From creative industries to creative economies: the power of culture and its impact on development

Cultura y comunidad

It’s 9 am on a Monday in September and the Convention Center at the City of Knowledge Foundation is packed: businessmen, officials, academics, creatives and above all, many young faces. Sunlight filters through the leaves of the trees that surround it and fills the room through its large windows. The buzz of several animated conversations mixes with the jazz music as attendees mingle; the expectation is palpable.

The reason? The launch of the Creative Industries cluster, an initiative that seeks to bring together business leaders, government and social actors from Panama’s cultural and creative industries to increase the visibility of this sector, boost its productivity, competitiveness and promote innovation.

The City of Knowledge Foundation, with the support of the Inter-American Development Bank (IDB) and Panama’s Ministry of Commerce and Industries (MICI, for its acronym in Spanish) leads the initiative.  With it, Panama aspires to create a space for creative collaboration, emulating powerful initiatives of the same nature in large Latin American cities such as Santiago, Buenos Aires and Bogota.

Here we explore the potential and impact of such a cluster on the development of the country’s creative and cultural sector and, on a larger scale, on the economy.

The synergy of clustering

Richard Florida, an expert on economic competitiveness, demographic trends, as well as cultural and technological innovation, and author of the book “Who’s your City: How the Creative Economy is Making Where To Live The Most Important Decision of your Life”, argues that the place one chooses to live has more influence in one’s life than almost all other decisions. The American theorist believes that behind the true economic forces of the world are not the countries, but clusters that gather in mega cities.  In line with this theory, he advises to choose one’s location deliberately.

This is particularly true for people in the creative and cultural industries, which UNESCO has defined as “those sectors of organized activity whose main purpose is the production or reproduction, promotion, dissemination and / or commercialization of goods, services and activities of cultural, artistic or patrimonial content.”

According to Florida, “creative people tend to gather in clusters not simply because they like to be in close proximity to each other or because they prefer cosmopolitan centers with a multitude of amenities” (…), but also because “such a density offers powerful productive advantages, economies of scale and a knowledge spillover” that benefits all.

For some years now, academics have been talking about the strengths of clustering and argue that one of the keys to economic growth lies in the concentration (or clustering) of productive, talented and creative people.

It’s a virtuous circle of sorts: new ideas and productivity are enhanced when we are close to other people with these characteristics, which in turn makes us more productive, generating greater benefits, input and wealth.

For this reason, developing clusters for industries has become a key objective for local economic development, since they have been shown to strengthen competitiveness, increase productivity, stimulate innovative alliances and bring forth opportunities for entrepreneurship.

The IDB representative in Panama, Verónica Zavala, believes that “cultural and creative industries are a source of opportunity and enormous potential” and that this is a good moment for Panama to act and promote this sector as a driving force for growth and an additional alternative for development.

With initiatives such as the cluster of creative industries, launched this year at the City of Knowledge, the gap between interest, intention and actions narrows, but we must quantify that potential to really understand its impact.Already in 2013, with the aim of stimulating debate in Latin America and the Caribbean around creativity’s contribution as a key element for economic development, the IDB launched the e-book “The Orange Economy: an infinite opportunity,” which remains the IBD’s most-downloaded report. This thirst for information on the subject is not a coincidence and shows that more people believe in this industry’s potential and the need to foster it.

According to Galileo Solis, Senior Specialist in Competitiveness, Technology, Innovation at the IDB, “the creative economy produces cultural and economic value; quantifying it will allow it to be sustainable.”

Indeed, the figures on the economic impact of the creative industries are far from negligible: at a global level, the so-called “orange economy” represents 5.2% of GDP and 5.3% of employment. In Panama, according to data from the World Intellectual Property Organization (WIPO) and the Faculty of Economics at the University of Panama, the creative industry contributed 6.3% to the country’s GDP in 2016 and generated 58,442 jobs (4.4% of the working population).

The road ahead for the Panamanian cluster

 Countries such as Argentina, Colombia, Brazil and Chile have successfully created creative collaboration spaces agglomerating a diverse agenda of cultural activities, people and companies in the creative industry, connecting them in turn with local social actors to create value. These clusters function as a development strategy for the industries themselves and in many countries, the strategy even fits with that of the nation brand.

According  the Vice Minister of Commerce and Industry, Néstor González, in Panama the cluster “fills a gap that our artists and creatives need,” however it is important to overcome various obstacles.

The IDB has diagnosed several shortcomings, such as the lack of information and statistics for the industry, insufficient human capital and policy instruments, the need for greater public-private coordination, as well as better protection of intellectual property.

Eduardo Araújo, Vice President of Communications of the City of Knowledge Foundation (FCdS), believes it is key to identify joint opportunities to achieve timely training, as well as the necessary professionalization, research, development and innovation (R + D + i), legal advice, networking and lobbying.

For this purpose, the Foundation has established a five-year implementation plan that takes into account the stages of incubation, development and maturity for the cluster. One of the key aspects in this process is to recognize that “the value chain of these industries is different and must be understood; we must generate action plans and strategies that respond to each of their particularities and provide them with the necessary tools to be able to compete in the business world, “adds Araújo.

Cultural initiatives such as Panama’s yearly International Film Festival (IFFF), the Microbrew Fest, TRAMA, and the PRISMA Festival have been important precursors of this cluster, having had a significant impact on positioning culture in Panama these last three years. Araújo argues that this not only generates income and employment, but also builds a reputation for the country, attracting academic and professional training programs, startups and independent professionals, innovative companies, more festivals and international projects, all of this making possible the collaboration of all these key actors, in order to favor the development of the cultural and creative sector.

“Our main challenge? To help connect what is disconnected,” he explains. Some of the lines of action are already underway, “others are in excellent conditions to be boosted in the short or medium term,” he points out.

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