Creative Economy: A Feasible Development Option

4.7 The case for a trade model for the creative industriesusing a product classification methodology 74Towards an evidence-based assessment of the creative economyThus far, the discussion of the creative industries andits definitions has focused on such measures as employmentand value added or size and structure. What has not been systematicallyaddressed is the question of trade flows. Tradepresents a new level of difficulty, but it does make a usefulstarting point. In a sector that is international, such a dimensionis important. Moreover, in terms of assessing the impacton development (positive or negative), it is important toknow the balance of trade in creative-industry products.Finally, the development of new intellectual property regimesneeds to be assessed against their potential impact on trade.An approach taken by some governments has been touse data specially collected on the trade in “invisibles” — thatis, pure services where remuneration is for a service rendered. 8The problem is that these data are very poorly documentedand disaggregated in national accounts. (The technicalaspects of the construction of taxonomies and the collectionof trade data with particular reference to culture and the creativeindustries are discussed later in this chapter.)Furthermore, as business involving these activities may or maynot rely upon a dual flow of earnings derived from physicalproduct and intellectual property, remuneration for servicesrendered or product leased is very difficult to capture. Finally,although useful in principle, the level of disaggregation ofstatistics such as those of the Extended Balance of PaymentsServices (EBOPS) classification is insufficient to produce thedefinition and precision required.Thus, while there is little alternative to using a productclassification, doing so has its limitations. For example, it isgoing to underreport the effort of the self-employed electronicartist, although it may capture the labour of self-employedartisans better. Essentially, the central product classification(CPC) does not focus on the shapers or designers of compositeproducts (plays, music, writing, etc.).The approach taken starts by defining the creativeindustries on the basis of final products (artists’ paintings,hand-blown glass). Moreover, marginal or composite categoriesare excluded to avoid over counting. This might beparticularly relevant in the computing sector. For example,one cannot include personal computer output in computergames since doing so would result in an overestimate of thededicated-games usage; however, it will result in a significantundercounting of the impact of the trade in computer games.One must add a caveat: in contradistinction to thenormative approach of industrial or product classification,the creative economy may have some overlapping (and hence,in whole economy terms, double counting) elements withdefinitions that have different bases. This should not invalidatethe adoption of a definition on the basis of the “finaluse” of goods or services; one must simply be careful withthe use of elements of product classification to make surethat it is appropriate. A similar protocol is adopted in thecase of satellite accounts.Finally, it should be added that what many regard asthe core of creative activity — the creation of intellectualproperty (rights) — is not directly measured for the simplereason that IPRs are increasingly disembedded from materialproducts. In the past, IPRs were rolled up in the materialproducts, but increasingly these elements can be separatedand, in fact, duplicated. A design can be used on a mug or atee shirt or a book, for example. Moreover, the system ofcollection of IPRs, royalties, is dependent upon a range oflocal particularities concerning collecting societies as well asnational ratification of relevant conventions. This systemalso depends on where an artist has registered his/her rightsand whether the artist’s income flows from that place and isidentified as such. This may seem a very individual andunique circumstance, but one of the characteristics of thecreative economy is the extreme wealth that may be held in afew hands. 9It is important to recognize that there is a considerablegap in the availability of statistics relating to the creativeeconomy. The objective of the Creative Economy Reports isto address this problem and take steps to solve it. Beforedescribing the steps taken to collate the data presented inchapter 5, it is useful to discuss why there is such a gap.7 This section builds upon the empirical research towards a methodological basis to measure the economic impact of the creative economy carried out by Prof. Andrew C. Pratt andhis valuable inputs to this report.8 International Financial Services (2007).9 For further discussion of these issues, see Burns Owens Partnership et al. (2006) and Roodhouse (2000).104 CREATIVE ECONOMY REPORT 2010