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    Creative Economy: A Dynamic Sector in World Trade


    International Trade Forum - Issue 3/2009

    The United Nations' Creative Economy Report 2008 demonstrates that creative industries are powerful engines for economic growth and trade development in developing countries. This is true not only in terms of direct economic impact from the sale of goods and services but, importantly, also as a multiplier in other sectors by stimulating new business opportunities and enhanced capacity.

    The report's major findings point towards a need for informed policy that recognizes the scope and diversity of the creative economy. Such policy would support the development of comprehensive and reliable data on the various dimensions of the creative economy, balanced with the enforcement of intellectual property rights to ensure that the interests of artists and creators from developing countries are protected.

    Market Overview

    The global market for traded goods and services of the creative industries has enjoyed an unpre-cedented dynamism in recent years. Their global export value reached US$ 424.4 billion in 2005, accounting for 3.4 per cent of world trade as compared with US$ 227.4 million in 1996 according to the United Nations Conference on Trade and Development (UNCTAD). Over the period from 2000 to 2005, the creative industries' share of global markets grew at an annual rate of 8.7 per cent, a trend that is likely to continue, given the positive prospects for global demand. Exports of creative services increased by 8.8 per cent annually, rising from US$ 38.2 billion in 1996 to US$ 89 billion in 2005.

    While developed countries have dominated both export and import flows, developing countries year after year have increased their share in world markets for creative products, and their exports have risen faster than those from developed countries. Exports of creative goods from developing econ-omies accounted for 29 per cent of world exports of such goods in 1996 and reached 41 per cent in 2005, with China alone accounting for 19 per cent.

    The dynamism of developing countries' exports of crea-tive products is new. The increase in China's exports over the ten years was remarkable - from US$ 18.4 billion in 1996 to US$ 61.3 billion in 2005. During this period, exports of creative goods from developing countries increased 143 per cent, nearly tripling from US$ 55.7 billion to US$ 136.2 billion. Asian economies accounted for more than three-quarters of total exports of creative goods, while in Latin America and the Caribbean, exports doubled from approximately US$ 3.5 billion to US$ 8.6 billion. The level of exports from this region, however, remained comparatively low given the potential of its creative industries. Africa contributed marginally (less than 1 per cent) to world exports even though exports increased from US$ 973 million to US$ 1.8 billion during the period.

    Major factors of the creative economy worldwide

    The major drivers responsible for the extraordinary growth in the creative industries worldwide can be found in technology, growing consumer markets and better linkages to the tourism sector.

    Technology. The convergence of multimedia and telecommunication technologies has led to an integration of the means by which creative content is produced, distributed and consumed and has, in turn, fostered new forms of artistic and creative expression. At the same time, the deregulation of previously state-owned enterprises has paved the way for growth in private sector investment. Digital technology has brought about enormous growth in the range of media through which creative content is conveyed to consumers, such as video-on-demand, music podcasting, streaming, computers and the provision of television services via cable, satellite and the Internet.

    Growth in demand. New communications technologies (digital, mobile and Internet) have seen a new generation of consumers who are not only expanding their range of cultural experiences, but also adding to it, creating the emergence of consumers as creators. Technology advances have also led to the cost of these items coming down.

    Tourism. Worldwide growth in tourism has helped fuel the growth in sales of creative goods and services to the tourist market. The cultural sector also contributes to the sector through the demand for visits to cultural heritage sites, museums, galleries, festivals, music and dance performances.

    Making a positive impact

    Creative industries provide a catalyst for positive change in developing countries across social and cultural dimensions in addition to direct economic impact. In this way, the sector plays an important role in all aspects of national development. The positive impact of creative industries on communities in developing countries includes:

    Economic aspects. International trade is a key component of the creative economy. UNCTAD reports this growth at 8.7 per cent per annum on average in the latest data available (2000-2005).

    Social aspects. A major social impact of the creative industries is their contribution to employment. Typically they account for 2 to 8 per cent of the workforce in the economy, depending on the scope of the sector defined.

    Cultural aspects. From a cultural perspective, the value of the creative industries in promoting cultural diversity has become more pronounced as the process of globalization continues.

    Sustainable development aspects. Creative industries contribute to sustainable development in the sense of "cultural sustainability" that maintains all types of cultural assets, from minority languages to artworks, artefacts and heritage sites. Creative industries are also environmentally friendly as the primary input is services (creativity) rather than natural resources.

    Obstacles to the expansion of the creative economy

    Despite the creative industries becoming a major driver of economic growth in emerging economies, a large majority of developing countries are not yet able to harness creative capacities for development gains. The challenges they face range from understanding the value chain of production and distribution of creative goods to capturing reliable data, the lack of knowledge of effective modes of governance of this trade and the challenges of marrying opportunity through technology with the protection of intellectual property.

    Policy towards the creative economy

    The United Nations' report highlights that policies to encourage the development of creative industries in developing countries must recognize the cross-cutting and multidisciplinary nature of the creative economy, with its widespread economic, social and cultural linkages and ramifications. These linkages span a number of different sectors in the overall economy ranging from arts and culture to tourism, international trade, technology and communications. Policy needs to reflect linkages between investment, technology, entrepreneurship and trade.

    Evidence-based policy-making is hampered at present by a lack of comprehensive and reliable data on the various dimensions of the creative economy. Progress can be made in assessing production and trade in creative products in developing countries using existing statistical sources. Further progress, however, requires the development of new models for gathering qualitative and quantitative data concerning the creative industries and how they function within the economy as well as improvement in the quality of current data-collection processes.

    Efforts to enforce intellectual property rights regimes should ensure that the interests of artists and creators from developing countries are duly taken into account. Intellectual property should provide a stimulus to creators and entrepreneurs in the form of a tradable economic asset that is instrumental to enhancing the potential of the creative sector for development.

    Policy recommendations

    The cross-cutting nature of the creative economy means that policy development for these industries must be formulated on a coordinated inter-ministerial basis. The range of instruments that policy-makers can use to develop strategies for creative industries in developing countries is wide. The need is mainly for infrastructure development, competition law and intellectual property regimes in addition to traditional debates about intrinsic value. In more specific terms, policy initiatives may be undertaken in:

    • Mapping of inventories of cultural assets and creative industries
    • Development and financing (e.g., microfinance) of small and medium-sized businesses
    • Copyright legislation and enforcement
    • Support for artists and the arts, both direct (via fiscal means) and indirect (through encouragement of private sector support)
    • Conservation of tangible and intangible cultural heritage
    • Expansion of digital capacity and know-how.

    These need to be married with other more general policy development work including:

    • Market (both domestic and export) development
    • Tourism promotion
    • Education, training and skills development
    • Industry assistance
      (e.g., via investment incentives, tax concessions, etc.)

    It is widely known that the appropriate development paradigm is one based on sustainable development measured in economic, cultural, social and environmental terms. Through its multidimensional potential, the creative industries sector represents a special opportunity for developing countries. This potential will only be fully realized through well-informed policy development, coupled with a highly energized businesses working closely with the creative communities within each country.

    The Creative Economy Report 2008 is the first study to present the United Nations perspective on the topic. Bringing together contributions from UNCTAD, the UN Development Programme, the UN Educational, Scientific and Cultural Organization, the World Intellectual Property Organization and ITC, the report provides empirical evidence that the creative industries are among the most dynamic sectors emerging in world trade. The report presents the latest data available on the industry and addresses the opportunities and challenges that lie ahead.

    A full copy of the Creative Economy Report 2008 is available at http://www.unctad.org/en/docs/ditc20082cer_en.pdf

    Definition of the creative industries

    The creative industries are at the heart of the creative economy. Although there is no definitive definition of the sector, UNCTAD stipulates the creative industries:

    are the cycles of creation, production and distribution of goods and services that use creativity and intellectual property as primary input

    constitute a set of knowledge-based activities focused on but not limited to arts, potentially generating revenues from trade and intellectual property rights

    comprise tangible products and intangible intellectual or artistic services with creative content, economic value and market objectives

    are at the crossroads of artisans, services and industrial sectors

    constitute a new dynamic sector in world trade.

    Text: Adapted by Trade Forum Editorial Team