2. Prepared by VANUS JAMES Senior Fellow, Scotiabank Chair; Adj. Distinguished Professor, University of Technology, JA Presentation Latin American Meeting of National Statistics Authorities - Creation and Economy in Latin America March 6 - 8, 2013. March 6 - 8, 2013. CREATIVE INDUSTRIES AND DEVELOPMENT POLICY ALTERNATIVE APPROACHES FOR MEASURING THE CREATIVE SECTOR – INTERNATIONAL AND NATIONAL EXPERIENCES

3.  Central Issues and Approaches  The DCMS Approach  WIPO Copyright-based Industries Approach  The Concentric Circles Approach  The Upstream-Downstream Activities Approach Main evaluation tool: Can the method shed light on how to achieve industrial restructuring and growth for competitiveness and sustainable poverty reduction in the modern world environment? WHAT IS COVERED

4.  Growing interest in the creative sector, spawned by  WIPO (2003)  UNCTAD (2004; 2008)  Growing need for a consensus approach to measurement of the main contributions  Main question - how is the sector is to be identified so that formal satellite accounting methodologies can be applied?  Most useful path – look at the leading alternative approaches from which the consensus is likely to arise  In particular, note significant commonalities on what constitute and delimit the creative and cultural activities, in terms of their  Conceptual definition  Compatibility with development modeling – expanding opportunities  Empirical methodologies. CENTRAL ISSUES AND APPROACHES

5.  Overall,  I find no overarching theory of the role of creative activity in development  Instead, the definitions and empirical methods seem to revolve around how to treat responses to two main classes of questions in the statistical work:  The kind of work being done (say during the past week?  allows identification of the occupation and whether or not it is creative.  Headcounts  Hours worked/time use  The kind of business carried out at an establishment?  allows identification of whether or not the activity is creative. MAIN INTERNATIONAL APPROACHES

6.  The DCMS Approach (DCMS, 1999; 2001; 2007; 2010; 2011)  WIPO Copyright-based Industries Approach (WIPO, 2003)  The Concentric Circles Approach (Thorsby, 2008)  The Upstream/Downstream Activities Model (Heng et al. (2003) MAIN INTERNATIONAL APPROACHES

7.  The approach of the DCMS (1998; 2001; 2007; 2010; 2011) is to treat industries as belonging to the creative sector if either  the activity is creative, or  the occupation is creative  The classification of Industries by the DCMS also appears to suggest that the activity must also generate intellectual property. THE DCMS APPROACH

8.  Taking into account its updated mapping from ISIC Rev 3 to ISIC Rev 4 at maximum digits, the DCMS now identifies 13 creative industries:  Advertising  Architecture  Arts and Antiques  Crafts  Design  Designer Fashion  Video, Film and Photography  Music and Visual & Performing Arts  Publishing  Software,  Computer Games,  Electronic Publishing, and  TV and Radio Broadcasting DCMS CONT’D

9.  Application of the DCMS method runs into the difficulty of extracting the creative component of some of the ISIC and ISOC codes.  Without further guidance,  It is difficult to separate the creative from non-creative component in both the ISIC and the ISCO classification, even when the classifications pose no special problems.  For example, two of the best researchers in the field, Cruz and Teixeira (2012), reported significant difficulty sorting creative and non-creative in:  Activities producing functional goods  (e.g., “Architecture”)  Activities associated with reproduction services  (e.g., “Reproduction of sound/computer media”, “Other publishing”),  Activities within the heading of Textile manufacturing and Footwear industry  (e.g., “Fashion Design”). PROBLEMS WITH THE DCMS

10.  Further, regarding the ISIC, when national accounting databases are being constructed, many activities that are ‘creative’ in the DCMS list are actually recorded in large pool of all- inclusive and residual categories.  Good examples are:  e.g., “Other business activities not elsewhere classified”,  “Other entertainment activities not elsewhere classified”,  “Other recreational activities n. e. c.”. PROBLEMS OF DCMS, CONT’D

11.  On the side of the ISOC, the analyst has to try to find creative persons or creative occupations in broad categories such as:  “Services managers not elsewhere classified”,  “Creative and performing artists not elsewhere classified”  “Engineering professionals not elsewhere classified”  “Teaching professionals not elsewhere classified”  “Software and applications developers and analysts not elsewhere classified.”  “Professional services managers, not elsewhere classified” DCMS PROBLEMS CONT’D

12.  Certain sectors are notoriously challenging, such as creative and performing artists, cultural activity and crafts sector.  Two types of issues arise.  The First Issue  No codes might exist for many of the activities in cultural creative operations, such as in the Steelbands and in Carnival.  Yet enormous amounts of details will be needed for such activities. DCMS CONT’D

13.  The second issue  Many of the operators who are creative are also micro and home-based.  For this reason, as the DCMS (2010: 2) itself observed, “the majority of businesses are too small to be picked up in business surveys”.  The standard surveys of establishments use frames that cut-off at 9 employees.  Thus, national accounting surveys tend to miss information about activities such as entertainment and craft, mainly because the size unit of the operator is smaller than 9 employees and many are also home- based.  Expect this second issue to arise even when codes are used to cover activities such as:  ‘ceramic design and decoration,  glass products manufacturing’  production of wooden articles  production of jewellery DCMS CONT’D

14.  Overall,  It is generally difficult to extract the creative component from a classification code, even when codes are at the most detailed level.  Similar problems also exist with the ISOC codes.  Of importance, the small size and home-based issues make it is difficult to say when a person should be classified as  ‘workers in the creative sectors’ as compared to  ‘creative workers outside the creative sectors’  This is especially important when the same person is doing multiple types of work and time-use surveys are not available. DCMS, CONT’D

15.  The above problems are compounded by  the need to identify proportionality factors that inform about what share of the activity is to be treated as creative.  The general orientation of the DCMS method is to use employment-based weights  This risks circularity because these weights require a workable allocation between creative and non-creative employment.  Case Specific solutions of these problems create a risk of incomparability across countries and over time  For countries facing the challenge of industrial restructuring, the fatal flaw of the DCMS method is that it provides no clue about how to distinguish  Capacity-building or capital producing activities  Consumer activities DCMS AND INDUSTRIALIZATION

16.  WIPO defines the copyright and related rights industries as those industries in which “copyright plays an identifiable role” in creating tradable private economic (property) rights and income from use of these economic rights (WIPO, 2003:18, 22).  That is, copyright and related are the basis for  investment,  employment, and,  generation of income from sale of a product or service or sale of the (economic) rights themselves. WIPO APPROACH

17.  WIPO (2003) recommends a satellite-type approach to industrial classification for statistical measurement by classifying into four broad groups of copyright activities:  Core Copyright Industries, which exist to create, produce, and/or distribute copyright materials.  Interdependent Copyright Industries, which are engaged in the production, manufacture and sale of equipment that facilitate copyright activity. Factors might be needed  Partial Copyright Industries, whose main activities may not be copyright but include a significant component of products and services that are based on copyright as defined in (1). Factors are needed.  Non-dedicated Support Industries, which are the distribution industries that facilitate broadcasting, communication, and distribution or sales of copyright-based activities that are not classified as core copyright activities. These industries serve to measure spillover effects of the Core, Interdependent and Partial Copyright Industries. WIPO OUTPUT

18.  The method of measuring employment is a count of the numbers reporting that they are employed in one of these industry groups.  Application of the WIPO method requires identification and application of scaling factors to the various classification codes. This challenge confronts all satellite accounting methods.  If standardized survey methods are used to address this problem, then the comparable of estimates will improve over time and across countries  Application of the WIPO method to the creative sector broadly defined would mean extending intellectual property coverage from Copyright and Related Rights to one or more additional forms of intellectual property, such as Industrial Design Rights. WIPO EMPLOYMENT

19.  One of the striking properties of the WIPO method, even if not the result of deliberate design in itself, is that  Classifications allow considerable monitoring of the wealth and capital outputs of the sector.  The sum of total copyright and related rights created and the total value of the Interdependent Sector is a fairly good measure of the amount of capital that is produced by the sector,  Remember these are outputs that are all useable to produce other output.  As the share of these outputs grow, an economy is likely to be improving on its path of industrialization as well as its path to foreign market penetration.  This is likely to be a crucial indicator for small economies grappling with the problems of poverty and industrialization. WIPO AND INDUSTRIALIZATION

20.  The leading exponents of the cultural concentric circles methodology are KEA European Affairs (2006) and (Thorsby, 2008).  KEA, European Affairs (2006), The Economy of Culture in Europe, study prepared for the European Commission (Directorate-General for Education and Culture). Brussels: European Commission  Thorsby, D. (2008), “The concentric circles model of the cultural industries”, Cultural Trends, 17(3): 147-164. THE CONCENTRIC CIRCLES APPROACH

21.  The approach identifies a ‘cultural core’ and then a set of concentric circles through which the core content is distributed.  The cultural core focuses on cultural goods/contents or ideas that are generated in the process of creating “sound, text and image’.  Thus the method addresses creativity that arises from artistic activity and symbolic knowledge and not from analytical or technological creativity. THE CONCENTRIC CIRCLES APPROACH

22.  The list of industries in the core is therefore short:  fine arts, such as performing arts, artistic and literary creation, and  visual arts or handicraft works  In particular the Cultural Core includes activities such as:  Visual Arts (painting, sculpture, photography, artistic and literary creation, crafts);  Performing Arts (dance, theatre, circus); and  Heritage (museums and libraries; arts & antiques market) THE CONCENTRIC CIRCLES APPROACH

23.  Beyond the cultural core lies activities that are dedicated to ‘distribution’ of its output.  These are identified in three broad layers or circles identified by their focus on the following:  (i) industrial or mass reproduction of cultural contents/goods;  (ii) functional outputs that incorporate elements from the core and layer (i) into the production process; and  (iii) ancillary services supplying equipment or support activities that make the process of creation and diffusion of the cultural and creative goods possible. THE CONCENTRIC CIRCLES APPROACH

24.  In particular, the list from (KEA, 2006) is:  Distribution Circles/Layers  Layer 1 - the Wider Core Cultural activities, dedicated to industrial or mass reproduction of cultural contents/goods and “whose outputs are exclusively cultural” (KEA, 2006: 56).  Film and Video;  Television and Radio;  Software Publishing including Games;  Music; and  Literature and Press. THE CONCENTRIC CIRCLES CONT’D

25.  Distribution Circles/Layers, Contd  Layer 2 includes all the Creative Activities in a strict sense, that is, all those “activities whose outputs are functional but which incorporate elements from the two previous layers into the production process”, (KEA, 2006: 53):  Design, including Fashion;  Architecture; and  Advertising THE CONCENTRIC CIRCLES CONT’D

26.  Layer 3, defined as Related Industries dedicated to ancillary services that supply equipment or support activities that make the process of creation and diffusion of the cultural and creative goods possible.  This set of industries specialize in the “production, manufacture and sale of equipment whose function is wholly or primarily to facilitate the creation, production or use of works” from the industries in the Core, Layer 1 and Layer 2 (KEA, 2006: 54).  They are found in the manufacturing and services sector, especially wholesale, retail sale and rental services, as follows:  Computers/ ICT and Software manufacturing and distribution;  TV sets, Radios, MP3/ 4 players, CD players, DVD players, Cassette players, Electronic Game Equipment, and other similar equipment;  Photographic and Cinematographic equipment and related services;  Photocopiers; and  Blank Recording Material. THE CONCENTRIC CIRCLES CONT’D

27.  The core categories (Visual Arts; Performing Arts; or Heritage) with the restriction ‘’ focuses on cultural goods/contents or ideas that are generated in the process of creating “sound, text and image’” do not fit easily into the standard ISIC or ISCO codes.  Establishments do not typically have trading descriptions that match the Core categories. Classification issues therefore arise early in the application of the method.  Either the ISIC codes are not sufficiently detailed or the activities of the Core are not treated as economic activities by the SNA. THE CONCENTRIC CIRCLES ISSUES

28.  For these reasons, special surveys would be needed to extract relevant data in a stand- alone manner.  Replication of economic estimation becomes difficult in that environment.  These problems also  Make comparability with the categories of the GDP difficult.  Make cross-country comparisons inappropriate THE CONCENTRIC CIRCLES ISSUES

29.  In a setting where the fundamental challenge is industrial restructuring, it will be a substantial challenge to know  when the share of the creative sector is rising, and  what share of the creative sector  Produces capital or  Produces consumer goods and services. THE CONCENTRIC CIRCLES ISSUES

30.  The leading exponent of Upstream-Downstream approach is Heng, T., Choo, A., Ho, T. (2003). Economic Contributions of Singapore ‟ s Creative Industries. Economic Survey of Singapore First Quarter 2003, Singapore Ministry of Trade and Industry  Its essential principle is to distinguish between  “Creation/Creative” activities, And  “Distribution/Broadcasting and Ancillary” activities, within all the segments of the creative economy THE UPSTREAM-DOWNSTREAM APPROACH

31.  The main creative activities identified are:  Software (including games) production  Advertising;  TV and Radio;  Publishing;  Design;  Architecture;  Arts and Antiques Market;  Performing Arts and Music;  Museums and other cultural activities;  Motion Picture and Video; and  Photography, THE UPSTREAM-DOWNSTREAM APPROACH

32.  Distribution/Broadcasting and Ancillary Activities by contrast are supposed to be those that “facilitate the distribution, reproduction, diffusion or commercialization of the creative and cultural outputs generated in the Creative/Creation activities”. These include:  Software distribution and related services;  TV and Media broadcasting related services;  Publishing related services (e.g., Printing services);  Performing Arts and Music related services;  Motion Picture and Video distribution and projection; and  Photography-related distribution services  THE UPSTREAM-DOWNSTREAM APPROACH

33.  The activities of the method can be identified in any standard ISIC coding system.  The main difficulty here is that it seem very difficult to separate creative activity from the related distribution and broadcasting activities.  How does on distinguish Radio activities from broadcasting related to Radio activities? THE UPSTREAM-DOWNSTREAM APPROACH

34.  Not unrelated to this “separability” challenge is that of knowing when an activity of distribution, broadcasting or ancillary services can be assigned to the creation of a particular output, and to what extent this should be done.  In particular, it is impractical to attempt to assign weights under such vague classification schemes.  Cross-country comparison is invalid  These difficulties also mean that the method is not very useful in guiding industrialization strategy – which is mainly to find and grow the domestic capital sector faster than all others THE UPSTREAM-DOWNSTREAM CHALLENGES

35.  (UNESCO, 2007: 15) seems to be on the right track:  The broad consensus seems to be that industries or occupations are creative if they give rise to wealth and income mainly through intellectual property protections.  So, what forms of IP matter are relevant?  WIPO focuses on copyright CHOOSING AMONG THE METHODS

36.  If you look at the colour coding of the DCMS industries you will find that two types of intellectual property feature:  Copyrights  Right to control copying,  Right to be credited  Right to determine who may adapt the work to other forms  Right to determine who may perform the work  Right to determine who may benefit financially  Related rights  Industrial design rights  Prevents replication or importation for the purpose of trade or business, sale, rent of any article with the protected  Shape, configuration or composition of pattern or colour  Combination of pattern and colour in three dimensional form containing aesthetic value CHOOSING

37.  So, regarding IP, the consensus of UNESCO and DCMS appears to be:  Extend the IP coverage to incorporate Industrial Design Rights.  On the other hand, the WIPO method is closest to what is needed for computations that facilitate a straightforward attack on the challenge of industrial restructuring to favour the capital creating sectors, even as we grow consumer output per worker as fast as possible. CHOOSING

38.  Extend the WIPO method to cover :  Copyright and related rights  Industrial design rights  Bring all countries up to that standard  Then, as the methodological problems are fixed, add other IP as convenient BEST GAME IN TOWN

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