Creative Economy Report 2008...Summary Creative Economy Report 2008 The challenge of assessing the...

EnglishSUMMARY

Creative Economy Report 2008

n Forewordn Acknowledgementsn Overviewn Lessons learned and policy options

Summary

Creative Economy Report 2008The challenge of assessing the creative economy: towards informed policy-making

n Full report on CD enclosed

Résumé

Rapport sur l’économie créative 2008 Le défi d’évaluer l’économie créative: vers une politique éclairée

n Rapport complet sur le CD adjoint

Resumen

Informe sobre la economía creativa 2008El desafío de evaluar la economía creativa: hacia la formulación de políticas públicas informadas

n Informe completo en el CD adjunto

Copyright © Nations Unies 2008Tous droits réservés

UNCTAD/DITC/2008/2ISBN 978-0-9816619-1-9

Le présent ouvrage peut être cité ou reproduit, à condition qu’il soit fait mention de la source.Un exemplaire de l’ouvrage où est reproduit l’extrait cité devrait être communiqué aux adresses suivantes: Secrétariat de la CNUCED, Palais des Nations, CH-1211 Genève 10 (Suisse), et l’Unité spéciale pour de la coopération Sud-Sud, PNUD, 1 UN Plaza New York, NY 10017 (É.-U.).

Le présent rapport est le résultat d’un effort concerté d’une équipe dirigée par la CNUCED et l’Unitéspéciale pour la coopération Sud-Sud du PNUD comprenant des spécialistes travaillant dans les institutions coopérantes de l’ONU – CNUCED, PNUD, UNESCO, OMPI et CCI – ainsi que des consultantsinternationaux.

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Ce rapport est disponible sur l’Internet aux adresses suivantes: http://www.unctad.org/creative-economy et http://ssc.undp.org/creative_economy

Copyright @ Naciones Unidas 2008Todos los derechos reservados

UNCTAD/DITC/2008/2ISBN 978-0-9816619-1-9

El material presentado en esta publicación puede ser citado o reproducido siempre que se reconozca yse haga referencia a su fuente. Se solicita que una copia de la publicación citando o reproduciendo estematerial sea enviada a la secretaria de UNCTAD: Palais des Nations, CH-1211 Ginebra 10, Suiza, y a laUnidad Especial para la Cooperación Sur-Sur del PNUD: 1 UN Plaza, New York, NY 10017, USA.

Este Informe es el fruto de un esfuerzo conjunto liderado por la UNCTAD y la Unidad Especial para laCooperación Sur-Sur del PNUD, por parte de un equipo de expertos de varios organismos de lasNaciones Unidas que colaboraron para su producción – la UNCTAD, el PNUD, la UNESCO, la OMPI y elCCI- y también de consultores internacionales.

Los señalamientos y la presentación del material de esta publicación no implican la expresión deopinión alguna respecto al estatus legal de ningún país, territorio, ciudad o área, ni respecto a ladelimitación de sus fronteras o límites.

Este Informe está disponibles en Internet en las siguientes direcciones: http://www.unctad.org/creative-economy y http://ssc.undp.org/creative_economy

The world economy has clearly seen anextraordinary expansion in the past five years.This expansion has been more broadly basedthan ever before, allowing many developingcountries to benefit from it. Even some of theleast developed countries have been able togenerate average annual GDP growth of morethan 5 per cent, representing significantprogress over that made in the 1990s.Nevertheless, this path of economic growthhas not yet been sufficient to ensure the wel-fare and decent living standards for the largemajority of people in the developing world.Despite efforts to diversify their economies,86 of 144 developing countries still dependon commodities for more than half theirexport earnings. Prevailing development strate-gies have yet to succeed in generating expectedlevels of socio-economic development for thesecountries. The challenge is to find feasibledevelopment options that take into accounttheir specific realities and in particular theirscarcity of skilled labour, lack of basic infra-structure and very low levels of foreign directinvestment. How to promote developmentthat is both sustainable and inclusive?

As economic models do not function inisolation, the time has come to go beyond economics and look for a more holistic devel-opment approach that considers their differ-ent cultural identities, economic aspirations,social disparities and technological disadvan-tages. Development strategies also must be

updated in order to cope with the far-reachingcultural and technological shifts under way inour society. The world needs to adapt to thisnew environment by bringing issues relating toculture and technology into the mainstream ofeconomic development thinking. Achievingthe Millennium Development Goals calls fordealing with cross-cutting development issuesby introducing concerted multidisciplinarypolicies and reinforcing policy coherence atthe national and international levels.

Globalization and connectivity are newrealities that have brought profound changesin lifestyles worldwide. This is reshaping theoverall pattern of cultural production, con-sumption and trade in a world increasinglyfilled with images, sounds, texts and symbols.There is a clear need to better grasp the complex interactions among the economic,cultural, technological and social aspects guid-ing the dynamics of the world economy andthe way people live in the twenty-first century.In this era of transformation, creativity andknowledge are fast becoming powerful meansof fostering development gains.

In this context, the interface among creativity, culture, economics and technology,as expressed in the ability to create and circu-late intellectual capital, has the potential togenerate income, jobs and export earningswhile at the same time promoting social inclusion, cultural diversity and human devel-

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Foreword

Foreword

opment. This is what the emerging creativeeconomy has already begun to do as a leadingcomponent of economic growth, employ-ment, trade, innovation and social cohesion inmost advanced economies. The creative econ-omy also seems to be a feasible option fordeveloping countries. If effective public poli-cies are in place, the creative economy gener-ates cross-cutting linkages with the overalleconomy at macro and micro levels. It thusfosters a development dimension, offeringnew opportunities for developing countries toleapfrog into emerging high-growth areas ofthe world economy.

This study is the first to present theperspectives of the United Nations on thisexciting new topic. The creative economy is anevolving concept centred on the dynamics ofthe creative industries. There is no single defi-nition of the creative economy nor is there aconsensus as to the set of knowledge-basedeconomic activities on which the creativeindustries are based. There is no one-size-fits-all recipe but rather, flexible and strategicchoices to be made by national governments inorder to optimize the benefits of their creativeeconomies for development.

At the heart of the creative economy liethe creative industries. Loosely defined, the cre-ative industries are at the crossroads of the arts,culture, business and technology. In other words,they comprise the cycle of creation, production

and distribution of goods and services that useintellectual capital as their primary input. Today’screative industries involve the interplay of tradi-tional, technology-intensive and service-orientedsubsectors. They range from folk art, festivals,music, books, paintings and performing arts tomore technology-intensive subsectors such as thefilm industry, broadcasting, digital animationand video games, and more service-orientedfields such as architectural and advertising servic-es. All these activities are intensive in creativeskills and can generate income through trade andintellectual property rights.

This Report provides empirical evi-dence that the creative industries are amongthe most dynamic emerging sectors in worldtrade. Over the period 2000-2005, trade increative goods and services increased at anunprecedented average annual rate of 8.7 percent. World exports of creative products werevalued at $424.4 billion in 2005 as comparedto $227.5 billion in 1996, according to pre-liminary UNCTAD figures. Creative servicesin particular enjoyed rapid export growth –8.8 per cent annually between 1996 and2005. This positive trend occurred in allregions and groups of countries and is expectedto continue into the next decade, assumingthat the global demand for creative goods andservices continues to rise.

It is clear that developed countries stilldominate the global market for creative prod-

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The creative economy has thepotential to generate income and jobs while promoting socialinclusion, cultural diversity and human development

This Report provides empirical evidence that the creative industries are among the mostdynamic emerging sectors in world trade

ucts. Nonetheless, many developing-countryproducts are already benefiting from the cre-ative industry boom, particularly in Asia.Unfortunately, however, the large majority ofdeveloping countries are not yet able to har-ness their creative capacities for development.In Africa, for instance, despite the abundanceof creative talents, the creative potentialremains highly underutilized. The continent’sshare in global trade of creative productsremains marginal at less than 1 per cent ofworld exports despite sharp increases. As isthe case for other developing regions, this is areflection of both domestic policy weaknessesand global systemic biases.

The policy-oriented analysis presentedin this Report represents an initial contribu-tion to developing a better understanding ofthe key issues underlying the creative economy

and its development dimension. The Reportaddresses the challenge of assessing the creative economy with a view to informed policy-making by outlining the conceptual,institutional and policy framework in whichthis economy is flourishing. Given the multifaceted nature of the creative economy,strategic choices for concerted interministeri-al policy action are crucial. The importantimplications of multilateral processes in shaping policies for the creative economy alsowarrant consideration.

This Report is an example of cooper-ation inside the United Nations system,comprising contributions from five interna-tional organizations: UNCTAD, UNDP via its Special Unit for South-SouthCooperation, UNESCO, WIPO and ITC. Itis a joint endeavour that builds on comple-mentarities in order to enhance the effective-ness of international cooperation and policycoherence in this innovative field. The creative economy is producing new opportu-nities for both developed and developingcountries, but the challenges ahead shouldnot be underestimated.


Foreword

The large majority of developingcountries are not yet able to harness their creative capacitiesfor development

Supachai PanitchpakdiSecretary-GeneralUnited Nations Conference on Trade and Development

Kemal DervisAdministratorUnited Nations Development Programme

The Creative Economy Report 2008 is theresult of an initiative put forward by the part-nership between UNCTAD and the UNDPSpecial Unit for South-South Cooperation.This policy-oriented study is the main outputof the project, “Strengthening the CreativeEconomy in Developing Countries”, jointlycoordinated by Edna dos Santos-Duisenberg,Chief, UNCTAD Creative Economy andIndustries Programme, and FranciscoSimplicio, Chief, Division for KnowledgeManagement and Operations of the UNDPSpecial Unit for South-South Cooperation.

The Partnership expresses its sinceregratitude to Yiping Zhou, Director, UNDPSpecial Unit for South-South Cooperation,for his deep support to this initiative. Withouthis vision and commitment, this work wouldnot have materialized.

The Report was prepared under theleadership of UNCTAD and is a pioneeringexample of multi-agency cooperation reflect-ing the work of the United Nations Multi-Agency Informal Group on CreativeIndustries in an effort to build upon comple-mentarities and enhance policy coherence onmatters relating to the creative industries andthe creative economy. It is the first report topresent the United Nations system-wide per-spective on this innovative topic and it bringstogether contributions from five collaboratingbodies: the United Nations Conference onTrade and Development (UNCTAD), the

United Nations Development Programme(UNDP) Special Unit for South-SouthCooperation, the United Nations Educational,Scientific and Cultural Organization(UNESCO), the World Intellectual PropertyOrganization (WIPO) and the InternationalTrade Centre (ITC).

The research and policy-oriented analy-sis were carried out under the overall guidanceof Edna dos Santos-Duisenberg. The Reportgreatly benefited from the invaluable academ-ic insights from Dr. David Throsby fromMacquarie University, Sidney, and Dr.Andrew Pratt from the London School ofEconomics, to whom the team expresses itsdeep gratitude. The Multi-Agency Groupacknowledges and thanks the contribution ofthe following team of international consult-ants who provided inputs for various chapters:Avril Joffe, Pernille Askerud, Ana CarlaFonseca Reis, David Diaz-Benevides andSylvia Amaya Londoño.

The Partnership extends its profoundappreciation to all the colleagues from the col-laborating organizations who participated inthis joint endeavour, in particular the mem-bers of the United Nations Multi-AgencyGroup. Acknowledgements are expressed to:Georges Poussin, Richard Engelhardt, SimonEllis, Lydia Deloumeaux and Guiomar AlonsoCano from UNESCO; Dimiter Gantchev,Wend Wendland, Brigitte Vezina and RichardOwens from WIPO; and Iris Hauswirth, Jean-


Acknowledgements

Acknow

ledgements

Michel Pasteels and Kefalla Conte from ITC.

From UNCTAD, our special thanks goto the Head of the Central Statistics Branch,Henri Laurencin, and his team composed ofDavid Critsallo, Sanja Blazevic, Yoann Chaine,Mirco Moretti, Flavine Creppy and SoniaBlachier. Analytical inputs were also provided byMatfobhi Riba and Dimo Calowski. Commentswere received from Diana Barrowclough, YuefinLi and Susan Teltscher. Research assistance wasprovided by Carolina Quintana as well as byCheng Shang Li and Simon Alder, who wereextremely devoted to this work during theirinternship with UNCTAD.

The Partnership also expresses its sincere gratitude to all those who kindlyaccepted our invitation to contribute withsigned articles featuring concrete cases and/ortheir experiences in the creative economy as

illustrated in the boxes throughout theReport. These articles helped to bring pragmatism to the policy-oriented analysis ofthis Report and evidence for some of theempirical arguments.

The text was edited by Barbara Brewka,and Jennifer Bergamini designed the cover andthe layout of this publication.

Administrative and secretarial supportwas provided by Clisse Medeiros RamosPerret from UNCTAD and LourdesHermosura-Chang and Ines Tofalo from theUNDP Special Unit for South-SouthCooperation.

The Creative Economy Report 2008 wasfinanced by the UNDP Special Unit forSouth-South Cooperation.


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In the contemporary world, a newdevelopment paradigm is emerging that linksthe economy and culture, embracing econom-ic, cultural, technological and social aspects ofdevelopment at both the macro and micro lev-els. Central to the new paradigm is the factthat creativity, knowledge and access to infor-mation are increasingly recognized as powerfulengines driving economic growth and promot-

ing development in a globalizing world.“Creativity” in this context refers to the formu-lation of new ideas and to the application ofthese ideas to produce original works of art andcultural products, functional creations, scientificinventions and technological innovations. Thereis thus an economic aspect to creativity, observ-able in the way it contributes to entrepreneur-ship, fosters innovation, enhances productivityand promotes economic growth.

Creativity is found in all societies andcountries – rich or poor, large or small,advanced or developing. The word “creativity”is associated with originality, imagination,


Overview

Overview

The Creative Economy Report 2008 is the first study to present the United Nations perspective on this emerging topic. It is an initiative of the partnership between UNCTAD and the UNDP Special Unit for South-South Cooperation. Furthermore, it is apioneer example of the work being undertaken by the Multi-Agency Informal DialogueGroup on Creative Industries.1 It brings together contributions from five relevant UnitedNations bodies: UNCTAD, UNDP, UNESCO, WIPO and ITC. This collective effort not onlycontributes to building synergy and exploring complementarities but also is an effective way to advance policy coherence and enhance the impact of internationalactions in the area of the creative economy and creative industries.

Creativity, culture and economic development

Creativity, knowledge and accessto information are recognized aspowerful drivers of development

1This Group was set up by the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) in 2004 in thecontext of preparations for the High-level Panel on Creative Industries and Development, held during the UNCTAD XI MinisterialConference. UNCTAD, as chair of the Group, convenes two meetings a year in Geneva. The work of the Group has been revitalized with aview to promoting concerted international actions and joint initiatives by the United Nations family so as to enhance the contribution ofthe creative economy to development.

inspiration, ingenuity and inventiveness. It isan inner characteristic of individuals to beimaginative and express ideas; associated withknowledge, these ideas are the essence of intel-lectual capital. Similarly, every society has itsstock of intangible cultural capital articulatedby people’s identity and values. Civilizationssince time immemorial have been aware ofthese concepts. However, the twenty-first cen-tury has seen a growing understanding of theinterface between creativity, culture and eco-nomics, the rationale behind the emergingconcept of the “creative economy”.

The concept of the “creative economy”is an evolving one that is gaining ground incontemporary thinking about economic devel-opment. It entails a shift from the convention-al models towards a multidisciplinary modeldealing with the interface between economics,culture and technology and centred on thepredominance of services and creative con-tent. Given its multidisciplinary structure, thecreative economy offers a feasible option aspart of a results-oriented development strate-gy for developing countries. It calls for theadoption of effective cross-cutting mecha-nisms and innovative interministerial policyaction.2

For some people, the “creative econo-my” is a holistic concept dealing with complexinteractions between culture, economics andtechnology in the contemporary globalizedworld that is dominated by symbols, texts,

sounds and images. Others are more skepticalabout this fashionable label, voicing concernsabout its overstated importance and the way itmay exacerbate cultural and technologicaldivisions. Against this background, the cre-ative economy has become a topical issue ofthe international economic and developmentagenda, calling for informed policy responsesin both developed and developing countries.

There is no unique definition of the“creative economy”. It is a subjective conceptthat is still being shaped. There is, however,growing convergence on a core group of activ-ities and their interactions both in individualcountries and at the international level.

The present Report adopts the UNCTAD definition of the “creative econo-my”, which can be summarized as follows:

n The creative economy is an evolving conceptbased on creative assets potentially generat-ing economic growth and development;

n It can foster income generation, job cre-ation and export earnings while promotingsocial inclusion, cultural diversity andhuman development;

n It embraces economic, cultural and socialaspects interacting with technology, intel-lectual property and tourism objectives;

n It is a set of knowledge-based economicactivities with a development dimension andcross-cutting linkages at macro and microlevels to the overall economy;


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The creative economy calls for informed policy responses

The creative industries are at theheart of the creative economy

2 UNCTAD Statement at the Second Meeting of the Ministers of Culture of the African, Caribbean and Pacific (ACP) Group ofStates, Santo Domingo, Dominican Republic, October 2006.

n It is a feasible development option callingfor innovative multidisciplinary policyresponses and interministerial action;

n At the heart of the creative economy are thecreative industries.3

“Creative industries” can be defined asthe cycles of creation, production and distri-bution of goods and services that use creativ-ity and intellectual capital as primary inputs.They comprise a set of knowledge-basedactivities that produce tangible goods andintangible intellectual or artistic services withcreative content, economic value and marketobjectives.4 Creative industries constitute avast and heterogeneous field dealing with theinterplay of various creative activities rangingfrom traditional arts and crafts, publishing,music, and visual and performing arts to moretechnology-intensive and services-orientedgroups of activities such as film, television andradio broadcasting, new media and design.The creative sector has a flexible and modularmarket structure that ranges from independ-ent artists and small-business enterprises atone extreme to some of the world’s largestconglomerates at the other.

Today, creative industries are among themost dynamic sectors in world trade. Over theperiod 2000-2005, international trade in cre-ative goods and services experienced anunprecedented average annual growth rate of8.7 per cent. The value of world exports ofcreative goods and services reached $424.4billion in 2005, representing 3.4 per cent oftotal world trade, according to UNCTAD.Nowadays in the most advanced countries, the

creative industries are emerging as a strategicchoice for reinvigorating economic growth,employment and social cohesion. The so-called “creative cities” are proliferating inEurope and North America, revitalizing theeconomy of urban centres through culturaland social developments offering attractivejobs, particularly to young people. Theturnover of the European creative industriesamounted to 654 billion euros in 2003, growing 12.3 per cent faster than the overalleconomy of the European Union and employ-ing over 5.6 million people.5

A significant finding of the presentstudy is the evidence that some developingcountries, mainly in Asia, have started benefit-ing from the dynamism of the global creativeeconomy and are putting in place tailoredcross-cutting policies to enhance their creativeindustries. China, which is leading thisprocess, became the world’s leading producerand exporter of value-added creative productsin 2005. Nevertheless, the large majority ofdeveloping countries are not yet able to har-ness their creative capacities for developmentgains. The obstacles preventing these develop-ing countries from enhancing their creativeeconomies are a combination of domestic


Overview

3 Definition by the UNCTAD Creative Economy and Industries Programme, 2005.4 UNCTAD definition further elaborated in chapter 1.5 See Economy of Culture in Europe, study prepared for the European Commission by KEA, European Affairs, Brussels, 2006.

The creative industries accountfor 3.4 per cent of total worldtrade, with exports reaching$424.4 billion in 2005 and anaverage annual growth rate of8.7 per cent during 2000-2005

The development dimension of the cre-ative economy is the guiding principle of thisReport. Developing countries can furtherintegrate into the global economy by nurtur-ing their creative capacities and enhancing thecompetitiveness of their creative goods andservices in world markets, provided thatappropriate public policies are in place at thenational level and market imbalances can beredressed at the international level. In thisrespect, support for domestic creative indus-tries should be seen as an integral part of thepromotion and protection of cultural diversity.Moreover, such diversity, because it is a globalpublic good, needs to be fully supported bythe international community.7

With the increasing knowledge intensi-ty of the contemporary economy and the needfor innovation to maintain competitive advan-tage, it has become imperative for countries to

tap into their vast reserves of creativity. Thishas been made easier by rapid advances ininformation and communication technologies(ICTs), which are progressively linking coun-tries and regions worldwide. Opportunitiesare thus created for developing countries toaccess global markets for the products of theircreativity and cultural diversity in a way notpreviously possible – and to do so directly,without intermediaries. Nonetheless, the challenges are immense and should not beunderestimated.

Despite the richness of their culturaldiversity and the abundance of creative talent,the great majority of developing countries arenot yet fully benefiting from the enormouspotential of their creative economies to improvedevelopment gains.8 These countries have beenfacing domestic and international obstacles thatneed to be fully understood and overcome


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policy weaknesses and global systemic biases,issues addressed in the analysis of this Report.

Another important conclusion of thisstudy is that developing-country exports ofrelated creative goods (including computers,cameras, television sets, and broadcasting andaudiovisual equipment) increased rapidly overthe period 1996-2005 from $51 billion to$274 billion.6 This spectacular growth isindicative of the catching-up strategies beingpursued in a number of developing countriesto increase their capacities to supply value-

added products to global markets. It also reaf-firms the continually expanding demand forcreative products that rely on these relatedindustries for their distribution and consump-tion. This ever-increasing demand is furtherconfirmation of the potential of the creativeeconomy to contribute to economic growth.

The large majority of developingcountries are not yet able toharness their creative capacities

The development dimension

6 See also chapter 5.7 See Summary of High-level Panel on Creative Industries (document TD/L.379, 16 June 2004).8 Statement of the Secretary-General of UNCTAD at the World Knowledge Forum, Seoul, Republic of Korea, October 2006.

through cross-cutting institutional mechanismsand multidisciplinary policies. In this scenario,development strategies must be updated to copewith the far-reaching cultural, economic andtechnological shifts that are reshaping society.

There is, for example, widespreadrecognition of the significance of tourism fordevelopment.9 In the present Report, a prelim-inary attempt is made to investigate the linkbetween tourism and the creative industries,addressing the question as to whether thedemand for creative goods and services bytourists supports the development of the cre-ative economy. From the perspective of thecreative economy elaborated in this Report,measures need to be taken to ensure that cre-ative workers can reap the benefits from theincreasing demand by tourists for creativeproducts.

The role of culture in development hasbeen analysed in the Human Development Report2004 published for UNDP.10 The presentReport aims to build on the normative debateabout culture and development by adding theeconomic dimension of the creative economyto the consideration of the developmentprocess. In so doing, it raises the question ofthe precise relationship between humanexpression and social and economic instru-mentalism. The Report raises this issue as an

essential matter that must be taken intoaccount in policy-making.

Overall, this study is a first attempt topresent a broader perspective on the poten-tial of the creative economy to assist devel-oping countries to leapfrog into new high-growth creative sectors. Development strate-gies aimed in this direction are consistentwith the achievement of the MillenniumDevelopment Goals (MDGs). As is wellknown, these goals represent the commit-ment of the international community toengage in the global development agenda inthe coming years. There are eight goals withspecific time-bound targets to be reached by2015, the first and most important of whichaims at the eradication of extreme povertyand hunger. The MDGs address develop-ment challenges not as a separate but as aninherent part of the global economy andsocieties. The full realization of these goalsnecessitates innovative and cross-sectoralapproaches to development and the seriousconsideration of issues such as culture, environment and social development. Theachievement of the MDGs demands a holis-tic and multisectoral approach that goesbeyond economics and includes cultural andsocial frameworks; the creative economyreflects such an approach.


Overview

9 Tourism, Culture and Sustainable Development (United Nations Educational, Scientific and Cultural Organization (UNESCO), 2006);World Tourism Barometer (United Nations World Tourism Organization (UNWTO), 2007); and Outcome of Pre-UNCTAD XI High-LevelInternational Meeting of Experts on Sustainable Tourism for Development (UNCTAD document TD(XI)/PC/6, 18 March 2004).

10 Human Development Report 2004: Cultural Liberty in Today’s Diverse World, published for the United Nations Development Programme (UNDP)and for which Professor Amartya Sen developed the conceptual framework.

Africa’s share in global trade of creative products remainsmarginal at less than 1 per centof world exports

The achievement of the MDGsdemands a holistic and multisec-toral approach that includes cultural and social frameworks

The main purpose of this Report is toprovide the conceptual and policy frameworkfor understanding the creative economy, witha view to identifying analytical tools con-ducive to informed policy-making. TheReport introduces the concept of the “cre-ative economy”, reviews definitions, recog-nizes characteristics and identifies parametersto assist in measuring the impact of the cre-ative economy at the national and internation-al levels. The objective is to propose a sharedvision and a policy-oriented research agendathat reflects current economic thinking andenables comparative analysis as the basis fornational and international policy formulation.

The Report takes stock of ongoingresearch being carried out in different parts ofthe world for mapping the overall impact ofthe creative economy at the national and inter-national levels. Rather than prescribing a sin-gle model for mapping the creative economyin developing countries, it sheds light on pos-sible alternatives, pointing, however, to thelimitations of certain methodologies and current gaps in statistics and quantitative analytical tools. Nevertheless, it suggests someelements to facilitate comparability across cre-ative industries within and among countries.The purpose is to present a comprehensiveanalysis and pave the way for the introductionof parameters for assessing national creativeeconomies worldwide, emphasizing theimportance of international trade in thedevelopment process.

Despite the limitations of economicand social indicators, this Report takes the

first step in using available official data totrace the global and regional trade flows ofcreative products and services for the period1996-2005, examining the main trends andidentifying the key players in major markets. Itpresents an analysis of the value chain and themarket structure of creative industries, con-cluding that the oligopolistic nature of mar-keting and distribution inhibits the competi-tiveness of creative goods and services fromdeveloping countries in the global trading sys-tem. It draws attention to the difficulties inquantifying intangible values and the con-straints to capturing the real impact of inter-national trade in creative goods and services inthe world economy. This Report emphasizesthe need to improve market transparency, par-ticularly in the most technology-intensive andservices-oriented sectors such as audiovisualsand new media. It also examines the scope forreinforcing South-South as well as North-

South trade and cooperation.

This Report recognizes the growing roleof intellectual property rights (IPRs) as a toolwith which to generate earnings from creativeindustries. The need to improve awareness andto reinforce the effectiveness of intellectualproperty regimes is highlighted. Nevertheless,the Report also recognizes the asymmetries


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Scope of this report

Rather than prescribing a singlemodel for mapping the creativeeconomy, this Report analysesalternatives and suggests an exten-sible model based on trade flows

existing in the current regime and stresses theneed to review the enforcement of some poli-cy instruments with a view to ensuring that theinterests of developing countries are properlytaken into account. Issues relating to tradition-al knowledge, cultural expressions and publicdomain are also discussed in the light of

progress made in the work of the WorldIntellectual Property Organization (WIPO).

The Report also presents an analysis ofthe phenomenon of connectivity and its influ-ence on world patterns of production, con-sumption and trade in tangible and intangiblecreative products. The importance of ICTtools and the new business models with newforms of marketing and distribution of cre-ative content in the digital era are discussed.Technology plays a key role in the creativeeconomy not only as the essence of creativesectors such as audiovisuals and new mediabut also as the means by which to access andcirculate digitized content in today’s interac-tive multimedia environment.

The importance of international poli-cies and global processes in shaping theemerging creative economy is also examined.This Report addresses the issue of the rele-vance of multilateral processes such as theDevelopment Agendas of WIPO and the

World Trade Organization (WTO) as well asthe entering into force of the UNESCOConvention on the Protection and Promotionof the Diversity of Cultural Expressions andtheir implications for the creative industriesand the creative economy. Attention is alsogiven to greater mobilization of developingcountries by the Member States of the Groupof 77 (G-77)11 in order to promote the cre-ative economy as a tool for development andby the inter-agency cooperation promoted byUNDP through its Special Unit for South-South Cooperation.12 This Report presents anoverview of the most influential intergovern-mental decisions of relevance to the creativeeconomy. The purpose is to explore the poli-cy framework surrounding the creative econo-my, with a view to identifying policy optionsto strengthen and integrate local creative

industries into national and internationaldevelopment strategies and global markets.

Given the multiplicity of approaches, theconclusion is reached that at this stage, there isno consensual model of the optimum packageof policies towards the creative industries.Nevertheless, individual countries are encour-aged to make some strategic choices of cross-cutting public policies in order to strengthentheir creative economies. Due account shouldbe taken of the specificities of their culturalidentities and the competitive advantages of


Overview

Intellectual property rights areincreasingly more important asa tool for capitalizing on the cre-ative industries

11Message from the Chairman of the G-77 at the International Forum on the Creative Economy for Development held in Rio de Janeiro,Brazil, on 26 November 2006: http://www.g77.org/Speeches/112606.html

12Statements of the Administrator of UNDP and the Director-General of UNESCO at the 2005 United Nations Day for South-SouthCooperation that focused on “Celebrating the Global South: Diversity and Creativity”: http://tcdc.undp.org/UNDAY/unday2-admin-stmt.pdf and http://portal.unesco.org/culture/es/ev.php-URL_ID=29653&URL_DO=DO_TOPIC&URL_SECTION=201.html

Technology plays a key role inthe creative economy for con-tent production and distribution

particular creative industries. Illustrative casesand successful practices being carried out indifferent countries are featured in the Report asevidence of the sorts of opportunities availablein different parts of the world.

In summary, this Report aims to assistdeveloping countries to harness their creativeeconomies and to maximize developmentgains by recognizing the creative economy as afeasible option for linking economic, techno-logical, social and cultural development objec-tives in a globalizing world. It does this by:

n discussing concepts, methods and the struc-ture of the creative economy;

n sharing evidence-based analysis confirmingthat the creative industries constitute a newdynamic sector in international trade; and

n suggesting directions for policy strategies.

The Report recognizes that creativityand human talent, more than traditional pro-duction factors such as labour and capital, arefast becoming powerful engines of sustainabledevelopment. Developing countries aroundthe world can find ways to optimize thepotential of the creative economy for generat-ing socio-economic growth, job creation andexport earnings while at the same time pro-moting social inclusion, cultural diversity andhuman development.


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Countries are encouraged tomake some strategic choices to strengthen their creativeeconomies

Countries in both the developing andthe developed world are enormously rich incultural diversity and creative talent. Their tra-ditions provide a unique heritage of music,craft, visual art, rituals, dance, performance,story-telling and cultural practice. All of thesemanifestations of local and national culturesare assets, representing the indisputable cultur-al capital, both tangible and intangible, onwhich the lives of the community are founded.These assets can, in turn, give rise to a complexarray of creative products – goods and servic-es (both commercial and non-commercial)with cultural content that are expressions ofthe creativity and talent of the people.

In addition to their role as essentialexpressions of local, national and regional cul-tures, however, these creative products andactivities have real potential to generate eco-nomic and social gains. The production anddistribution of creative goods and services canyield income, employment and trade opportu-nities, promote growth and development, andfoster social cohesion and community interac-tion. Globalization and the rapid uptake ofnew ICTs have opened up huge possibilitiesfor the commercial development of creativeproducts. Indeed, it is the adoption of newtechnology and a focus on market expansion

that are distinguishing characteristics of thecreative industries as dynamic sectors in theeconomies of the industrialized world.

How are these trends reflected in theexperience of developing countries? Someparts of the developing world, notably in Asia,are enjoying strong growth in their creativesectors. Evidence assembled in this Reportindicates the importance of growth in trade increative goods and services as indicators of thestrength of the creative industries in thesecountries. In the ten years to 2005, worldexports of creative goods and services grew atannual rates of 6.1 and 9.1 per cent, respec-tively, with growth rates in developing coun-tries as a whole exceeding those in developedcountries. These results provide some hint ofthe potential for further expansion of theirvalue-added creative exports that awaits developing countries.

Yet there is a paradox in the worldtoday: despite the richness of their creativityand the abundance of their cultural resources,many developing countries are failing to takeadvantage of the potential for development oftheir creative industries. For a variety of rea-sons, the possibilities for using these indus-tries to generate increased output, exports andemployment remain under-exploited, and


Lessons learned and policy options

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opportunities for achieving genuine develop-ment gains through growth in the creativeeconomy are being missed. These problemshave arisen because of a range of difficultiesconfronting countries in the developing worldin this area, including:

n the lack of a clear framework for under-standing and analysing the creative econo-my as a basis for informed, evidence-basedpolicy-making;

n a lack of data about the performance of thecreative economy upon which sound devel-opment strategies can be based;

n the unusual organizational characteristics ofthe creative economy that call for country-specific rather than generic policies;

n the lack of institutional capacity to supportdevelopment of the creative industries inthe developing world, particularly in theprotection and enforcement of intellectualproperty rights; and

n the fact that the developed world has enor-mous “first-mover” advantages in the field ofcreative goods and services, making it moredifficult for developing countries to competein global markets for these products.

How do these considerations relate toculture? From a policy viewpoint, the mainaspect of culture that has been stressed ininstrumental policy terms has been its role in

empowerment and social cohesion. ThisReport seeks to extend understanding of theimportance of culture by pointing to theadditional (and sometimes separate) role ofculture in economic development that oper-ates alongside the core notion of “culture” interms of values and identity. It points to thecomplex interaction of formal and informal,commercial and non-commercial, instrumen-tal and intrinsic notions of “culture” in theprocess of development and demonstrateshow cultural and economic development canbe understood as a holistic process wheninterpreted in terms of the creative industries.Based on this understanding as well as on asound evidence base, the Report advocates arenewed concern with culture and creativity indevelopment. However, this concern must beone that relies on multi-agency action andmultidisciplinary expertise.

This Report has set out to take a firststep towards clarifying the basic concepts necessary for a proper understanding of thecreative economy, putting forward objectiveevidence, providing some analytical tools andsuggesting directions for policy action. Inestablishing some understanding of the natureand form of the creative economy, however, theReport also stresses that it is only a beginning,an initial step towards a more robust and com-prehensive analysis of the creative economy.


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Major findings

Definitions and concepts

Definitions of the “creative economy”may vary, but it is generally agreed that at theheart of the creative economy lie the creativeindustries. There is no single agreed definition

of the “creative economy” or the “creativeindustries” although clearly, they embrace theconcept of “creativity” as an essential charac-teristic. In the contemporary world, creativityis often referred to as a key resource in the

knowledge economy, leading to innovation andtechnological change and conferring competitiveadvantage on businesses and national economies.The association of creativity with commoditiesgives rise to a class of products known as “cre-ative goods and services”, of which, manybelieve, “cultural goods and services” constitutea subset formed by products with artistic or cul-tural as well as creative content. This in turnenables the definition of “creative and culturalindustries” as those industries producing creativeand cultural goods, respectively. Different mod-els of the creative economy have different waysof identifying and classifying the creative indus-tries, though for the purposes of this Report, thefollowing groups of industries are included:

n cultural heritage;

n visual and performing arts;

n audiovisual industries;

n publishing and printed media;

n new media;

n design; and

n creative services, including advertising andarchitecture.

This Report seeks to establish a realis-tic benchmark of definitions of the “creativeeconomy”. A future objective must be the generation of a robust classification systemthat is not dictated simply by statistical con-venience or availability but rather is based onan understanding of what evidence is requiredto develop policy.

Cross-cutting linkages

The “creative economy” is a multidi-mensional concept with linkages to a numberof different sectors in the overall economy.

Different approaches to analysing the creativeeconomy lead to different emphases on its var-ious aspects. For example, a sociologicalapproach has examined the notion of a “cre-ative class” in society, comprising professional,scientific and artistic workers whose presencegenerates economic, social and culturaldynamism. Other approaches have stressed therole of culture in terms of social empower-ment. Even beyond urban planning circles, theconcept of the “creative city” has becomeestablished, while geographers focus on thelocational aspects of creative activity in theform of creative clusters, networks and dis-tricts. The multifaceted nature of the creativeeconomy means that it cuts across a wide rangeof areas of economic and social policy in addi-tion to any intrinsic value. Thus policy-makingin relation to the creative economy is not con-fined to a single ministry or governmentdepartment; rather, it is likely to implicate anumber of different policy fields, including:

n economic development and regional growth;

n urban planning;

n international trade;

n labour and industrial relations;

n migration;

n domestic and foreign investment;

n technology and communications;

n art and culture;

n tourism;

n social welfare; and

n education.

Moreover, there is a similar multiplicityof involvement across the public sector, thecorporate sector, the non-profit sector andcivil society.


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The creative economy in thedeveloped world

In the developed world during the1990s, the creative industries grew faster thanother sectors, including services and manufac-turing. One of the major drivers of thisgrowth was the extraordinarily rapid pace oftechnological change in multimedia andtelecommunications that occurred during thisperiod. In particular, digital technologyopened up a range of new media throughwhich cultural content could be delivered toconsumers, and the creative industriesresponded by supplying an ever-wideningarray of creative products to the market. Onthe demand side, rising real incomes amongconsumers in developed countries, coupledwith changing preferences for modes of cul-tural consumption, helped to sustain thegrowth of the creative economy. By the mid-dle of the first decade of the new millennium,the proportion of GDP contributed by thecreative industries in developed countries aver-aged around 3 to 6 per cent. For example,recent estimates collated by OECD for mem-ber countries indicate that the creative indus-tries in France and the United States made upabout 3 per cent of gross value added in2002-2003 and almost 6 per cent of grossvalue added in the United Kingdom.

The creative economy in thedeveloping world

The engagement of developing coun-tries with the creative economy varies dramat-ically around the world partly because of dif-ferences in the industrial and export capabili-ties of different countries but partly alsobecause of variation in the extent to whichdifferent countries have recognized and imple-

mented a deliberate development agenda forthe creative sector. In Africa, for instance,there has been only limited commercializationof cultural products. Perhaps the most obvi-ous illustration is music, a form of culturalexpression that is of particular importance onthe African continent. Much of the musicindustry in Africa remains based on live per-formance, with formal production and circu-lation of music products still awaiting furtherdevelopment. An outstanding issue here is thatdeveloping countries commonly lack the insti-tutional resources to manage copyright collec-tion and payment systems. Accordingly, starperformers are frequently attracted overseas insearch of wider opportunities or simply inpursuit of payment for what they do. Someareas of Asia, by contrast, are at the leadingedge of innovation in creative production, asin the case of video games in the Republic ofKorea. Likewise, a number of Asian cities areformulating urban development strategieswith a strong emphasis on cultural and cre-ative activities. In the Caribbean and Centraland South America, the state of the creativeindustries varies considerably across the board,with different industries being the focus ofattention in different countries, such as pub-lishing in Argentina, music in Jamaica or thefilm industry in Mexico.

The value chain in creativeproducts

It is essential to understand the valuechain for the production and distribution ofcreative goods and services in order to deter-mine optimal points of intervention for policyinitiatives designed to boost the creative econ-omy. A systematic understanding of who thestakeholders in the creative economy are, how


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they relate to one another, and how the creativesector relates to other sectors of the economyis critical for informed policy-making.

One tool that has proven useful forstudying the creative economy is value-chainanalysis, which depicts the progress of creativegoods from an initial idea through to final con-sumption. In particular, it is important toexamine the early stages in the chain, i.e., tounderstand the structure of the productionsector for creative goods and services.Production units in this sector range fromindividual artists and producers on the onehand to large transnational corporations onthe other. In between are small and medium-sized enterprises (SMEs), which, in manydeveloping-country situations, comprise themost significant element in terms of volume ofoutput and levels of employment and commu-nity engagement. In a number of instances,these businesses offer the best prospect forcombining economic revenue potential withthe development of authentic cultural symbolsand traditions, for example in the productionof craftware, fashion products, music record-ings, etc. Indeed, SMEs may become the cor-nerstone of locally based strategies for sustain-able development of the creative industries,enhancing the economic, cultural and sociallife of the community. Value-chain analysisalso enables identification of creative productsand services with particular competitive advan-tages or that are capable of being developed asniche markets in particular situations.

Data issues

Reliable data on the creative economy –on its inputs, outputs, value of production,prices, employment and trade – are in shortsupply among developing countries, and there

is an urgent need to improve statistical collec-tions as a basis for formulating creative-indus-try policy. The lack of a tradition for econom-ic valuation and measurement in the culturalsphere, combined with difficulties of defini-tion in the realm of cultural activities and cre-ative goods and services, has meant that therehas been a dearth of reliable indicators onwhich to base assessments of the size andscope of the creative economy. Moreover, therapid pace of technological change has made itdifficult to keep abreast of new products andservices constantly coming onto the market.

Thus at present, we have only a limitedset of measures of creative-industry output,employment and trade. In an ideal world,these are the data with which we might start.In addition, data on participation and cultur-al and creative activity time-use would help todevelop a more holistic perspective. Even so,new models are required. In regard to creativeemployment, for example, statistics on occu-pation by industry are necessary to assess thelinkages between the creative industries andother sectors while data on the locational dis-tribution of employment is important foranalysis of creative clusters. In regard to trade,although exports and imports of physicalproducts produced by the creative industriesare documented (as in the statistical tables ontrade in creative goods and services assembledas part of this Report), the increasing dema-terialization of cultural products has madestatistical tracking of trade problematic. Inregard to audiovisual products, for example,the international market in rights and servicescertainly exceeds the physical market in valueterms, yet documentation of the volume andvalue of rights trade is difficult to obtain.Nevertheless, it is possible to make someprogress towards improving our understand-


Policyoptions

ing of international trade of creative productsthrough a combination of existing trade dataand statistics on copyright payments.

Trade

Despite the problems in measurement, itis possible to assemble consistent data ontrends in exports and imports of creative prod-ucts classified by region and by product cate-gory. In a pioneering exercise, this Report pres-ents a universal comparative analysis of tradein creative goods and services, based on nation-al trade statistics that can serve as a startingpoint in the development of more comprehen-sive and more transparent statistical collec-tions. This exercise draws attention to the com-plexity, the heterogeneity and the multidiscipli-nary nature of the creative economy and pointsto the difficulties in conceptualizing, classify-ing and measuring production and trade of thecreative industries. The actual figures for tradeare without doubt an underestimate andskewed towards production, as this is wheredata collection concentrates.

As noted above, the material aspect ofthe creative economy is potentially lessimportant than its immaterial/rights dimen-sion; unfortunately, however, this is thedomain on which we have the least informa-tion. Moreover, we have little knowledge ofthe effective modes of governance of thistrade. WIPO has made some useful interven-tions in this field, but its objective is regula-tion; thus it focuses on different variables.The trend analysis shows that trade in creativegoods and services over the last decade hasshown an unprecedented rate of growth ascompared to the more traditional manufac-turing and services. Assuming this growth

continues in the coming years, it will open upnew opportunities for developing countriesto increase their market shares of global tradein creative products.

Connectivity and ICTs

As noted earlier, a major driver of thegrowth of the creative economy worldwidehas been the advent of new information andcommunication technologies (ICTs). Ofcourse, ICTs benefit the whole economy buttheir role in the creative industries is ofparticular significance. They offer new distri-bution channels for creative content; allow theadoption of innovative entrepreneurial business models; and strengthen the linksbetween creativity, culture, technology andeconomic development.

In the context of developing countries,ICTs have a strong potential to boost socio-economic development, especially through theopportunities that they provide to SMEs tobroaden their customer bases and increasetheir participation in international supplychains. ICTs can leverage new links in thevalue chain in many creative industries, espe-cially via the phenomenon of digital conver-gence. Again, however, measurement issuesarise, especially in assessing Internet penetra-tion and usage, the extent of e-commerce, etc.Efforts are under way in different parts of theUnited Nations system to meet the challengesof new technologies through internationalcooperation, for example in the compilationof standardized statistics, the promotion of aglobal hub for networking, and support forcreative-economy expos to expand under-standing of the creative industries in a digitalenvironment.


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Policy towards the creativeeconomy

The cross-cutting nature of the creativeeconomy means that policy development forthe creative industries must be formulated ona coordinated interministerial basis. The rangeof instruments that can be used by policy-makers in charting development strategies forthe creative industries in developing countriesis wide indeed. In broad terms, the need is forinfrastructure development and capacity-building to reinforce the operation of fiscalpolicies, competition law and intellectualproperty regimes in addition to traditionaldebates about intrinsic value. In more specificterms, policy initiatives may be undertaken in:

n mapping of inventories of cultural assetsand creative industries;

n SME business development and finance(e.g., micro-finance);

n copyright legislation and enforcement;

n support for artists and the arts, both direct(via fiscal means) and indirect (throughencouragement of private-sector support);

n conservation of tangible and intangible cultural heritage;

n expansion of digital capacity and know-how;

n market development, both domestic andexport;

n tourism promotion;

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Summary of key messages

The key messages of this Report can be summarized as follows:

n Evidence shows that trade in creative goods and services is important to the economies of developing countries, and the importance of this trade highlights the strength of the creative economy in many partsof the developing world. Despite the difficult obstacles that many developing countries face in accessingglobal markets for creative products, there is the potential for looking to export expansion as a source ofgrowth for the creative economies of these countries.

n Policy strategies to encourage the development of the creative industries in Southern countries must recognize the cross-cutting and multidisciplinary nature of the creative economy, with its widespread economic, social and cultural linkages and ramifications. Key elements in any package of policy measuresare likely to emphasize the “creative nexus” between investment, technology, entrepreneurship and trade.

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

n Current IPR legislation has not been able to avoid economic asymmetries. Therefore, efforts to enforce IPRregimes should ensure that the interests of artists and creators from developing countries are duly taken intoaccount. Intellectual property should provide a stimulus to creators and entrepreneurs in the form of a trad-able economic asset that is instrumental to enhancing the potential of the creative sector for development.

n education, training and skills development;and

n industry assistance (e.g., via investmentincentives, tax concessions, etc.).

As a result, policy development cannotbe confined to a single ministry, but requiresco-ordinated action across a range of ministe-rial responsibilities and although mainly urbanin location, it is important in rural areas, too.The appropriate development paradigm is onebased on sustainable development measured ineconomic, cultural, social and environmentalterms. Only by adopting such a paradigm shiftcan we recognize the breadth and depth of thepotential contribution of the creative indus-tries to developing countries.

International context

The creative economy features in a num-ber of arenas of international policy-making.The challenge is to create a positive environ-ment to optimize the potential of the creativeeconomy for development gains. Moreover,given the multifaceted and multidisciplinarynature of the creative economy, governmentscan benefit from synergy and expertise fromthe United Nations system to analyse keyissues to assist them in policy formulation.

Policy-makers need to be aware of anumber of subtleties in dealing with the creative economy. In the area of trade, forexample, ongoing multilateral negotiationscontinue to encounter difficulties in dealingwith cultural products although it should benoted that the General Agreement on Trade in

Services (GATS) has built-in flexibilities thatdeveloping countries can use to strengthentheir creative industries. The Agreement onTrade-Related Aspects of IntellectualProperty Rights (TRIPS) offers someprospect for consideration of topics related tothe creative economy, but to date, matters suchas folklore and traditional knowledge havereceived little attention. Undoubtedly, a majorarea for national and international action is thecopyright area. Further development of the cre-ative sectors of many developing countriesdepends critically on having in place an effectivecopyright regime. Other initiatives for tradeexpansion are under way, for example the devel-opment of opportunities for increased South-South trade as part of the work of the UNDPSpecial Unit for South-South Cooperation andthe facilitation of business opportunities forcreative entrepreneurs by ITC.

An important step forward in raisingthe profile of the creative sector in developingcountries has been the ratification of theUNESCO Convention on the Protection andPromotion of the Diversity of CulturalExpressions. This treaty draws particularattention to the role of the creative industriesas a source of economic and cultural empow-erment, particularly in the developing world,and encourages countries to give greaterprominence to policy-making in this area. All of these international aspects should beseen in the context of the MillenniumDevelopment Goals. The Goals provide a setof strategic objectives and the creative indus-tries in developing countries are well placed tocontribute to their achievement.


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