• Stuart Cunningham

28 August 2006Creative impulses are the economy?s driving force, writes Stuart Cunningham

THE term creative economy refers to the growing role of creative industries and creative people in our economy and society. This is a crucial emerging concept for Australia because the creative economy will secure our competitiveness in the global future.

But if we are to harness its energy we must first settle the vexed question of what it is.

Of course, it?s the brilliant movies for which our directors, set and fashion designers, cinematographers and actors have received such high international acclaim, marking out Australia as a talent pool of the highest order.

It?s also the interface designers who have worked in the finance industry to change how we do our banking and make investments. This has been one of the most dramatic and rapid changes in mainstream business models seen in a leading service sector.

Naturally, it includes our great writers, novelists, playwrights, poets and lyricists, who continue to find ways to reflect back to us our life and times through their engaging prisms. It?s also the technical writer, whose job it is to produce online education and training materials that contribute to Australia?s education export successes.

It obviously includes our artists, who represent the top echelon of creative talent winnowed through innumerable filters. The creative economy is also about the growing legions of amateur and pro-am creatives: bloggers, flash animation mavens and webmeisters, creative and technologically literate wunderkinder who are not minded to wait until the gatekeepers tell them how they can reach an audience.

The creative economy is a difficult category to nail down, but it is bigger and broader than we think, and it is much more than culture and the arts. It joins together a broader range of industry sectors than those that traditionally have been classified as cultural, giving birth to the notion of the creative industries. But it also goes beyond a sectoral focus to embrace how creative roles or occupations are increasingly being found throughout the economy.

Tracking this is necessary, but insufficient, if we are to capture what is causing longer-term changes in our economy. For that we need a better understanding of innovation and policies suited to promoting innovation across the economy, not just in sectors that depend on laboratory science.

First, then, the idea of the creative industries as a broad alliance of activities with creativity at their heart is one that is becoming more central to economic policy and planning, and being entertained seriously in many parts of the world.

The idea of creative industries is quite recent. It was developed in Britain by the Blair government in 1998. The British definition ? ?activities that have their origin in individual creativity, skill and talent and that have the potential for wealth and job creation through the generation and exploitation of intellectual property? ? has remained broadly acceptable worldwide. It is a definition that encompasses no fewer than thirteen industry sectors across the traditional arts, the electronic and print media, new media such as games and other software, as well as design, architecture and fashion.

A key aim was to highlight that the creative industries were already a significant component of gross domestic product, exports and jobs for advanced economies. Indeed, they had been growing at twice the rate of the rest of the economy.

Several other countries have rapidly developed creative industries strategies. East Asia, Australia and New Zealand are hot spots. We are beginning to see China ready to accept creative entrepreneurialism from below even as it continues to obey a national imperative imposed from above that it be more industrially and educationally innovative. The economy that is already reshaping geopolitics and economic strategy is beginning to change from ?made in China? to ?created in China?.

The latest figures from London show that creative industries are second only to business services in driving Britain?s economy. The industry represents the second largest sector employer, with 600,000 people working directly in creative industries or in creative occupations in other industries. They contribute more than 4 per cent of Britain?s export income and provide jobs for more than two million people. Estimates put the world market at more than $3.04 trillion last year, a figure that may double by 2020.

These are data to die for. But what about the situation in Australia? The creative industries idea has been in play in Australia since the late 1990s. The states, particularly Queensland and Victoria, have invested strategically in their creative industries. Although policy work has yet to translate into significant federal government action, the level of activity shows this sector is more visible on Canberra?s radar now than at any time since the mid-?90s.

With a creative industries cluster study, a digital content industry action agenda, a Prime Minister?s Science, Engineering and Innovation Council inquiry into creativity in the information economy and a creative innovation strategy from the Australia Council, we are witnessing the development of an innovation framework appropriate for creative content.

The focus has shifted towards the digital content end of the creative industries and has raised understanding that creative industries? outputs and creative occupations are becoming a more important input into manufacturing and the wider service industries, such as health, education, government and business services.

The aim of the digital content industry action agenda is to double the value of the digital content industry in the Australian economy to $42 billion by 2015. Nationwide consultations on its implementation are in train. Its recommendations are aimed at improving private investment in the sector through strategies such as the development of stronger export performance, the strengthening of links between industry and skills and training providers and with research and development institutions, and by ensuring that intellectual property regimes keep pace with technological and social change. The agenda also aims at better sources of timely data that can inform planning by industry and government.

The approach in this action agenda brings me to the second point: we need to understand better the full economic contribution of creativity to the wider economy.

The creative industries constitute one sector of the economy; the creative economy is formed when we move from sector-specific arguments to creative occupations as inputs into the whole economy, and creative outputs as intermediate inputs into other sectors.

In recent decades, information and communications technologies have been shown to enable economy-wide growth. Recent work we have conducted at the ARC Centre of Excellence for Creative Industries and Innovation has begun to show that creative skills and occupations too are capable of enabling broader economic growth.

Richard Florida, in The Rise of the Creative Class, has drawn attention to this idea, but his strategy of including all manner of white-collar professionals in the creative class to bulk it up to about one-third of the total US work force has drawn criticism.

Our work at the centre has refined official categories of what counts as a creative occupation or industry without going overboard like Florida. Our evidence demonstrates these sectors are significantly underestimated in official statistics, whose categories lag behind the growth of the digital end of this industry sector in particular. We have also counted more comprehensively the economic contributions of creative people and organisations by correlating industry sector with occupation.

For example, our analysis shows that because so many designers are embedded in other industries and because design is defined and counted in such an unhelpful way, the design sector is undercounted by about 36 per cent.

Design consulting activities are often subsumed into much broader business services, or technical services, or even clothing manufacturing classifications. And when specialist occupations alone are tallied, the failure to take into account the support and management staff who work within specialist creative firms results in total employment being underestimated by as much as 33 per cent. People who are embedded ? that is, employed in creative occupations outside specific creative industries ? constitute almost 2 per cent of the total Australian work force. Of the total population with creative qualifications at the last Census, our figures show almost 70 per cent of those employed are working outside the specialist creative industries.

The whole sector has a mean income 34 per cent higher than the economy as a whole, which suggests a different profile for creatives than the usual view of a chronically low-wage, underemployed sector. In our Queensland study, we found that exports from the state and gross value added are higher than average sectorally, and that creative industries tend to be more knowledge-intensive in that they spend more on knowledge-based workers as a percentage of their total expenditure on wages than other sectors.

The final point is the most speculative and in many ways most interesting because it goes to the question of economic theory. Cultural economics, the traditional approach to the arts and culture, employs an argument for public support based on exceptional economic activity in which there will always be market failure. Large cultural industries such as broadcasting attract content regulation also based on arguments for market failure.

But economic theory that seeks to identify the sources of novelty and change, and the way industries grow, is better suited to understanding a creative economy. We need to think less about optimal allocation of scarce resources and market failure and more about the wellsprings of innovation and the way in which the creative industries may function as a bellwether for structural change in economies. This is the kind of thinking found in transaction-cost economics, growth theory and evolutionary and information economics.

British interest group Focus on Creative Industries captured this well: ?The challenge of the creative industries is the challenge of a new form of economic understanding: they are not catching up with serious, mainstream industries, they are setting the templates these industries will follow.? ?

Stuart Cunningham is director of the ARC Centre of Excellence for Creative Industries and Innovation based at the Queensland University of Technology. His platform paper, What Price a Creative Economy?, is published by Currency House. This article first appeared in the Australian.

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