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Economic development for cultural and creative industries


Cultural and creative industries (CCIs) have a great potential to create growth and jobs in Europe. In many cities and regions CCIs have a significant impact on smart, sustainable and inclusive growth. In the EU cultural and creative sectors account for 3.3 % of GDP and employ 6.7 million people (3 % of total employment). Because of a high rate of self-employed people in cultural and creative industries the number of workers is even higher. Due to these facts the strengthening and support of CCIs form a central part of smart specialisation strategies on local, regional and national levels, also in rural areas.

Written by Dr Daniel Kipp

Reviewed by David Walburn

 

The concept

How to implement it?

A regional experience

Step in the RIS process

What can be expected?

A quote

References

Experts' comments

 

The concept


The ‘Green Paper - Unlocking the potential of cultural and creative industries’ from the Commission uses a broad definition for cultural and creative industries:[1]

‘Cultural industries’ are those industries producing and distributing goods or services which at the time they are developed are considered to have a specific attribute, use or purpose which embodies or conveys cultural expressions, irrespective of the commercial value they may have. Besides the traditional arts sectors (performing arts, visual arts, cultural heritage – including the public sector), they include film, DVD and video, television and radio, video games, new media, music, books and press. […]

‘Creative industries’ are those industries which use culture as an input and have a cultural dimension, although their outputs are mainly functional. They include architecture and design, which integrate creative elements into wider processes, as well as subsectors such as graphic design, fashion design or advertising.

Many other industries are closely connected to CCIs, e. g. tourism and new (information) technologies. CCIs can act as an innovation catalyst for these other sectors due to various interdependencies.

The Commission has acknowledged the meaning of CCIs for the creation of growth and jobs. On the regional and local level several public authorities have developed a wide range of measures to support these industries.

 

How to implement it?


The Commission identifies the following key drivers to support the development of CCIs and make the most out of the opportunities derived from these industries:[2]

  • Offer good basic conditions for CCIs (increasing the capacity to experiment, innovate and succeed as entrepreneurs; and providing easier access to funding and the right mix of skills);
  • Help CCIs to develop in their local and regional environment as a launch pad for a stronger global presence, including through increased exchange and mobility;
  • Use spill-over effects of CCIs on a wide range of economic and social contexts.

In order to provide optimal starting conditions for companies from CCIs supporting measures must focus on various levels. The Commission specifies significant starting points to provide a suitable legal framework (e. g. modernization of the state aid rules), exchange of good practices and 'peer learning' and plans to provide funding instruments under the new Multiannual Financial Framework 2014-2020 of the EU.[3]

A major limiting factor is the financing of CCIs, which is also confirmed by a study on behalf of the Commission published in October 2013. Due to this fact a new Financial Guarantee Facility scheme under the new Creative Europe programme is envisaged. This guarantee, which will operate from 2016 and specifically target SMEs, will share the risk on loans offered to them by banks. Creative Europe will set aside more than €120 million to fund the guarantee, which is expected to yield more than €750 million in affordable loans.[4]

 

A regional experience


In the following the focus lies on supporting measures for CCIs on local and regional level. During the last years the city of Oldenburg in Weser-Ems region (Germany) has developed and implemented several measures to support CCIs in the city and is the leading example in this regard in the Weser-Ems region. The participation of the city of Oldenburg in the INTERREG IV B project ‘Creative City Challenge’ (2009-2012) formed an important starting point in this regard. Twelve project partners from ten cities covering six EU Member States were involved in this project.[5] Subsequently to the participation in this project, the following measures were implemented successfully in Oldenburg:[6]

  • Network 'cre8 oldenburg': A network for all CCIs in Oldenburg was established by the business development department of the city of Oldenburg together with various companies and stakeholders from the creative industry. In the last years, the network developed very dynamically and it builds the organisational framework for collaboration between companies from the CCIs in Oldenburg.
  • Events and networking: In regard to networking activities several events are organized regularly. These include, inter alia, larger ‘open space’ events, ‘bar camps’ taking place annually on various topics, the organization of regular meetings, regulars' tables for specific target groups (e. g. web designers) and festivals.
  • '3X3' – cooperation between artists/entrepreneurs from creative industry and established companies: In the 3X3 project, three artists and three employees of a company supported by a coach develop creative solutions to an actual operational problem of the company. The tasks can, for example, originate from the areas of corporate strategy, product innovation, organizational development, human resources, marketing, communication or management questions.[7]
  • Website www.cre8oldenburg.de: To promote CCIs in Oldenburg and make the Oldenburg creative industries more transparent and visible, an online information platform was established. Approx. 180 members have registered and can present themselves here. Through a marketplace function of the platform, they can exchange offers and requests.
  • Coaching for start-ups in CCIs: Within the pilot-project ‚Ideenlotsen‘, self-employment is facilitated through the coaching of companies and start-ups from CCIs. This project was finished already.
  • Technical plus creative approach: The FabLab Oldenburg (fabrication laboratory) opens its doors with offers for entrepreneurs, start-ups, pupils and students and teachers to get to know and to learn working with high tech machines, e.g. 3D printer, laser cutter and CNC-mortizer.
  • Urban and socio-cultural development of the train station area in Oldenburg to a creative location: The support of CCIs in Oldenburg was also accompanied by urban developments in the city. Within the process, the City of Oldenburg started to transform the train station area into a creative location. Various activities have been initiated for this purpose (participation processes, workshops, exhibitions, excursions, etc.) and include the temporary use of vacant buildings by artists and cultural workers according to the principle of 'co-working space'.

The measures mentioned above show the great variety of activities in the city of Oldenburg. It becomes apparent that these are predominantly ‘soft measures’. In Oldenburg, they result in a very open dynamic climate where creative entrepreneurs take the initiative to implement further projects.

 

Step in the RIS process


Step 5 (Definition of coherent policy mix, roadmaps and action plan) will be most important to promote companies from CCIs.

 

What can be expected?


Investments in CCIs can have a significant impact on smart, sustainable and inclusive growth, e. g.:[8]

  • CCIs are vital for the emergence of new economic activities and the creation of new jobs,
  • CCIs have the potential to increase the quality of life in urban and rural areas,
  • CCIs can contribute for the social integration of marginalised groups,
  • CCIs as catalysts for structural change and diversification of economies,
  • CCIs as location factor for attracting enterprises into cities and regions,
  • CCIs as magnet for tourism, to generate a creative buzz, to attract talents and to contribute to a positive image of cities and regions.

 

A quote


"Europe's cultural and creative sectors are not only essential for cultural diversity; they also contribute a great deal to social and economic development in our Member States and regions. At the local and regional level, strategic investments in these sectors have often delivered spectacular results, as exemplified by many European Capitals of Culture. They also produce important spill-over effects, as well as enhancing a dynamic image of an attractive and creative Europe which is open to cultures and talents from across the globe." -  Androulla Vassiliou, European Commissioner for Education, Culture, Multilingualism and Youth.

 

References


 

Mr Daniel Kipp


 

Dr. Daniel Kipp studied economic geography at the University of Osnabruck and wrote his PhD concerning regional innovation support strategies for small and medium-sized enterprises.

For more than ten years he is working as a consultant for MCON Dieter Meyer Consulting GmbH in Oldenburg / Germany. His activities thematically mainly focus on the consulting of public institutions concerning the implementation of economic development processes, improvement of policy instruments and funding opportunities. Furthermore, another thematic area of Daniel Kipp’s work is the support of SMEs in innovation processes.

His research interests lie in particular in the effectiveness of regional innovation systems and in the design of new financial instruments.

kipp@eurooffice.de

 

Experts' comments


The main paper gives a clear and comprehensive overview of the special importance of cultural and creative industries in economic development policy, with useful, practical examples of good practice.

It might be useful to examine a little further some of the reasons why this category of firm has special needs which public policy has to recognise and address.

Economic developers will all be familiar with the problems faced by small businesses and the entrepreneurs who run them. In creative businesses these problems are often at their most acute. It is a cliché to say that the assets of creative businesses leave the office every night, but it is none the less true for that. Whilst the intellectual property in technology-based firms may be patented and have a commercial value ascribed to it, and thus may be used as a security for loan finance, or sold, in part, to attract venture capital, for the creative business the value may simply be the ideas in the mind of a highly creative individual. This can make it difficult for creative firms to secure suitable premises, obtain bank finance or development capital. A highly successful and creative person may be able to walk away from a failed company and be immediately commercially active again, leaving behind financial chaos and losses for other people.

These problems can hold back a sector which, as the main paper points out, has the potential to make an increasingly important contribution to economic growth and job creation in many urban regions.

The good news is that the scale of the need for premises, loan and equity finance tends to be smaller in the creative sector, whilst the upsides can be considerable. Working on a portfolio basis, the losses from individual firms may not be too great a difficulty for development agencies. There are usually no expensive programmes of research and development to be financed[9], marketable products may only need the investment of time and effort by a few individuals, and accommodation requirements are often limited. This means that the possibilities for effective public policy interventions are considerable, and at a relatively low cost compared with the potential benefits, eg:

  • The provision of suitable premises in creative clusters, encouraging  opportunities for inter-firm networking
  • Helping to set up loan guarantee schemes in partnership with banks
  • Encouraging business angel networks where individuals may have a taste for the higher risk investment opportunities which exist in the sector with relatively modest levels of investment. Such support could take the form of financing the overheads.
  • Supporting special vocational courses in local colleges
  • Helping to provide business training, perhaps in partnership with local banks or accountancy firms.

These suggestions are very much in line with the practical examples from Oldenburg outlined in the main paper.

Working with firms in the creative sector offers much potential for economic development policy. Creative businesses are to be found in the urban centres of most regions, and sometimes in relatively rural areas.

 

Mr David Walburn


After a career in business David Walburn joined Greater London Enterprise in 1986 where he was responsible for venture capital and other small business support, before becoming Chief Executive of the organisation. He was the Chair of the London Business Angels Network and played a key role in the setting up of the European Business Angels Network. He has worked with the UK government and the European Commission on developing public policy initiatives to improve the financing of small and medium-sized enterprises. He was the Chair of Capital Enterprise, the umbrella body for organisations supporting micro business development in London, until 2012.

For the last ten years he has been a Visiting Professor at London South Bank University where he headed the Local Economy Policy Unit and was the managing editor of the journal Local Economy.

He has served as President of EURADA, and been a member of a number of advisory bodies of the European Commission.  He has been an active member of the International Economic Development Council in Washington DC and has a wide range of international contacts with economic development organisations.

He continues to write and lecture on small business finance and regional economic development.

davidwalburn@europe.com



[1] COM(2010) 183, p.6

[2] COM(2010) 183, p.7-16

[3] COM(2012) 537, p.3

[4] COM IP/14/4

[6] for further information see: www.cre8oldenburg.de

[7] for further information see: www.3mal3.net

[8] S3 Platform: Guide to Research and Innovation Strategies for Smart Specialisation (RIS 3), p.88-91

[9] Sometimes firms in the creative sector may develop individual projects (eg a film, a theatrical production of an exhibition) which in themselves can have a commercial value separate from the firm itself. Such projects may attract risk capital and public policy may be able to support this process. The future of the firm does not necessarily depend on the commercial success of each venture.

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