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4. THE CULTURAL FABRIC OF CITIES The varying geometry of economic spin-offs It is easier to assert that there are tourism spin-offs than to demonstrate their exact scale. It is often assumed almost automatically that art cities will benefit from tourist spending, without considering the leakage or displacement effects it may cause. Yet whether the expected impacts are achieved will depend on two types of factors: - the territory’s capacity to satisfy new demands through its own resources, on one hand, and - the relative factor scarcity within the territory and the consequent price changes that will be sparked by growing tourism expenditure. The first point was examined in Chapter 2. There, we showed that the more integrated a territory is, i.e. the more resources it can use or redeploy for productive purposes, the better it can absorb the tensions created by artistic and tourism investment, thereby making sure that the positive effects outweigh the negative ones. Conversely, the less integrated a territory is, i.e. the fewer resources it can use or redeploy, the sharper will be the tensions created by the investment, and the negative effects will outweigh the positive ones. To this integration yardstick we must add the relative weight of the cultural or heritage sector in the local economy: the greater that weight, the greater the risks of upsetting the balance through price effects. By combining these two criteria — the degree of integration and the relative weight of the artistic sector — into a model of variable-price multipliers we can identify four potential situations as shown in table 4.2. Table 4.2. Differential effects of artistic investment on local development HIGH INTEGRATION WEAK INTEGRATION HERITAGE WEIGHT Zone1 Zone 4 IMPORTANT Ep (0) Ep (>0) < Enp (>0) _ HERITAGE WEIGHT Zone 2 Zone 3 LIMITED Ep(>0) < Enp (>0) Ep(>0) > Enp (>0) Following McGregor & al (2000: “Neoclassical economic base multiplier”, Journal of Regional Science, vol 20, n°1, page 15) Notes: Ep is the change in employment in the artistic sector. Ep (0) means a positive change in artistic employment. Enp is the change in employment in the local non-artistic sector. Enp (0) means a positive change in non-artistic employment CULTURE AND LOCAL DEVELOPMENT - ISBN 92-64-00990-6 - © OECD 2005 145
4. THE CULTURAL FABRIC OF CITIES • In the first case, with high integration and limited heritage weight (zone 2), the shifts are both positive, and employment rises faster in the non-artistic than in the artistic sector. This is likely to be the case with heritage investments in large cities, such as the establishment of heritage or museum districts. Use of the heritage causes employment to rise despite higher real wages: the economic fabric is sufficiently dense for creating non-artistic jobs in response to the higher purchasing power induced by tourist spending (which raises the incomes of local service providers). At the same time, the relative weight of the artistic sector is sufficiently low that the negative impact of higher prices and wages in artistic-related services will not spill over into other sectors. In short, the positive effects of integration are not altered: the artistic factor’s weight is sufficiently limited and the destabilising effect from artistic investment will not be felt. This is what justifies heritage investments in important cities, both in major metropolitan areas like New York or Paris, or smaller ones like Bilbao. • In the second case, where integration is weak and the artistic weight is limited (zone 3), employment changes are still positive, but this time employment rises less quickly in the non-artistic than in the artistic sector. This is the case with cities where tourism sparks artistic job creation, but where the economic fabric cannot meet the needs of artistic workers or the non-cultural needs of visitors and tourists, meaning that goods must be imported rather than produced locally. The positive effects of integration are no longer there, but the weight of the artistic factor is sufficiently low to prevent excessive destabilising effect artistic investment. This is exactly the situation in art cities like Krakow, Bruges or Toledo, where the lack of structural diversification makes it impossible to take full advantage of tourism activities, which can even induce inflation and speculation damaging to other activities (heritage cities). • In the third case, with weak integration and a major artistic element (zone 4), the employment change is positive in the artistic sector but negative for all other activities. This situation is likely to result from highly speculative development of the artistic sector. The price effects will ultimately make other services completely uncompetitive, and may induce tourists to satisfy their housing and restaurant needs elsewhere. In short, we may say that the destabilising impact of the artistic factor’s weight is catalysed by the weakness of integration. This is the case with stand-alone artistic sites like Mont Saint Michel. It is also the case in territories were non-artistic economic agents adopt speculative behaviour and seek to exploit location advantage (Venice). • The final case — zone 1, with high integration and a heavy artistic factor — is more ambiguous, and perhaps surprising. We may interpret it as follows: a major investment in a highly integrated zone can push incomes and prices up to the point where the artistic sector is no longer competitive with other sites, 146 CULTURE AND LOCAL DEVELOPMENT - ISBN 92-64-00990-6 - © OECD 2005
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Culture and Local Development
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ORGANISATION FOR ECONOMIC CO-OPERAT
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Table of Contents Executive Summary
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EXECUTIVE SUMMARY the operation of
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EXECUTIVE SUMMARY new projects; and
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EXECUTIVE SUMMARY is the fact that
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EXECUTIVE SUMMARY A new agenda for
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INTRODUCTION a basis for developmen
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INTRODUCTION Defining cultural reso
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INTRODUCTION - the one where cultur
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Chapter 2 Local development based o
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2. LOCAL DEVELOPMENT BASED ON ATTRA
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