The Culture Fix

Regional perspectives: CCS as drivers of regional and local development

Cultural and creative sectors (CCS) are important for regional development

CCS businesses are widely acknowledged to significantly contribute to regional development. CCS businesses directly generate wealth, jobs and innovation which stimulates the local economy. These sectors also contribute more broadly to local ecosystems through their impact on other sectors of the economy, for example by driving revenues for other businesses within CCS supply chains and creating jobs in sectors supporting or adjacent to CCS.

These “multiplier effects” have been observed in many national contexts and for many different CCS subsectors. For example, Gutierrez-Posada et al. (2021[1]) examined the role of CCS in stimulating employment in London and find that every job in CCS generated 1.9 jobs in other sectors of the economy. Similarly, analysis of the video games industry in Canada, shows that while the sector directly supported 27 700 full-time jobs in 2019, it also supported 9 800 jobs in the video games supply chain, and stimulated an estimated 10 600 jobs through the “induced effects” of spending by videogames industry workers (ESAC/Nordicity, 2019[2]).

As well as contributing to local economic growth through supply chains and job creation, CCS generate a broad range of knowledge, industry and network spillover effects (Figure 1). Such spillovers have a strong spatial dimension and are therefore particularly important for regional development. This includes spillover effects to other businesses, but also broader effects on local communities, such as improving health and wellbeing and facilitating social cohesion. CCS can also play an important role in influencing attitudes and behaviours, and can therefore contribute to local sustainability agendas, for example in tackling climate change (WCCF, 2019[3]).

The innovation spillover effects of CCS in particular have been shown to contribute to higher productivity across regional economies. Boix-Domènech and Soler’s (2015[4]) study on CCS in 250 regions across Europe finds high correlation between labour productivity (measured as the regional GDP per person) and the proportion of people employed in some cultural and creative sectors. They distinguish between “creative services” (which includes publishing, programming and broadcasting, computer programming, architectural and engineering activities, scientific research and development, advertising and market research, design, photography, and artistic and cultural activities) and “creative manufacturing” (which includes wearing apparel, leather and related products, printing and reproduction of recorded media, and jewellery), finding that employment in creative services highly correlates with increased productivity. Moreover, they suggest that around 90% of this relationship is not due to higher productivity in CCS, but rather the generative nature of spillovers from CCS to other sectors of the economy.

However, the spillover effects of CCS on productivity are uneven across regions and differ by type of CCS activity. Using a similar methodology to the study mentioned above, applied to 275 European regions, Boix-Domènech et al. (2021[5]) find that while the presence of CCS had a significant positive effect on labour productivity on average, this was not the case across all regions and there were stark differences between the effect of creative services vs creative manufacturing. Their estimates suggest that while the effect of creative services on labour productivity was positive for 92% of regions, the effect of creative manufacturing was negative for 44% of regions meaning that in some regions, the high presence of creative manufacturing actually had a negative impact on labour productivity.

Figure 1. CCS effects on knowledge, industry and networks

Source: Tom Fleming Creative Consultancy (2015[6]), Cultural and Creative Spillovers in Europe: Report on a Preliminary Evidence Review, http://dx.doi.org/10.1163/2210-7975_HRD-1957-2015001.

Box 1. Harnessing CCS to address climate change and supporting CCS businesses in the green transition

Cultural and creative sectors can support the green transition in three key ways. Firstly, the sectors themselves can address the impact that their activities have on sustainability issues, for example by addressing sustainability issues in the fast fashion industry, or the use of plastics at live events. Secondly, CCS can contribute to the green transition in other areas of the economy, for example through design services which incorporate more sustainable materials. Thirdly, CCS have an important role to play in raising awareness and shaping narratives around the sustainability agenda through the work they produce, such as documentaries, music, novels etc.

Creative Carbon Scotland

Launched in 2011, Creative Carbon Scotland works with individuals, organisations and strategic bodies from CCS, sustainability and policy spheres with an aim to harness the cultural and creative sector in addressing sustainability needs in Scotland. Alongside working directly with artists and individuals on sustainability projects, the Creative Carbon provides arts organisations with training in carbon measurement, reporting and reduction, and has supported around 120 organisations in mandatory carbon reporting. Creative Carbon has also worked in partnership with the sector body Creative Scotland in developing an environmental sustainability policy for arts organisations across Scotland and offers a wide range of both general and sub-sector specific guidance documents on sustainability in CCS through its website.

Ahead of the COP26 summit in Edinburgh in 2021, Creative Carbon led the Climate Beacons project, which aimed to stimulate long-term public engagement in sustainability through a collaborative programme of work between climate change and environmental organisations, and arts, heritage and cultural organisations. The Climate Beacons project launched seven “hubs” across Scotland where artists and cultural sector professionals, environmental non-governmental organisations (NGOs), scientists and policymakers and members of the local community could meet physically or virtually to discuss and debate COP26 themes and climate action specific to each local area.

Source: Creative Carbon Scotland (2022[7]), Creative Carbon Scotland: Connecting Arts and Sustainability, http://www.creativecarbonscotland.com/. (accessed on 28 Feburary 2022)

CCS tend to “cluster” in specific regions or cities

It is well established that CCS have a tendency to cluster in specific regions or cities. There are multiple reasons why CCS cluster (Lazzeretti, Capone and Boix, 2012[8]). Firstly, much like other sectors, CCS businesses can gain significant “agglomeration” benefits from being geographically situated near to other businesses in the same sector, as they are able to pool resources and share knowledge and expertise (Porter, 1990[9]). These benefits of agglomeration are however particularly important for CCS, as they rely more heavily on knowledge generation and human capital, operate within dense networks and comprise smaller firms. Secondly, there are historic cultural reasons why CCS clusters develop and persist over time. Cultural heritage represents a resource for creativity and as expertise build over time regions develop path-dependent knowledge accumulation, meaning that areas with rich cultural heritage often develop into creative and specialised hubs. Thirdly, the popular “creative class” approach to understanding CCS clustering (Florida, 2002[10]) explains how creative professionals are drawn to places which exhibit certain characteristics (namely, access to technology, high levels of talented human capital, and high levels of social tolerance) and that the presence of this “creative class” in turn enhances these characteristics, thus attracting more creative professionals and increasing the clustering effect.

The clustering of CCS businesses and labour markets leads to uneven CCS activity across regions. As discussed in Chapter 3, CCS employment is most often concentrated in large cities and capital regions. Analysis from the UK shows that productivity (measured in this study as GVA per employee) also varies widely by region, with CCS productivity in London being up to three times higher than in other regions (Tether, 2019[11]). Moreover, they find that productivity in London and the south-east of England has grown over six times faster between 2011 and 2017 than in the rest of the UK. Evidence from China, (Tao et al., 2019[12]) suggests that the urbanization economies reflected in being in a large city (e.g. more diversity of industries, greater access to transport and communications networks etc.) raise the productivity of CCS businesses. However, studies also show that small “micro-clusters” of CCS can be found across regions, in both cities and non-metropolitan areas (Siepel et al., 2020[13]; Boix., Hervás-Oliver and de Miguel-Molina, 2015[14]), suggesting that there is potential to significantly improve CCS national productivity by targeting policy intervention towards rural and non-capital regions.

CCS are feeding into regional smart specialisation strategies

Considering the benefits that CCS can bring to local economies and communities, many local governments have put the development of CCS as a priority area in their smart specialisation strategies. Smart specialisation is an industrial and innovation framework for regional economies that combines industrial, educational and innovation policies to leverage innovation-led, knowledge-based investments in regions, while taking into account contextual specifies (OECD, 2013[15]). The smart specialisation approach encourages countries or regions to identify and select a limited number of priority areas for knowledge-based investments, focusing on their strengths and comparative advantages (OECD, 2021[16]). CCS can deeply benefit from such approaches, as they focus on investment in knowledge sharing, collaboration, infrastructure and the businesses environment.

Emerging from the EU expert group “Knowledge for Growth”, smart specialisation strategies (S3) is the result of EU cohesion policies and investments. However, the smart specialisation approach has been taken up by many regions across the world. In total, 19 EU Member States and 7 non-EU countries as well as 180 EU and 42 non-EU Regions are registered on the European Commission’s Smart Specialisation Platform, which provides advice to countries and regions for the design and implementation of their Smart Specialisation Strategies (EC, 2022[17]).

While specialisation may have traditionally focused on technology sectors, a growing number of regions have focused their smart specialisation strategies on CCS. Evidence from the European Commission (2019[17]) shows that 80% of public authorities in Europe have included CCS in their innovation strategies, with more than 90 EU regions including CCS in regional smart specialisation strategies. Between 2014 and 2020, more than EUR 67 million were made available to regional smart specialisation strategies through the European Structural and Investment funds and through national and regional funding (EC, 2012[18]). In 2014-2020, around 100 European regions had cultural and creative industries and/or cultural heritage included in their Research & Innovation Strategies for Smart Specialisation, both within regional and national priorities.

However, there remain barriers to taking up CCS-focused smart specialisation. For example, a lack of data on innovation in CCS has prevented some countries from including the sector, focusing instead on areas with a stronger evidence base (EC, 2018[19]). Moreover, the growing interest in developing smart specialisation strategies around CCS does not correspond to an equally substantial commitment in terms of allocation of financial resources (see Figure 2).

Figure 2. Shares of overarching topics addressed by Smart Specialisation Strategy priority areas and budget spent on such topics from ERDF funding, 2014-20

Source: European Commission (2021[20]), Study on prioritisation in Smart Specialization Strategies in the EU, Prognos and CSIL, 2021.

Smart specialisation can be a helpful approach to consolidating CCS policy across different areas or levels of governance. CCS business and entrepreneurship policies are often fragmented, with initiatives and programs split between arts and cultural ministries and economic, or innovation ministries. Moreover, national policies can be inconsistent with local approaches. Smart specialisation approaches to policy design can help to integrate various government departments in formulating comprehensive policy agendas, as well as bringing together the creative community, academia and businesses across the economy (EC, 2020[21]). Moreover, co-planning at a national level could help solve regional and local lack of resources when it comes to business development by sharing resources on a larger scale (EC, 2018[19]).

Smart specialisation strategies can target CCS as a whole or target specific subsectors. For example, in Catalonia, Spain, the region’s cultural and creative strategy for 2014-2020 focused on tourism, culture and sport, while aiming to promote entrepreneurship through education from secondary and tertiary education so that youth from all sectors may participate in an entrepreneurial culture (Generalitat de Catalunya, 2014[22]). In Provence-Alpes-Côte-d’Azur, France, home to the Cannes film festival, the 2014-2020 strategy focused on exploiting the audio-visual and tourism sectors to increase the attractiveness of the region while also making culture an interactive element through e-tourism. (Région Provence-Alpes-Côte-d'Azur, 2014[23])

Box 2. CREADIS3: The Smart Specialisation Creative Districts Project

As part of the EU’s Regional Funds Interreg Europe initiative the Sustainable Smart Specialisation Creative Districts or CREADIS3 project was launched in 2017 as a collaborative project between six regional actors: the Basque Country, Emilia-Romagna, Central Finland, Wallonia, Western Greece and the Slovak Republic. The purpose of the project is to align territorial public policy agendas and support the development of more efficient CCS policies in European territories, in order to generate innovation and economic development in European regions.

The project aimed to:

• Promote administrative collaboration at different levels to facilitate synergies between the different authorities in charge of the CCS

• Articulate better cultural and economic policies to achieve effective innovation policies for CCS

• Support the international territorial appeal to increase investment in the creative potential of each territory and retain entrepreneurs

• Improve collaboration within the local ecosystem of centres, laboratories, clusters, incubators, universities, science parks, etc.

• Improve growth between cultural and technological sectors

• Support the internationalisation of SMEs through capacity building and new business models in the field of research and innovation

Each region developed specific policies in response to these objectives, tailored to their own regional contexts, with a total of 22 actions developed across the partnership. For example, Wallonia developed actions around supporting creative hubs in the region and Western Greece looked at developing an online calendar of CCS events. Evaluation of the programme shows that the project has been highly impactful and the majority of actions taken by regional partners have a strong potential to be transferred to other regions.

Source: CREADIS3 Project (2020[24]), Lessons Learnt in CREADIS3: From Territorial Action Plans to Smart Specialization Strategies in Cultural and Creative Districts, https://www.interregeurope.eu/fileadmin/user_upload/tx_tevprojects/library/file_1585655498.pdf.

Alongside this, CCS are increasingly feeding into wider policy initiatives, such as tackling climate change and creating more sustainable environments. The New European Agenda for Culture (EC, 2018[25]) highlights the importance of “cultural cross-overs”, where connections between cultural and non-cultural spheres generate new, hybrid forms of social and economic value. This includes cross-overs between culture, health, and wellbeing; culture and social cohesion; culture and innovation; and culture, learning and education, to name only a few. Harnessing these types of cultural cross-overs can help address some of the most pressing policy issues and responding to the Sustainable Development Goals. For example, the recently launched New European Bauhaus initiative connects the European Green Deal with CCS to promote sustainability agendas. It aims to connect science and technology sectors to the world of art and culture through knowledge sharing and idea generation in order to produce innovative solutions for sustainable living (EU, 2021[26]).

Culture is also a driver of regeneration in local communities

With growing recognition of the direct and indirect benefit of CCS to local regions, culture-led regeneration policies have proliferated in cities and regions across the globe (IDB, 2019[27]). As economies shift away from traditional manufacturing and primary industries, cities and regions have looked towards knowledge-intensive sectors and creative capability building as a way to remain globally competitive. Culture-led regeneration policies focus on economic and social development of a city or region through promoting and enabling cultural and creative activity (Vickery, 2007[28]; Evans, 2005[29]). Initial culture led-regeneration strategies emerging in the mid-1990s focused on “transforming old industrial and harbour areas with key infrastructures, hosting cultural events and reconstructing their industrial image through place marketing” (Gainza, 2017[30]). Over the past decade or so, these strategies have become increasingly targeted, focusing on specific neighbourhood level intervention and the promotion of spaces for cultural production. Whereas policies to support CCS at a national level typically see growth in CCS as the end goal, culture-led regeneration strategies at a local level are more targeted towards development, with CCS acting as a catalyst for this change. Here CCS are understood to not only provide economic benefits (through local taxation, job creation and innovation), and social benefits (e.g. improved wellbeing and community cohesion) but also to contribute to “place making” by making cities and regions more attractive to work and live, encouraging inward investment, inward labour flows, higher productivity and increased tourism. An often-cited example of this wider impact is that of the city of Bilbao, which experienced transformative regeneration after the Guggenheim Foundation opened its second European museum in the city in 1997 (González, 2010[31]).

Culture-led regeneration policies integrate urban planning with economic and regulatory policy. CCS require affordable office and workshop space as well as physical and digital infrastructure (e.g. good transport links, high-speed broadband, etc.). Urban planning schemes can address these needs by investing in new building programs and reallocating former industrial districts and unused warehouse spaces for CCS use. For example, the INCREDIBOL! Project in Bologna has renovated over 40 vacant buildings in the area for use by entrepreneurs and start-ups in CCS (see Chapter 4 Box 4.4). Urban planning and city regulation also has a role to play in promoting a creative “milieu”, by promoting nightlife (such as clubs, bars and restaurants) as well as cinemas, galleries, museums and libraries. These forms of cultural infrastructure contribute to city vibrancy, attracting creative professionals and proving an opportunity for social networking.

Sustainable culture-led regeneration must remain mindful of protecting existing communities. One of the main criticisms of culture-led regeneration is that it leads to gentrification and the “pricing out” of local communities (Cameron and Coaffee, 2005[32]). Sustainable regeneration therefore requires consideration of how increased development might impact the affordability of places for local communities. Moreover, while strong cultural heritage in a region or city represents a significant asset, over commercialisation or “commercial misappropriation” of local cultural heritage can be deeply damaging to local communities (UNESCO/World Bank, 2021[33]). Consequently, sustainable culture-led regeneration requires consideration of how to support communities in retaining control over the marketisation of heritage and ensure that they adequately benefit from it.

Box 3. Co-financing of regional CCS via the EU’s Cohesion funds

The European Regional Development Fund (ERDF) is a structuring instrument for EU Member States’ investments in cultural and creative sectors. The ERDF is the most significant source of EU funding for investments in culture. For the programming period 2014-2020, EUR 39.3 billion have been allocated for the co-financing of culture and cultural heritage programmes and projects in Europe.

Through ERDF and other structural funds, such as the European Social Fund (ESF), European Agricultural Fund for Rural Development (EAFRD) and European Maritime and Fisheries Fund (EMFF), financial support has addressed culture and culture-related projects in cities and regions across the EU. This includes support on the local level earmarked directly for culture (including cultural heritage), for the development and promotion of cultural and creative SMEs, and devoted to access to public sector information (including open data on culture, digital libraries, e-content and e-tourism).

Regarding ERDF itself, a number of broad programmes and actions supported by this fund provide opportunities or explore topics connected to cultural and creative sectors. For example, URBACT is a European exchange and learning programme promoting sustainable urban development. It conducts a number of culture related work streams including KAIRÓS, an URBACT Action Planning Network focused on cultural heritage as a driver for sustainable urban development and regeneration. A second example is Urban Innovative Actions (UIA), which provides urban areas throughout Europe with resources to test new and unproven solutions to address urban challenges. Culture and cultural heritage are one of UIA’s main thematic areas, receiving over 100 funding applications under this theme in its latest funding call. ESPON (European Observation Network for Territorial Development and Cohesion), co-funded via ERDF, has also been analysing the impact of cultural heritage investments on societies and economies across Europe, including examining the economic impact of culture and the links between cultural heritage and identity.

Source: EC (2022[34]), European Regional Development Fund, https://ec.europa.eu/regional_policy/en/funding/erdf/ (accessed 13 May 2022); URBACT (2022[35]), Culture & Heritage, https://urbact.eu/ (accessed 13 May 2022); UIA (2022[36]), Culture and cultural heritage, https://www.uia-initiative.eu/en/theme/culture-and-cultural-heritage, (accessed 13 May 2022); ESPON (2022[37]), Cultural heritage, https://www.espon.eu/search/node/cultural%20heritage, (accessed 13 May 2022) https://ec.europa.eu/regional_policy/en/funding/erdf/ ; https://urbact.eu/ ; https://www.uia-initiative.eu/en/uia-cities, https://www.espon.eu/search/node/cultural heritage

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