Determinants of development of creative economy

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Institute of International Relations of Taras Shevchenko National University of Kyiv

Determinants of development of creative economy

Daria Kopiika, applicant

Abstract

Determinants of the development of creative industries are not limited to technological innovations or new business models but are complex. The primary determinant of the formation of a creative economy is the intellectual environment of its development, which should meet the requirements of creative individuals regarding the possibility of implementing theirs on ideas, and consistent organizational measures by national regulators. The creative economy tends to metropolises and cultural centers - large cities. The determinant of the development of a creative economy is the change in the management functions of the creation of a creative product. The creative economy generates to the transformation of the social structure of society, which is characterized by the emergence of a new social class (creative class).

Keywords: creative economy, creative industries, measuring of creative commodities costs, cultural cooperation, creative Europe, governance over creative sector of economy development

Introduction

One of the imperatives of the development of the global economic system is created, which allows the creation of new meanings and values of social life from knowledge. There is an increase in the influence of the creative sector on economic and social processes in a post-industrial society. So there is a scientific discussion regarding the determinants of the development of a creative economy. Given the current developments, one should add two more resources to the three basic factors of production (land, labour and capital), i.e. entrepreneurial skills and creativity. The latter has been interpreted and acknowledged as a factor of production since the beginning of the new millennium, however, artworks, souvenirs, designing ideas, architectural feats and many other artifacts have been prized as valuables for barter and trade or collectibles since the beginning of the very history of humankind. Correspondingly, the emergence of national and international determinations of creative products was a harbinger of a new sector of the economy - the creative economy. It is imperative for theorists and practitioners alike to determine the future of management within the framework of the creative economy and to understand how it will impact the world architectonics.

Literature Review

One of the first authors to dedicate his works to creative economy was John Howkins [1]. In 2001 he formulated the coherent concept of creative economy. One can name the two of his brilliant adherents: Peter Lloyd Higgs and Stuart D. Cunningham [2]. They made history of statistic evaluation of expanse of creative economy in the UK and employment therein. With the help of Colette Henry and Anne de Bruin it was possible to collect articles and to systematize the approaches of different authors to creation of foundations of entrepreneurship in creative economy, understanding of creative processes and practices, dynamic interaction and implementation in global economy [3]. David Parrish is the author of Creative Business Guide, which outlines both theory and practice of this field [4]. Andy Pratt highlighted the oxymoron of cultural industries and public policy (mostly in cultural field) [5].

It must be noted that currently in our scientific circles there is no coherent foundation for a comprehensive overview of various problems and issues of the creative economy. As one of the most important tasks is to figure out how to analyze and generalize within the framework of national economic systems of determinations of creative economy.

The aim of the article is to define determinations of the creative economy, further shaping of scientific understanding of certain peculiarities of the creative economy, organization of administration of creative industries and laying a foundation for shaping sector of the creative economy in Ukraine.

Methodology

The article uses general and special methods of investigation. The theoretical positions of the concepts of the creative economy are analyzed. As research materials in the article are articles of researchers of the creative economy, the actual material of the UNESCO and the UNCTAD.

Results and discussion

The term “creative industries” came into being in the 1990's and was first employed for describing all the creativity-based branches that engendered copyright protection [3, p.1]. Back then, creative economy encompassed arts and crafts, design, cinematography, theatre and performing arts, advertising, publishing, music recording, and radio. Afterward, the list was expanded with software and computer services, digital media, architecture, jewelry, museum activities, etc.

Department for Culture Media and Sport, (hereinafter DCMS) estimates the creative industries as something being: “those industries which have their origin in individual creativity, skill and talent and have a potential for wealth and job creation through the generation and exploitation of intellectual property”. DCMS lists thirteen sectors of creative industries. Another approach to scaling of creative economy is based on statistics of jobs and other undertakings of a person. According to UK Census 2001, 26 task groups were established. They include, inter alia, such professions as city planners and graphic designers; advertising managers and furniture manufacturers; actors and librarians; journalists and software specialists; architects and archivists. Those types of activity have been in development for many years with some of them absent from the Census reports of 1981 or 1991 [2, p.3].

Creative industries, according to UNESCO, are “sectors of organized of activity whose principal purpose is the production or reproduction, promotion, distribution and/or commercialization of goods, services and activities of a cultural, artistic or heritage-related nature” [6].

Hence, the aforementioned definitions emphasize that the basis of a creative product is an intangible component thereof (i.e. idea, substance, creative vision and its implementation) closely related to the very artist or a group of artists. In order to provide material and economic dimension of a creative product it is imperative to have a solid legal foundation in sphere of copyright protection for legal safeguards of the artist - the creator of the creative product.

Creative economy has a number of other characteristics as a type of human activity and a sector of economy. Let us look at them in more detail.

The very foundation of creative economy is individual creativity, which, in turn, is based on individual knowledge, skills, talents and abilities. Unlike in serial production, labour input in creation of a creative product is fully dependent on personal qualities of the creator, level of his or her qualification, creative vision etc. Each piece is unique and therefore its evaluation is either impossible or highly subjective. This peculiarity of creative economy makes evaluation of a product and standardization of approaches to quality of a product placed on market very difficult.

Creative sector of economy comprises mostly subjects that provide intangible assets and values (i.a. cinematography, fine arts etc.) That is why it is difficult to estimate increase in assets, their impairment, book and residual values etc. In the case of beaux-arts, with time the value of art pieces does not decrease, but, to the contrary increases. Hence, it is near to impossible to use standard accounting and reporting operations.

The majority of participants of creative economy are either mini- or microenterprises, although it is also possible for large-scale projects with hundreds and thousands of participants to be realized within its framework. Basically, key producers work on the basis of self-employment, though involvement of other people, tangent to the subject of creating values and/or their resource component, is also possible. Such a peculiarity of creative economy is, on one hand, a very positive fact, since it actively encourages working-age population to productively use its own work force and creative capabilities. Especially, let us highlight the importance of creative economy in self-employment of people with health problems, youth and people of so-called “third age”. Activity in the sphere of creative economy fosters social inclusion and increase of value of human capital like no other type of activity. On the other hand, it is 17 quite difficult to analyze the way these human resources are involved in creation of a new product, to evaluate productivity and effectiveness of talents and abilities.

Creative economy is also seen as to be gravitating towards centers of culture, science and high-tech, which almost always are large cities. The only exception is craft art. Inner London, berlin, Milan, Paris, Barcelona and New York are the most well-known “zones” of creative economy. These megapolises are the hubs for a huge variety of types of creative economy and activities related to it. Rarely, small towns develop a type of creative economy, which makes them famous and turns them into a domestic and foreign tourism attraction. High level of skill and creativity in megapolises of creative culture makes their creative products expensive and thereby attracts clients with high spending capabilities. Such creative centers accumulate enormous financial resources, strengthening regional financial power. However such an intensive development of creative economy in certain large cities can engender disparity in regional development and create elite centers that drain talented and crafty people from smaller towns.

Let us note also the changes happening in administration activity. Techniques and technologies of management that proved to be effective in non-creative industries are not necessary effective in creative economy. This can engender new approaches to and types of management, i.a. creative management, personnel creativity management etc. The character of administration activity is being changed dramatically and building of administrative vertical gives way to teamwork, creativity and close ties between self-dependent individuals. At the same time, it is worth mentioning that managing a group of creative individuals has its issues. For one, it is almost impossible to make people create creative products regularly. Such functions as prognosis, planning and control gain new features and demand different technologies.

Creative economy also erases borders between states and promotes such a type of exchange of ideas, innovations and solutions that upgrades its development, broadens horizons and fosters emergence of new types and forms thereof. This stimulates interstate relations and international cooperation. UNCTAD points out that creative economy becomes a national advantage for economic development in countries with significant cultural diversity, especially, for the developing countries [7]. However, given the subjective nature of evaluation of a creative product, in some countries certain pieces of art are being undervalued, in some - overvalued.

Creative economy had been developing mainly in rich countries. John Howkins noted that developed countries spend more on culture and recreation rather then on food and attire; only the bills for shelter and energy are more costly. For instance, the Japanese spend much more on leisure rather then on clothing or healthcare, and the majority of their clothing is picked not for practicality, but for their entertaining value [8]. In time, the situation changed and the developing countries joined the club. As it was stated on a special event “The High-level Policy Dialogue on the Creative Economy for Development” at UNCTAD XIII, 26 April 2012, developing countries account for almost 50% of the market of creative commodities.

At the same time, in certain cases the developed countries while appraising a creative product of a developing country origin impose such a pricing policy that is inadequate to the real price and value of the product. Such instances are regarded as possibly detrimental to measurement, evaluation and understanding proper value of products of creative economy in GDP.

Hence, taking into account all the aforementioned, the primary issue of creative economy is to create a coherent mechanism for evaluation of its volume and assessment of its effectiveness in terms of statistic codes and classifications. The UK is the first country in Europe to distinguish the creative sector as a separate unit within the structure of economics. Nowadays the majority of European countries followed the example.

International consulting companies (like EY and GfK), universities and public organizations joined the effort to create reports on the dynamics of the development of the creative economy.

UNCTAD highlights a rapid extension of volumes of creative economy during the last decade. World trade in creative goods and services in 2011 amounted to USD 624 billion [9]. Average annual growth rate of goods export during 2007-2011 was 3,71%, import - 0,58%. During 2012-2015 average annual growth rate of trade in creative goods suffered a setback with 0,23% in export and - 0,25% in import. The setback was a courtesy of the developing countries: goods export there had been annually degrading with a 1,89% ratio, import - even more dramatically with 8,17%. The developed countries showed an increase in goods export (2,86%) and import (3,56%) per annum during the abovementioned period [10]. The data are indicative of developing countries having limited resources for import of expensive creative products and lacking adequate capabilities for creation of stable export flows.

The European region is defined by its relatively stable development of trade in creative goods. Such a trade is overall supported and fostered by supranational and national bodies of the Union. Within EU the program called “Creative Europe” is now being implemented, which implies a number of initiatives related to creative economy and culture. In particular, 20152018 Work Plan for Culture, adopted in December 2014 by Ministers for Culture of states-members of the EU. The document sets core priorities of European cooperation in shaping cultural policy: accessible and inclusive culture, cultural heritage propagation, support for development of cultural and creative sectors, promotion of cultural diversity in EU external relations. The important part of implementation of the Work Plan is introduction of statistics of cultural sphere that would provide opportunity to compare statistic data of different countries and would become a reliable and modern basis for implementation of cultural policy [11]. A post of European coordinator for synergy of creative industries was created in order to coordinate activities in the sphere of creative economy.

According to the data articulated on International Forum “Creative Economy - Ukrainian Start-up” in September 2015, European creative economy provides 8,5 million of people with jobs and constitutes 4,5% of GDP of the EU.

One o of the leaders of the movement for development of creative economy globally is the Great Britain, where the branch continues to envelop new sectors and niches. In 2001 the UK creative economy involved roughly 1,9 million people, which is 7,1% of employed [2, c.40]. Yet in 2016 it involved directly 2 million people and 3,4 million people in tangent sectors. British creative economy now contributes annualy GBP 91,8 billion [12].

At the same time, these initiative need to meet certain requirements, which demands participation of state bodies, businesses and population. Firstly, the set of qualification groups of branches and types of activities involved in creative economy needs to be defined. We suggest the following constituent elements and their components. Components of creative economy can be distinguished by form as visual, acoustic and digital. By content: cultural content, intellectual, content, beaux- arts content, crafting content, social activism, cookery, design and architecture, digital technologies and massmedia. Secondly, a basis for precise evaluation of a creative product must be outlined. Most and foremost, that demands a comprehensive system of copyright protection (both legal and organizational). Which is, frankly, a problem, given the national mentality and gaps in intellectual property protection legislation.

State bodies must create relevant infrastructure elements in order to promote involvement in creative industries. This, obviously, concerns education, preparation and training and retraining of personnel in various centers and agencies (business-incubators, projectspaces).

Particular attention should be paid to increase of financing entrepreneurs and structures involved in creative sector, e.g. supporting star-ups, search for investors in currently existing structures, creation of venture funds for realization of creative business ideas.

We believe that creative economy holds great promises as a new major export. Therefore, the relevant state bodies must devise a system of exemptions, promotions and support for the exporters of creative goods. Also, types of creative economy, which should be a priority provider of employment, fostering social inclusion and overcoming regional disparity, must be defined.

A general approach that needs to be taken is as follows: conducting in-depth research in order to determine promising avenues for development of creative industries. We consider creation of local creative centers paramount, which is different from the European approach. For instance, small towns can house relevant equipment and decorations for films and development of national cinematographic art.

Creative economy needs stimuli for development, given its peculiarities and economic importance for any state. State policy needs to be directed at: precise outlining of limits of creative economy, defining certain sectors and types of economic activity as a constituent of creative economy, creating statistic case groups for statistic measurement of creative economy; creating greater copyright protection; defining directions and sources of financing and tech support for sectors and subsectors of creative economy; mapping regional and local development of creative industries; creating network of educational and professional institutions and infrastructure for training specialists in creative economy; forming a reporting system, given peculiarities and requirements of creative economy; developing new management technologies for individuals involved in creative industries.

creative economy intellectual

Conclusion

Determinants of the development of creative industries are not limited to technological innovations or new business models but are complex. The primary determinant of the formation of a creative economy is the intellectual environment of its development, which should meet the requirements of creative individuals regarding the possibility of implementing theirs on ideas, and consistent organizational measures by national regulators. The creative economy generates not only economic benefits, but also has a non-material value, which in turn affects the general processes in society. In particular, it leads to the transformation of the social structure of society, which is characterized by the emergence of a new social class, which is not an alternative social group, but a creative stratum in all spheres of society (creative class). Such social processes should lead to changes in the organization of economic relations as they change the tastes and preferences of consumers, the requirements of workers to employers, civil society to government structures, etc.

Further research may be focused on defining current models of development of creative economy around the world. Defining tools and technologies for introducing active the creative subject business to a developed and a developing economy.

References

1. Howkins, J. (2001), Creative Economy: how people make money from ideas, Penguin Group (USA) Incorporated, Allen Lane.

2. Higgs, P. L., Cunningham, S. D. and H. Bakhshi (2008), “Beyond the creative industries:

19 Mapping the creative economy in the United Kingdom”. - January 2008. - available at:

https://www.researchgate.net/publication/27471984

3. Henry, C. H. and de Bruin A. (2011), Entrepreneurship and the Creative Economy: Process, Practice and Policy, Edward Elgar Publishing.

4. Perysh, D. Cishotki i Pinzhaki: Dapamozhnik pa tvorchym biznjesje Pjeraklad DyJany Darazhok, Logvino literatures namai, 2017.

5. Pratt, A. C. (2005), “Cultural industries and public policy”, International Journal of Cultural Policy, 11:1, 31-44.

6. The official site of UNESCO, available at: http://portal.unesco.org/cul- ture/en/files/30297/11942616973cul- tural_stat_EN.pdf/ cultural_stat_EN.pdf

7. The official site of United Nations Conference

on Trade and Development, available at: Leveraging culture and creativity for sustainable development [Електронний ресурс]. Режим доступу:

unctad.org/en/PublicationsLibrary/web- ditcted2014d1_en.pdf

8. Howkins J. (2013), The Creative Economy: How People Make Money from Ideas: Second Ed., Penguin UK.

9. The official site of United Nations Conference on Trade and Development, available at: Global database on creative economy.

10. The official site of United Nations Conference on Trade and Development, Growth rates of creative goods exports and imports, annual, 2003-2015 - available at: http://unctad-

stat.unctad.org/wds/TableViewer/tableView.aspx.

11. Culture statistics - international trade in cultural goods, available at: http://ec.europa.eu/euro- stat/statistics-explained/index.php/Culture_statistics_- _international_trade_in_cultural_goods.

12. “UK creative jobs and exports”, available at:

http: //www.thecreativeindustries.co.uk/uk-creative-

overview/news-and-views/news-creative-industries- grow-jobs-exports, (Accessed 24 July 2018).

13. Mazurenko, V. P. and D. V. Kopiika, “National and Global Measures of the Development of Creative Economy”, Young Scientist. 2018. №8.

http://molodyvcheny.in.ua/ru/archive/60/.

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