FOUR MODELS OF THE CREATIVE INDUSTRIES

Jason Potts1and Stuart Cunningham2

What is the dynamic value of the creative industries from the economic perspective? This paper seeks to answer this question by proposing four models of the relationship betweenthe creative industries and the whole economy, then examining the evidence for each. Wefind that growth models fit the data well, but not everywhere. We discuss themethodological and empirical basis for this finding and its implications for economicand cultural policy.

KEYWORDS creative industries, economic evolution, growth models, cultural policy

Introduction

¡®Creative industries¡¯ is a new analytic definition of the industrial components of the economy in which creativity is an input and content or intellectual property is the output.3 This definition was introduced in the DCMS 1998 template and has been adopted in raft of mapping documents by other countries also seeking to estimate the size and growth of this sector and to formulate new policy.4 The creative industries have thus come to be newly represented as a significant and rapidly growing set of industries;5 an important sector, in other words, for policy attention. The ostensible purpose of these mapping documents has been to estimate the¡®significance¡¯ of the creative industries to the modern economy in order to reorient economic policy support in accordance with that significance.6 In doing so, however,these studies highlight an important point: namely that the economic value of the creative industries may extend beyond just the manifest production of cultural goods or the  
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employment of creative people, but may have a more general role in driving and facilitating the process of change across the entire economy, as evidenced by its dynamic parameters and degree of embedding in the broader economy. Indeed, it may even be the case that the ¡®dynamic significance¡¯ of the creative industries is greater than their ¡®static significance¡¯. This paper seeks to address this question by posing it directly: what is the dynamic relation between the creative industries and the rest of the economy?7 The four models of this paper are the four possible answers to this question: namely (1) welfare, (2)competition, (3) growth and (4) innovation. Each of these possibilities parlays into a very different policy model: in (1) a welfare subsidy is required; in (2), standard industry policy; in (3), investment and growth policy; and in (4), innovation policy is best. Very different policy frameworks thus follow from each of the four basic dynamic models relating the creative industries to the rest of the economy. This paper will outline these four models and marshal a sample of existing evidence to begin the process of sorting among them. We begin by outlining the four possible primary relations between the creative industries and the rest of the economy. We explain the relation of each model to different theoretical foundations, what we should expect to observe if each model were true, and the appropriate policy framework in each case. Using various mapping documents, we then undertake an initial consideration of a set of data samples connected to the four models. However, this paper does not attempt a comprehensive analysis. For that, a much more rigorous approach to modeling, data and statistical analysis would be required.What we aim to provide here is only a theory of the classes of models involved and an illustration of how different sorts of data might be applied to them. This seems to us a necessary first step (prior to a more rigorous approach) in developing the economics of the creative industries. Yet, in doing so, we immediately find at least superficial evidence supporting models (3) and (4). And while clearly signaling the need for further theoretical and empirical work, this also points up the potential value of an innovation-based approach to creative industries and cultural policy. As such, we propose these four models as a  
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