Before the pandemic, the creative economy was growing rapidly and generating new jobs in every region of the world, predicted to account up to 10 per cent of global GDP by 2030. The crisis has brought this exceptional growth to a standstill, exposing the fragility of a sector dominated by micro-businesses, informal work practices and few tangible assets. Lockdowns have also highlighted the importance of cultural and creative activity in maintaining individual well-being and community resilience. Our contention is not that the creative economy needs public subsidies to resume its previous growth. It does however require governments and multilateral organisations to recognise and address constraints and regulatory structures that have failed to keep pace with the rapid evolution of the sector. Another priority is to rebalance the glaring asymmetry between the growing power of transnational digital platforms and those who have created much of the content on which their prosperity rests.
Challenge
THE DISRUPTED RISE OF THE CREATIVE ECONOMY HAS NEGATIVE IMPACTS ON THE DELIVERY OF THE 2030 AGENDA
The resolution of the 74th session of the United Nations General Assembly establishing 2021 as the International Year of Creative Economy for Sustainable Development confirmed the rising role of creative economy on the global stage.1 Yet creative economic sectors, at the crossroads of the arts, culture, business and technology, have been hit disproportionally hard by the COVID-19 crisis (OECD, 2020), in particular workers in the informal economy (ILO, 2021a) in cities (U20, 2020, 2021).
Civic response to the COVID-19 crisis around the world has demonstrated the importance of creativity and culture in sustaining community resilience and protecting livelihoods when formal health, social and economic systems are under pressure or cease to function (Newbigin, 2021). Furthermore, evidence indicates that with low barriers to entry, creative economy is a sector that is genuinely inclusive and agile. With the development of technologies that create new products, new services and new revenue streams, it clearly has potential as part of the future global economy.
A research study from the first half of 2021 (GIZ, 2021) has compiled and interpreted advanced data about the impact of Covid-19 on the music, fashion and design sectors in several countries from Africa and the Middle East.2 Results show that across sectors and cities, financial losses were extreme. Full-time employment dropped by two thirds in some cities, and only a small minority reported maintaining steady income. In depth research conducted in the UAE (UAE Ministry of Culture and Youth, 2021) underlines that ‘all institutions, companies and individuals working in the cultural and creative industries sector were affected in 2020 as 41% of companies lost their revenues on average, and this percentage reached 52% among independent individuals, and one in 5 independent individuals lost their entire income’. Only 13% of businesses and 9% of freelancers were reported making a profit in 2020, using digital technology to reach new customers and audiences.3 As the COVID-19 crisis continues to unfold, the risks of jeopardising the inclusion and development potential of creative economy and the micro, small and medium-sized enterprises (MSMEs) that sustain it are growing. While the major online platforms have prospered, creative MSMEs and those dependent on live interaction with audiences or customers have been devastated. The “inclusively creative” roadmap which led to the adoption of the UN Resolution on creative economy in 2020 featured the key role of MSMEs in the development of the creative economy, but they have also suffered the most from the impacts of the crisis, in particular in countries where welfare systems could not compensate for months of revenue losses. This downturn could become permanent, especially if young people feel deterred from seeking their futures in this sector. But at a time of rising calls to protect local values, and scepticism about the benefits of globalisation, the creative economy offers a unique means of developing international trade on the basis of cultural distinctiveness. Aligning widespread but dispersed community, local government and international initiatives to support and invest in the creative economy is urgent, to re-energise an emerging economic sector which has many positive features in terms of its sustainability (UNPGA, 2021) and, at a time of growing youth unemployment, an exceptional capacity to generate jobs (UK Dept for Culture).
In addition, the creative economy generates social and cultural capital for the world. In South Africa, the cultural and creative industries contributed 5.6% to the gross domestic product with an upward trend in pre-crisis time. In Nigeria, the music industry was growing at an annual rate of 13.4%. The Nigerian film industry, known as “Nollywood”, employs about one million people and, with over 2,000 films produced per year, was ahead of Hollywood. In Kenya, the entertainment and media sector grew by an average of almost 7% from 2014 to 2018.
The Bali Agenda on Creative Economy adopted in 2018 described it as a bridge for communication and understanding between countries and cultures, connecting urban, metropolitan and rural ecosystems with low initial barriers of entry. But this attractive vision poses a further challenge: by its nature the creative economy is a labour-intensive, people-oriented sector that relies heavily on human talent and thrives through the development of social capital. Its future success therefore depends on the adoption of broadly based education curricula that stimulate creativity in the young but, in many countries, school closures, deep digital divides and a focus on rote learning and technical knowledge rather than the fostering of creative and critical thinking impede progress.
As the race for recovery focuses on infrastructure investments, including long neglected and underfunded social infrastructure (Fransen et al., 2018) to revive the 2030 Agenda, the creative economy could play a significant macroeconomic role in support of people-centred sustainability policies, as recognized by the doubling of the Creative Europe funding program by the European Commission in May 2021, up to € 2,3 billion.4 A key issue therefore arises as whether and how such programs could be expanded globally, starting with a G20 wide perspective.
Figure 1: Export and import value of creative goods from selected economies to the world market (US$ millions)
Notes: ASEAN = Association of Southeast Asian Nations; EU28 = European Union; SAR= Special Administrative Region Source: Sioson, E.P., and Korwatanasakul, U., ADBI-ASEAN, 2021
Proposal
HOW CREATIVE ECONOMY CAN HELP STRENGTHEN MULTILATERAL MECHANISMS
The creative economy, defined by the UNCTAD and UNDP as “an evolving concept based on creative assets potentially generating economic growth and development” , was one of the fastest growing sectors in every region of the world North and South, East and West before the COVID-19 pandemic outbreak.5 It was also highly transformative in terms of income generation, job creation and export earnings with spillover effects that stimulated innovation in other sectors. There is the chance now, as the world is racing towards recovery, to shape the creative economy to be even more effective in delivering sustainable and inclusive growth.
Twenty years ago, the creative economy was seen as primarily a phenomenon of a few developed economies. More recently the combined processes of the World Conference on Creative Economy (WCCE), initiated in South-East Asia, and of the Orange Economy in Latin America have accelerated South-South and triangular cooperation. Remarkably, over 80 countries co-sponsored the UN resolution on creative economy in the fall of 2019.6 It is thus no surprise that creative economy is identified as an important driver for recovery in South-East Asia, as per the ASEAN Comprehensive Recovery Framework under development. Building a responsive and conducive ecosystem for cultural and creative enterprises to thrive is also a clearly emerging macro-economic priority in Latin America (IADB, 2020).
As Indonesia has held a side-event of the 2021 High Level Political Forum on creative economy and recovery,7 its inspiration still comes from the Bandung 1955 international AsianAfrican Conference, the birthplace of Non-Alignment. This echoes the contemporary positioning of creative economy as an inclusive and cross-sector phenomenon embracing culture and trade, economy and place, global flows and local identities, and reviving heritage preservation (ICOMOS, 2019, 2021).8
In emerging markets, the artisan economy is a major driver of informal jobs for an estimated 300 million people and projected to reach a global valuation of US$985 billion by 2023 (Callanan et al., 2020). Meanwhile, UNCTAD, which has been tracking the trade in creative goods and services for close to 20 years, found that creative economy export trade growth averaged 7 per cent between 2002 and 2015, often outpacing the growth rate for other industries. In 2015, UNCTAD pegged the value of the global market for creative goods at a significant US$509 billion. According to other calculations by UNESCO and dating back from 2013, global creative industries reportedly generated US$2.25 trillion in revenue and formally employed 29.5 million people worldwide. According to pre-crisis forecasts, the creative economy could represent 10 per cent of global GDP before 2030.
What has been relatively little studied and understood to date is the extent to which the near ubiquity of hand-held digital devices and the accessibility of affordable networks is now bridging the gap between traditional craft industries, informal cultural activity and world markets. In the process the wealth and job-generating potential of new products, new services, new revenue streams, old skills and old ways of working are being unnecessarily held back by outmoded regulatory structures, inadequate access to effective protection of intellectual property and lack of access to skills acquisition and business support for MSMEs in the creative sector.
Sustained dialogue between governments and civil society, arising from intersectoral approaches and exchanges of good practices and joint work, could benefit from articulated policies supporting the exchange of goods, services and cultural consumption, generating income for creators and experts, and promoting networks that allow the expansion of interactions. Linking experts, chamber leaders and associations from different sectors of the creative economy is key to ensure the transmission of specific knowledge, analyse the scenarios and create awareness of the strategic importance of cultural development.
LEVERAGING SOCIAL INFRASTRUCTURE
Physical and digital infrastructure have been largely overtaken by social infrastructure in the past decade and in particular as a G20 response to the 2008 global financial crisis (EU, ELTI, 2018). Investment in intangibles now exceeds tangibles in a growing number of countries. Unprecedented and rapid urbanisation has triggered an emerging societal substructure made of culture, creativity, innovation, ethnic and cultural diversity, community governance with a global reach, and the development of new productive and cognitive capacities, expressed formally (the UNESCO Creative Cities network has 180 members; the World Cities Culture Forum has 40 members) but also informally. These impacts are about memory and values, singular and collective identities, the symbolic uses of space, the re-evaluation of the soul of a city another word for sense of place the development of new cultural-spatial nexus (Buchoud and Moreno, 2021). This worldwide phenomenon is creating the foundations of a new urban culture that energises communities and finds much of its expression through the development of creative economy.
From heritage restoration practices to audiovisual clusters, creative and cultural economies cover a vast diversity of practices. The rehabilitation of the Medina of Fez UNESCO World Heritage Site (ICOMOS, 2021) or the rising success and recognition of “Sakhawood”, a synonym for the rising cinema industry in the region of Yakutia in the Russian Far East now gaining international recognition, are just two among many concrete illustrations of genuine social innovation converted into drivers of job creation (Larasati et al., 2020).
In February 2020, the World Urban Forum held in Abu Dhabi focused on “Connecting Culture and Innovation”. Although the outcomes of the meeting were overshadowed by the pandemic, this echoed the 2014 session of the Forum held in Medellin on the theme of “Urban Equity in Development Cities for Life”. A report edited by UN Habitat in April 2021 on cities and pandemic recovery solutions shows that some local governments, for example in Barcelona, have supported their cultural sectors, but failed to recognise their interaction with creative industries and a diverse range of public, private and civic players. Elsewhere, local administrations have understood the value of this wider creative economy, even during the present crisis. For example, Bandung in Indonesia passed a Creative Economy Bill at the beginning of 2021 (Larasati and Satari, 2021), and the metropolitan government of Izmir in Turkey created a new directorate of “Urban Economy and Innovation Industries” despite an accumulation of challenges ranging from the pandemic to an earthquake and drought.9
The development of the creative sector brings access to opportunities, especially for young people and women, two priorities of the G20 Italian presidency. The combination of digital technology with creative imagination, which underpins much of the creative economy, makes it especially attractive to the rising youth generation who are most impacted by rising unemployment. Therefore, a good place to start building a “new normal” would be a recognition that there is no infrastructure more fundamental than culture, no form of capital investment more productive than investment in human capital and no better place to start policy planning than by looking at a community’s assets and capabilities rather than its needs. This is how creative economy can contribute to global macro-economic growth, without imperilling environmental sustainability.
We argue that the crisis could trigger a paradigm change for creative economy, which has long been envisioned as a “feasible development option” (UNDP and UNCTAD, 2010) with a strong potential to “widen local development pathways” (UNESCO, 2013). The forthcoming UNCTAD 15 conference to be held in October 2021 (UNCTAD, 2020) offers an opportunity to further develop this agenda. In particular, the G20 could play a critical role in acknowledging the convergence between the Orange Economy and the World Conference on Creative Economy and digital growth opportunities (ACEBF, 2021), globally and locally.
FOSTERING AN INCLUSIVE FOURTH INDUSTRIAL REVOLUTION
The shifts in the global economy from natural resources-based to human resources-based growth have reinforced the case for creative capacities and skills. This is powerfully illustrated by a pre-crisis calculation in the United States that investment in content production and distribution (e.g., for the cinema, music, videogames, books, etc.) over the previous five years equalled investment in the oil and gas industries, at some $650 billion.10
Unlike many other sectors where the growth of digitisation and the advent of machine learning is reducing the need for traditional human skills, the cultural and creative sectors continue to require the cultural sensitivity, social skills and personal vision of individual human beings. This ability of the creative sector to continue generating new jobs as well as wealth will therefore be of particular importance as the global labour market adjusts to the realities of the Fourth Industrial Revolution (4IR). It is already evident that the accelerated digitisation of many economic sectors during the pandemic has created new opportunities as well as challenges for the creative economy. City administrations have been quicker than national governments to recognise this value, so a better alignment of global, local and civil society efforts and initiatives will help foster the long-term benefits of cultural and creative industries in strategic planning for sustainable development and inclusion. Solutions to strengthen cognitive skills, technology savviness and interpersonal abilities are also critical in support of youth empowerment and employment.
While bridging the global and local digital divides will be a critical factor for sustainable recovery and economy, a further factor is the frequent blurring of formal and informal work practices in the value and supply chains that link development, production and distribution in the online environment. The creative sector has been at the leading edge of this change which, characterised as the “gig economy”, is now impacting a growing number of economic sectors in every society.
Thus, the acceleration of the digital transformation of MSMEs is a concrete way to recover from the crisis and benefit from the accelerated development of e-commerce. For instance, in Indonesia, lockdowns have stimulated the national government to create incentives for creative SMEs to move their businesses to e-commerce platforms. Within just a few months, more than two million creative sector SMEs joined such platforms. Encouraged by this success, one of the priorities for Indonesia’s pandemic recovery is to accelerate digital transformation of all businesses to ecommerce (Pesik, 2021). Mainstreaming creative economy could also accelerate by including it within national and subnational governments’ key performance indicators. In particular, digital dashboards could help local governments make decisions and policies based on real-time data of creative economy potentials in their respective areas. This could reinforce the uptake of creative economy at the local level and help local governments cope with rapidly changing labour markets (Larasati et al., 2020).
One way to move forward would be to promote the global coordination of creative economy indexes. The continuing failure of standard industrial and occupational classification codes to fully reflect the rapid evolution of the creative economy militates against the growth of public and private investment in the sector or the establishment of common standards for trade. In some cases, inter-agency competition within the United Nations has also slowed down the uptake of a more unified vision of creative economy. A further issue is that international trade in creative and cultural goods and services inevitably raises issues of cultural sensitivity, particularly in the digital sphere which has increased the reach and influence of already dominant players.
ENERGISING THE 2030 AGENDA
The creative economy can contribute to reinforcing the delivery of the 2030 Agenda. In June 2021, the Asian Development Bank and the ASEAN Secretariat have launched a global call for proposals in preparation of the G20 Indonesia in 2022, underlining the role of creative economy in regional and global recovery frameworks.11
In the fall of 2021, the UNCTAD 15 conference and the United Arab Emirates’ planned World Expo, commended by the G20 Saudi Arabia Leaders and possibly including a plenary meeting of the World Conference on Creative Economy, present two opportunities to further develop this contribution. In addition, the creative economy should play a central role, locally and globally, in the “future cities” task force proposed by the Secretary General of the United Nations. As well as generating high quality jobs that can give satisfaction to workers, it has a role to play in sustainable and inclusive place-making and sustainable urbanisation.12
Before COVID-19 hit, the global creative economy was growing rapidly in many regions. This momentum should not be lost in the wake of the pandemic; rather, greater investment
Figure 2: Articulating creative economy, recovery and strengthening the economic productivity of the SDGs
Author: T. Larasati
needs to flow to the creative industries that have the potential to make localised and high impact, and help us shift to a new sustainable economy. With less than decade to go to reach to the goals of the 2030 Agenda, creative economy can contribute to re-energising the delivery of the sustainable development goals (SDGs).
Although there is no development goal focusing on culture or creative economy, the development goal 8 on promoting “sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all” and 12 on “ensuring sustainable consumption and production patterns” include many references related to cultural development. The launch of the Culture 2030 initiative by UNESCO in 2019 and the introduction of 22 corresponding indicators shows many other links between culture and creative economy and the SDG framework. Yet none of the indicators directly refers to creative economy. As pre-existing finance gaps to reach out to the 2030 Agenda have been enlarged by the COVID-19 crisis, creative economy provides a rationale that can also help give new perspectives to players in the cultural sector; and it can also contribute to strengthening the economic base for heritage preservation.
One way to bridge the SDG finance gaps through creative economy would be to maximise the potential of impact investment, addressing multi-dimensional social, cultural, innovation and economic needs. According to 2018 estimates, impact investment assets under management were US$31 trillion, an increase of 34 per cent over 2016 (GSIA, 2018) but creative economy was still largely seen by impact investors as synonymous with “arts and culture”.13 However, the 2020 report of the Global Impact Investing Network suggested that impact investing leaders were beginning to recognise the error of defining the creative economy too narrowly, and a report from the Upstart Co-Lab coalition identified more than 100 private equity, private debt and real estate funds, representing an estimated US$60 billion assets under management, that had been active in the creative economy.
CONCLUSION: HOW THE G20 CAN SUPPORT CREATIVE ECONOMY FOR RECOVERY
Our tangible and intangible cultural heritage unique and unrepeatable, containing the past, present and future of a people is essential to promote world peace. By organising the first G20 Culture Ministers’ summit in July 2021, the G20 Italy has undertaken a comprehensive initiative by recognising the role of culture and heritage preservation in supporting sustainable development pathways. The G20 could advance the 2030 Agenda by incorporating the creative economy into the mainstream of a new global narrative of a people-centred recovery from the COVID-19 crisis, by:
Harmonising standards, protocols and definitions
International labour market definitions such as the Standard Industrial Classifications and the Standard Occupational Classifications fail to identify and differentiate between many of the emerging skills that drive creative industries. At an international level this adds confusion to trade agreements. At the national level, it means that governments are failing to accurately predict skills needs and trends in the sector. Failure to achieve international agreement on issues such as definitions of creative R&D hamper companies working across national boundaries. The imprecision over definitions also hinders the growth of impact investment and other forms of finance investment that seek to achieve social and environmental as well as commercial returns. Recent research in the United States reveals that impact investment opportunities in the creative sector are often wrongly characterised as “arts”, thereby diminishing their appeal to investors seeking strong commercial returns.As illustrated by the successful call for policy papers ‘Creative Economy 2030’ launched by ADBI and the ASEAN Secretariat in July 2021 and which received nearly 100 proposals in a short time14, this is the right moment to work on data availability and mobilize research and analytic capacities, such as from development agencies and International Financial Institutions (IFIs), to raise the macro-economic profile and potential of creative economy and share it with the G20 Finance Track.Valuing and protecting intellectual propertyThe creative economy depends on trade in intangible assets, particularly intellectual property (IP). Piracy, inadequate and over-complex protection and defence of copyright and other forms of IP actively disadvantage content creators in the online world which, by definition, transcends national boundaries. The pandemic has highlighted the huge power imbalance between platform operators and those whose creative production gives value to those platforms. It particularly disadvantages new entrants who lack profile or market power. Action to address these imbalances requires international agreement and would be further facilitated by addressing the issues of harmonisation and definition identified in the point above. Instead of engaging productively with the needs and growth potential of a sector much of whose value is generated by informal workers in entirely informal settings, governments around the world continue to ignore, marginalise or even criminalise informal working.
Promoting digital literacy
The growing significance of the online world, hugely accelerated by the impact of the pandemic and by the near ubiquity of affordable devices and accessible networks, makes the teaching of digital skills an urgent requirement in every society. With youth unemployment intensified by the pandemic, the failure to facilitate the entry of young people into the labour market by providing access to digital literacy and the creative potential of the online world represents a colossal waste of human resource and the loss of productive, sustainable jobs. It is necessary to promote the development of new capacities to face the exponential leap in the use of digital tools, to design measures for the growing trend towards concentration, to protect the digital commons, to guarantee a diverse content offer (geographical, thematic and identity) and to update regulatory frameworks, historically designed for the analogue world.
Recognising the importance of culture in sustainability strategies at every level
The pandemic has highlighted the centrality of culture in sustaining individual well-being and social harmony at the community level. Local and municipal administrations around the world are beginning to integrate cultural sustainability thinking into their strategic planning, their administrative structures and their day-to-day practice. As urbanisation accelerates, it is urgent to align the way in which local, national and international institutions work to achieve a more sustainable and inclusive economy and society. The Urban 20 Communiqué of June 2021 calls to guarantee “the right to participate fully and freely in cultural life”.15 This first step of a people-centred recovery has to be economically substantiated, in particular through the development of creative economy, a sector of the economy based primarily on intersecting human creativity and capital, not on extracting natural resources.
NOTES
1 UN resolution 74/198, https://documents-dds-ny.un.org/doc/UNDOC/LTD/N19/359/41/PDF/N1935941.pdf?OpenElement.
2 Iraq, Jordan, Kenya, Lebanon, Senegal and South Africa. The research team focused on 7 cities: Amman, Beirut, Cape Town, Dakar, Johannesburg, Nairobi and Sulaymaniyah, working with coordinators on the ground in each city to digitally conduct 604 surveys and 42 hours of focus group interviews with 133 participants.
3 UAE Ministry of Culture and Youth, Monitoring the Pulse of the Cultural and Creative Industries Resilience and Recovery Report, June 30, 2021.
4 Creative Europe: Over €2 billion to support the recovery, resilience and diversity of cultural and creative sectors, May 27, 2021, Retrieved from https://www.eureporter.co/eu2/2021/05/27/creative-europe-over-e2-billion-to-support-the-recovery-resilience-and-diversity-of-cultural-and-creative-sectors/.
5 United Nations Conference on Trade and Development (2018), Creative Economy Outlook: Trends in international trade in Creative Industries and Country Profiles, Geneva and New York, United Nations, https://unctad.org/en/PublicationsLibrary/ditcted2018d3_en.pdf.
6 The Global Summit on the Orange Economy in Medellin, Colombia, in 2019, stated that the orange economy “represents an enormous wealth based on talent, intellectual property, connectivity and of the cultural heritage of (Inter-America) region”. The Bali 2018 WCCE conference acknowledged “the vast potential and significant contributions of the creative economy to enable global economic growth, social and cultural development in the framework of the fourth industrial revolution”.
7 Inclusive and Resilient Creative Economy for Sustainable Development, 8 July 2021.
8 The 20th General Assembly of the International Council on Monuments and Sites (ICOMOS) in 2020 stated the need to sustainably synergise cultural heritage conservation and management with cultural and creative industries in order to attend to a people-centred approach to Cultural Heritage (ICOMOS resolution 20GA/19). The driving principles of the Indonesian Creative Cities Network are directly inspired from the “Dasasila Bandung”, the declaration on world peace and cooperation adopted at the Bandung Asia Africa Conference of 1955.
9 The Bandung creative economy bill, initiated by an independent community and academic institutions and is supported by the Research & Development Agency of Bandung Municipality, was passed in January 2021. Once effective, the bill guarantees that whoever takes office as Mayor of Bandung will have to include the creative economy in the city’s development agenda, alongside being committed to eight other related main issues, such as creators and IP rights holders, creative hubs, data collection, creative city development, and incentives and financing for the creative economy sector.
10 The Economist (2019), “Who Will Win the Media Wars”, 4 November.
11 ADBI, call for policy papers on Creative Economy 2030: Imagining and Delivering a Robust, Inclusive, and Sustainable Recovery, https://www.adb.org/adbi/capacity-building-training/call-policy-papers/creative-economy-2030.
12 Gatherings such as the 2021 Culture Summit of the United Cities and Local Governments movement focusing on the role of “culture in shaping the future” and including a dedicated focus on creative economy could contribute to enlarging the impact of experts panel recommendations.
13 As an example, for ten years the Global Impact Investing Network has captured data on “arts & culture” in the Annual Impact Investor Survey of its 289 global members, representing US$221 billion worth of impact assets under management. In 2020, arts & culture was reported as representing only 0.1 per cent of assets under management, with allocations from only 9 per cent of respondents.
14 Call for Policy Papers on Creative Economy 2030: Imagining and Delivering a Robust, Inclusive, and Sustainable Recovery, ADBI, ASEAN, 2021. Retrieved from https://www.adb.org/adbi/capacity-building-training/call-policy-papers/creative-economy-2030.
15 The official communiqué of Urban 20, published on 17 June 2021 and endorsed by 28 cities around the world, emphasises the importance of culture as a key pillar of sustainable development. The 2020 Rome Charter strongly states that “we need a cultural democracy more than ever”.
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