Creative Economy, a New Path to Development

Creative economy, which is one of the world’s fastest-growing sectors, offers a feasible development option to all countries, especially developing economies, according to UNCTAD’s Creative Economy Outlook 2022.

The report launched on October 7 at the 3rd World Congress on Creative Economyin Bali, Indonesia, said  that although creative services exports vastly exceed those of creative goods, developing countries are under-represented and face hurdles in exporting these services. In addition, there is a significant creative trade data gap between developed and developing countries

On the report, UNCTAD Secretary-General Rebeca Grynspan said: “The report is published at a time when the global community faces some of the most significant challenges in decades: the COVID-19 pandemic, looming climate change and environmental crisis, geopolitical tensions and a major cost-of-living crisis. Despite these challenges, the creative economy remains a critical sector for sustainable development.”

CREATIVE ECONOMY; DEFINED

UNCTAD defines creative industries as cycles of creating, producing and distributing goods and services that use creativity and intellectual capital as primary inputs. They comprise a set of knowledge-based activities that produce tangible goods and intangible intellectual or artistic services with creative content, economic value and market objectives. The concept of the creative economy is closely linked with the “knowledge economy,” a key driver of endogenous growth through investment in human capita. Creative economy offers a feasible development option to all countries and in particular to developing economies. More data and innovative and multidisciplinary policy responses are needed to enhance the development impacts of the creative sector.

CREATIVE ECONOMY; REVENUE

Trade in creative goods and services generates increasing revenues for countries, with services having a dominant role. The latest available data show that in 2020, creative goods and services represented 3% of total merchandise exports and 21% of total services exports, THE UNCTAD said.

In the report, the UN Agency said that exports of creative goods across the globe increased from $419 million in 2010 to $524 million in 2020. Meanwhile, world exports of creative services increased from $487 billion to almost $1.1 trillion during the same period.

Developing economies export more creative goods than developed ones. In 2020, China was by far the largest exporter of creative goods ($169 billion), followed by the United States ($32 billion), Italy ($27 billion), Germany ($26 billion) and Hong Kong (China) ($24 billion), the UNCATD said.

South-South trade in creative goods has almost doubled in the past two decades. In 2020, South-South trade in creative goods represented 40.5% of creative exports by developing economies. South-South trade is important for developing economies to create new trading opportunities and diversify exports.

Creative goods exports were hit hard by the COVID-19 pandemic and lockdowns worldwide. Creative goods exports were down by 12.5% in 2020, while exports of all goods fell by only 7.2%. However, preliminary data show that creative goods exports began to recover in 2021 and surpassed 2019 levels.

Creative services exports also rose, with their share of total services exports increasing from 12.3% in 2010 to 21.4% in 2020.

Developed economies export significantly more creative services than developing ones, accounting for 82.3% of all creative services exports in 2020. The largest creative services exporters in 2020 were the United States ($206 billion), Ireland ($174 billion), Germany ($75 billion), China ($59 billion) and the United Kingdom ($57 billion).

Creative services were more resilient than other services sectors during the COVID-19 pandemic. Exports of creative services were down by only 1.8% in 2020, while exports of all services fell by 20%.

Developing countries face several barriers to participating in services trade, including creative services. These include lack of fundamental skills and infrastructure, which can hinder them from becoming competitive players in creative services, and trade restrictions.

CREATIVE ECONOMY; HARNESSING CREATIVE INDUSTRIES

In the report, the UNCTAD highlights a few recent statistics from both developed and developing countries showing how creative industries are contributing to various economies.

For example, in Azerbaijan, cultural and creative industries contributed 1% of the gross domestic product (GDP) and 3.8% of total employment in 2018.

In Canada, culture and sport represented 3% of the GDP, while cultural products accounted for 2.5% of total exports and 2.9% of imports in 2019.

In Colombia, almost 500,000 people worked in the creative economy in 2021.

In Georgia, culture accounted for 2.8% of the GDP and 5.1% of the workforce in 2017.

In Mexico, the cultural sector contributed 2.9% of the GDP and employed over 2.2 million people in 2020.

Case studies from Argentina, Indonesia, Mexico and South Africa show that developing countries measure the economic contribution of their creative industries in diverse ways.

The lack of yearly reporting and diverse definitions and methods applied in different countries make international comparisons difficult.

CREATIVE ECONOMY; GROWTH

Since 2015, more developing countries have issued national strategies, policies and regulations for the sector. Most respondent countries have established a strategy or national plan to support and develop creative industries.

In addition, several countries drafted national plans for their creative industries in 2020 and 2021 as an integral part of their post-COVID-19 recovery plans.

CREATIVE ECONOMY; TECHNICAL CHANGES

The report said that new and emerging technologies are changing some of the creative industries.  Further, the UNCTAD said that COVID-19 pandemic accelerated the shift towards e-commerce and digital platforms and the scope of transformation of the creative economy.

However, the report points to a global digital divide with repercussions on the creative economy. Digital divides mainly affect the creative economy’s ability to be inclusive, notably in developing countries that still need to benefit from the digital dimension of the creative economy.

To enhance the development impacts of the creative sector, especially in developing countries, UNCTAD calls for multidisciplinary policy responses in education, digital infrastructure and legal frameworks related to the creative economy, such as intellectual property rights.

CREATIVE ECONOMY; CHALLENGES

The report finds lack of harmonized definitions and methodologies and lack of data are among the key challenges to measuring creative economy. Lack of data may lead to some creative industries and activities being overlooked by analysis, policy design and development.

Several frameworks exist to measure the creative economy, with patterns of common industries and products covered, but also differences due to national or regional classifications, activity or product coverage and methodology.

Developing countries face several challenges in quantifying creative services. They often lack appropriate statistical systems, adequate institutional arrangements, financial resources, IT infrastructure and trained experts. Even if data exist, processing, formatting and publishing them may be challenging.

Better and more disaggregated data are required to gain more insights into the role of creative services in economic transformation and their potential for services-led diversification in developing economies.

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