no one accepted definition or quantification of the ‘creative economy’. This makes assessment and benchmarking around the country virtually impossible right now. While there have been definitions for and strategies to develop the creative economies of the European Union and Australasia, the US is at least fifteen years behind such a comprehensive approach to this economic sector.

The United Nations Conference on Trade and Development wrote a Creative Economy Report in 2010 and reported that “in 2008, despite the 12 percent decline in global trade, world trade of creative goods and services continued its expansion, reaching $592 billion and reflecting an annual growth rate of 14%. The emerging creative economy has become a leading component of economic growth, employment, trade and innovation, and social cohesion in most advanced countries”. For full report go here.

There have been many cities, regions, and states who have defined and measured their creative economies – each using the definition and data sets most relevant to their communities. During the fall/winter of 2012/13, a national profile of the various definitions of the creative economy is being compiled by Christine Harris with the Creative Alliance Milwaukee under the umbrella of a National Endowment for the Arts grant. This is designed to shed light on what could become a national definition for measuring the creative economy across the nation. The research hopes to provide an avenue for communities to compare and contrast across the country, and set benchmarks for creative economic development.

There has been much written about how to define and measure the creative economy in the US. Richard Florida has taken a very wide view with his distinction of  ‘creative class’ talent but definitions of the creative economy are most generally connected to the production of goods or services generating revenue. Significant research approaches have come from the New England Foundation for the Arts (see their report) and the leading consultants in this field, Mount Auburn Associates (their website with their studies). This is not about the creative process or creative thinking per se, but about understanding the role and quantifying the impact of creative goods and services on a community’s economy.

The concept of a creative economy/industry is still quite new to many development agencies around the country. Creative Alliance Milwaukee’s Creativity Works! Milwaukee’s Regional Creative Industries Project 2010 received the first ever grant from the US Economic Development Agency to support creative economy research. In more recent years, economic development practitioners, researchers and policy makers are recognizing the crucial role of creative enterprises and creative workers as significant to local economic strength and differentiation. Often these industries are catalysts for change and growth, contributing to place identity (often referred to as ‘creative placemaking’), competitive advantage, new employment opportunities and the overall well-being of an area.

Measuring the economic value of an industry sector includes measuring its enterprises and its workforce. The industries that make up the creative economy are a set of interlocking industry segments including nonprofit arts/culture groups, for profit creative businesses and sole proprietor creatives – all of whom create, produce and distribute products or services.  Therefore, a definition is suggested below for determining what makes up the creative economy.

Creative Industries: Those organizations, individuals and companies whose products and services originate in artistic, cultural, creative and/or aesthetic content.

Generally, the definition includes counting both the creative businesses and the creative occupations within the industry sector. A creative business is comprised of those individuals and companies working within that industry, e.g. architecture firm or recording studio; and a creative occupation is any occupation which has as its primary purpose tasks requiring creative or aesthetic skills, e.g. graphic designer whether in an ad agency or a manufacturer.  A more detailed definition can be found in the aforementioned Creativity Works!  report.

Now let's look at why it matters.

There are two things that the creative industries produce – ideation and conceptualization of new products and services; and revenue. Casting the net over this interlocking set of businesses and measuring their economic value often leads to a surprisingly sizable component of any community’s economy – both in terms of economic output and related jobs. Then, of course, there is the role these industries play both in new idea and innovative product development with respect to differentiating competitive advantage and expanding tourism opportunities.

A strong creative economy is a symbol of a vibrant, clean, environmentally friendly, and forward-thinking community. The benefits creative industries and its workers can bring include:
·       greater diversity of people and work opportunities, which is highly attractive to young professionals  and their families – who can work anywhere
·       greater ability to attract new employees, who seek quality of life and a more creative lifestyle
·       higher profile in the media if your community is seen as ‘cool’ and ‘creative’
·       a more engaged, interesting citizenry with increased creativity outlets
·       a proven record as a growth industry
·       elevated tourism appeal

Finally, it is important to note that unlike any other industry sector, the creative industries offer a triple return on investment.

First, the industry sector itself represents significant economic and employment value. When measured, this sector often comes up as one of the largest industry sectors in a community.

Second, it provides a positive impact on all businesses by helping them be more creative, differentiating products and services, supporting a strong tourism and hospitality business, and fostering artistic/artisan opportunities.

And third, a strong creative economy improves community attractiveness because people (including creatives!) like to be around creative people, it fosters a vibrant community life, it helps define the ‘quality of place’ and it enhances quality of life.

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