Quantifying the Creative Economy

by Louise K. Stevens, President, ArtsMarket

A recent study found that the creative industries are a significant component of the Monterey County, Calif. economy. In this photo, the Fiesta Mexicana group dances folklorico (traditional Mexican folk dancing) at a community awards dinner.

Economic development professionals have been hearing more and more about the benefits of a creative or cultural economy and are seeking ways to jump on the bandwagon. First considered more buzzwords than reality, the creative or cultural economy is now sought by communities of all sizes, from rural towns in northern Maine to the metro areas of New York and Los Angeles.

Ralph Waldo Emerson must have been seeing well into the future when he said, “A creative economy is the fuel of magnificence.” Magnificent indeed, a creative economy shows incredible growth potential. Consider these statistics:

• In the United Kingdom, KPMG recently predicted 46 percent employment growth and 136 percent output growth in the creative industries between 1995 and 2015. Between 1997 and 2004, the creative industries averaged 6 percent growth, around twice the rate of the economy as a whole.

• A new report from the Los Angeles Economic Development Corporation (LAEDC) shows that the creative industries are now the number one engine of the Los Angeles economy, outpacing tourism and international trade. The LAEDC study demonstrates that the creative industries in Los Angeles account for far more than Hollywood entertainment jobs. Entertainment, in fact, accounts for only 35 percent of the jobs in Los Angeles’ creative industries.

The concept of the creative economy is new to many economic development professionals. It has no official description, and its terminology is interchangeable – some communities use the term “cultural economy,” some use “creative economy,” some use “arts economy.”What industries are included in the creative economy? And how can economic developers start examining their local creative industries and decide if there is a sizable enough base from which to leverage more growth?

Defining the creative or cultural industries

First, it’s important to get a handle on what is included in the full range of creative industries that exist in the nonprofit, for-profit and education sectors. The United Kingdom defines the creative industries as “those that have their origin in individual creativity, skill and talent, and which have a potential for wealth and job creation through the generation and exploitation of intellectual property.”

The LAEDC’s work investigating the creative economy has helped identify a range of industries therein, including:

• Architecture and interior design
• Art galleries
• Communications arts (including graphic design services, advertising agencies, package design, and display and direct mail advertising)
• Digital media
• Entertainment
• Fashion (including apparel and textile manufacturing, jewelry manufacturing, cosmetics, and footwear and handbag production)
• Furniture and accessories
• Product and industrial design
• Toys (design, marketing, wholesaling and manufacturing)
• Visual and performing arts providers, including theater and dance companies and museums
• Self-employed, independent artists, writers, designers, and performers

Economic development agencies can begin gathering statistics on the cultural sector by working with their local arts agencies or commissions, which maintain databases of local nonprofit organizations that deliver arts or cultural services and may also keep track of individuals who work as independent writers, artists, and performers.

Many local arts agencies, however, are just beginning to get up to speed on the for-profit aspects of the industry and may not be able to fully document the sector for economic development purposes. But as shown below in the case of Monterey County, California, it can be done.

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