12-6-200913-1-2011

New Economic Model for 21st Century

By

Iftikhar M.Mohsini

Today, the world is in the midst of an economic, social crisis and banks are on government life support. The idolizing of the free-market finance has been thoroughly discredited, that is over turning much conventional wisdom. Old believers-a group of economists who study money and credit – have been mugged by reality. But failure has led few of them to start looking for completely new ideas. Instead, they have just dusted off some old ones. New economic ideas needed to develop new economic model for long term, sustainable economic progress. The best course of action is to tackle it head-on with new ideas and paradigms, fostering an environment that rewards creativity.

In the contemporary world, a new development paradigm is emerging that links the economy and culture, embracing economic, cultural, technological and social aspects of development at both the macro and micro levels. Central to the new paradigm is the fact that creativity, knowledge and access to information are increasingly recognized as powerful engines driving economic growth and promoting development in a globalizing world. “Creativity” in this context refers to the formulation of new ideas and to the application of these ideas to produce original works of art and cultural products, functional creations, scientific inventions and technological innovations. There is thus an economic aspect to creativity, observable in the way it contributes to entrepreneurship, fosters innovation, enhances productivity and promotes economic growth.

Creativity is found in all societies and countries – rich or poor, large or small, advanced or developing. The word “creativity” is associated with originality, imagination, inspiration, ingenuity and inventiveness. It is an inner characteristic of individuals to be imaginative and express ideas; associated with knowledge, these ideas are the essence of intellectual capital. Similarly, every society has its stock of intangible cultural capital articulated by people’s identity and values. Civilizations since time immemorial have been aware of these concepts. However, the twenty-first century has seen a growing understanding of the interface between creativity, culture and economics, the rationale behind the emerging concept of the “creative economy”.

The term “creative economy” appeared in 2001 in John Howkins’ book about the relationship between creativity and economics. For Howkins, “creativity is not new and neither is economics, but what is new is the nature and the extent of the relationship between them and how they combine to create extraordinary value and wealth”. Howkins’ use of the term “creative economy” is broad, covering fifteen

creative industries extending from arts to the wider fields of science and technology. According to his estimates, in the year 2000, the creative economy was worth $2.2 trillion worldwide, and it was growing at 5 per cent annually. For Howkins, there are two kinds of creativity: the kind that relates to people’s fulfillment as individuals and the kind that generates a product. The first one is a universal characteristic of humanity and is found in all societies and cultures. The second is stronger in industrial societies, which put a higher value on novelty, on science and technological innovation, and on intellectual property rights (IPRs).

The concept of the “creative economy” is an evolving one that is gaining ground in contemporary thinking about economic development. It entails a shift from the conventional models towards a multidisciplinary model dealing with the interface between economics, culture and technology and centered on the predominance of services and creative content. Given its multidisciplinary structure, the creative economy offers a feasible option as part of a results-oriented development strategy for developing countries.

Despite the richness of their cultural diversity and the abundance of creative talent, the great majority of developing countries are not yet fully benefiting from the enormous potential of their creative economies to improve development gains. These countries have been facing domestic and international obstacles that need to be fully understood and overcome through cross-cutting institutional mechanisms and multidisciplinary policies. In this scenario, development strategies must be updated to cope with the far-reaching cultural, economic and technological shifts that are reshaping society.

The creative economy is an evolving concept based on creative assets potentially generating economic growth and development; It can foster income generation, job creation and export earnings while promoting social inclusion, cultural diversity and human development; With the increasing knowledge intensity of the contemporary economy and the need for innovation to maintain competitive advantage, it has become imperative for countries to tap into their vast reserves of creativity. This has been made easier by rapid advances in information and communication technologies (ICTs), which are progressively linking countries and regions worldwide. Opportunities are thus created for developing countries to access global markets for the products of their creativity and cultural diversity in a way not previously possible – and to do so directly, without intermediaries.

ICTs play a vital role in advancing economic growth and reducing poverty. Such was the conclusion of a World Bank survey carried out in 56 developing countries, revealing that those using ICTs grow faster, invest more and are more productive and profitable than the others. Knowledge and creativity are becoming powerful drivers of economic growth in the contemporary globalizing world. They have profound implications for trade and development. Together with technology, they open up a huge potential for developing countries to develop new areas of wealth and employment creation consistent with wider trends in the global economy.

In addition, the creative economy has important relationships with the educational systems in both developed and developing countries. In schools, the role of the arts in forming children’s social attitudes and behaviors is well recognized. In adult

education, many possibilities exist for using education in culture and the arts to enhance understanding of society and its functions. There is a two-way relationship between the education system and the creative industries. On the one hand, education and training institutions are responsible for turning out individuals with the skills and motivation to join the creative workforce. On the other hand, the creative industries provide the necessary artistic and cultural inputs into the education system to facilitate students’ education in the society in which they live and, in the longer term, to build a more culturally aware population.

Nowadays in the most advanced countries, the creative industries are emerging as a strategic choice for reinvigorating economic growth, employment and social cohesion. The so called “creative cities”. The idea of a creative economy has also been applied specifically to the economy of cities, leading to the emergence of the concept of a “creative city”. This term describes an urban complex where cultural activities of various sorts are an integral component of the city’s economic and social functioning. Such cities tend to be built upon a strong social and cultural infrastructure, to have relatively high concentrations of creative employment, and to be attractive to inward investment because of their well-established cultural facilities.

At last count, over 60 cities worldwide called themselves “creative city”. A good example of a creative city is London; the creative industries comprise the second biggest sector in the London economy. Between 1995 and 2001, London’s creative industries grew faster than any other major industry except financial and business services and accounted for between 20 and 25 per cent of job growth in the city over this period.

A broad interpretation of creativity also underlies Richard Florida’s descriptions of the emerging “creative class” in society, a cohort of professional, scientific and artistic workers whose presence generates economic, social and cultural dynamism, especially in urban areas. More specifically, the creative class includes people in science and engineering, architecture and design, education, arts, music and entertainment whose economic function is to create new ideas, new technology or new creative content. In Florida’s approach, the creative class also includes a broader group of creative professionals in business, finance and law. Whether they are artists or engineers, musicians or computer scientists, writers or entrepreneurs, these workers share a common creative ethos that values creativity, individuality, difference and merit. In sum, they are people who add economic value through creativity. The values of the creative class are individuality, meritocracy, diversity and openness.

The Canadian authorities invited designers and architects to redefine a new esthetic/functionality of open spaces and to reinvent and redevelop neglected parts

of Montreal in order to make these more attractive to the citizens. The “Design Commerce Montreal” project invited designers/architects to work on the look and feel of shopping areas by redesigning numerous shops and restaurants.

In most cases, these are conversions of run-down and vacant factories that used to house activities of the manufacturing industries that either died off or have been relocated to another district or city. The majority of these conversions are initiated by the government, implemented either wholly by the government or in some form of public-private partnership. The Jockey Club Creative Arts Centre project is the first of its kind initiated by the Government and supported by a few institutions, including a seed donation of HK$70 million from the Jockey Club for the renovation of a vacant factory building into a creative arts Center. The seven-story factory, with a gross floor area of about 8,000 sq. m, is located in a very old district of public housing. The designer is to consider how to convert and transform the factory spaces into studios and other communal spaces for the tenants, who would be artists and entrepreneurs in the creative industries.

Another important feature of China’s modernization drive and the success of its creative industries results from the multidisciplinary policies in place where ministers of commerce, culture, science and technology, information and education have been working in a concerted manner. The creative industries were identified as one of the pillars of China’s future economic development. Structural reforms recognizing the growing role of culture and creativity for economic development have been articulated with a view to enhancing creative industries, particularly those generating high-growth, value added goods and services. In this respect, China is a concrete example of how cross-cutting policies should be integrated in order to enhance the overall impact of the creative economy for development gains. Recently, innovative financing arrangements, including new private partnership, have been an engine for the dynamism of its technology-intensive creative industries. An important shift in policy orientation from “made in China” towards “created in China” is already noticeable.

In the Asia-Pacific region, the creative industries have been an important element in the development of the mature economies of countries such as Japan and the Republic of Korea and, to a lesser extent, in the fast-growing economies such as Malaysia. Many city authorities in China, Japan, the Republic of Korea and Singapore have formulated economic investment policies based on creativity and creative enterprise as a strategy for economic growth and competitive advantage. In most Asian countries, however, the “creative economy” is not really a concept that has taken hold and is not reflected in national economic development plans. Neither are the concepts of “creative or cultural industries”, which are hardly used in debates about national economic strategies. Fundamental to an understanding of the creative economy – what it comprises and how it functions in the economies of both developed and developing countries are the evolving concepts of “cultural industries” and “creative industries”.

At the heart of the creative economy are the creative industries. “Creative industries” can be defined as the cycles of creation, production and distribution of goods and services that use creativity and intellectual capital as primary inputs. They comprise a set of knowledge-based activities that produce tangible goods and intangible intellectual or artistic services with creative content, economic value and market objectives. Creative industries constitute a vast and heterogeneous field dealing with the interplay of various creative activities ranging from traditional arts and crafts, publishing, music, and visual and performing arts to more technology-intensive and services-oriented groups of activities such as film, television and radio broadcasting, new media and design. The creative sector has a flexible and modular market structure that ranges from independent artists and small-business enterprises at one extreme to some of the world’s largest conglomerates at the other.

The global market for traded goods and services of the creative industries has enjoyed an unprecedented dynamism in recent years. The value of world exports of creative-industry goods and services reached $424.4.billion in 2005, accounting for 3.4 per cent of world trade as compared with $227.4 billion in 1996. Over the period 1996-2005, the creative industries gained shares in global markets, growing at an annual rate of 8.7 per cent for the period 2000-2005. This upward trend is likely to continue throughout the decade, given the positive prospects for global demand.

The creative industries comprise four groups, taking into account their distinct characteristics. These groups, which are heritage, arts, media and functional creations,

Heritage: Cultural heritage is identified as the origin of all forms of arts and the soul of cultural and creative industries. It is the starting point of this classification. It is heritage that brings together cultural aspects from the historical, anthropological, ethnic, aesthetic and societal viewpoints, influences creativity and is the origin of a number of heritage goods and services as well as cultural activities. Associated with heritage is the concept of “traditional knowledge and cultural expressions” embedded in the creation of arts and crafts as well as in folklore and traditional cultural festivities. This group is therefore divided into two subgroups:

Traditional cultural expressions: arts and crafts, festivals and celebrations; and

Cultural sites: archaeological sites, museums, libraries, exhibitions, etc.

Arts: This group includes creative industries based purely on art and culture. Artwork is inspired by heritage, identity values and symbolic meaning. This group is divided into two large subgroups:

Visual arts: painting, sculpture, photography and antiques; etc. andPerforming arts: live music, theatre, dance, opera, circus, puppetry, etc.

Media: This group covers two subgroups of media that produce creative content with the purpose of communicating with large audiences (“new media” is classified separately):

Publishing and printed media: books, press and other publications; andAudiovisuals: film, television, radio and other broadcasting.

Functional creations: This group comprises more demand-driven and services-oriented industries creating goods and services with functional purposes. It is divided into the following subgroups:

Design: interior, graphic, fashion, jewelry, toys; etc. New media: software, video games, and digitalized creative content;

etc. and Creative services: architectural, advertising, cultural and recreational, creative

research and development (R&D), digital and other related creative services.

The creative economy in general and the creative industries in particular are indeed opening up new opportunities for developing countries to leapfrog into high growth sectors of the world economy and increase their participation in global trade. The creative industries are already driving trade and development gains in a growing number of countries, particularly in Asia. In the Islamic Republic of Iran, creative industries such as publishing and film production have a long tradition. Iranian films exhibit a strong cultural identity and audiences have been increasing worldwide. Carpets remain one of the most appreciated items of the Iranian culture in global markets. Figures show the Islamic Republic of Iran as the third-largest carpet-exporting country, accounting for nearly 15 per cent of world market share.

More recently, the rapid economic development in places such as Dubai and some other cities of the Arab States region does target culture and creativity as vectors for economic growth and development. The new sprawling media city complex in Dubai has turned the United Arab Emirates into a center for broadcasting and publishing, hosting hundreds of Arabic- and English-language publications and satellite television channels beaming throughout the region. Deeper into the desert, the massive Production City is growing into a sprawling movie and television production zone, seeking to do for Dubai what Hollywood did for Los Angeles. In

2006, Dubai played host to the 40th World Congress of the International Advertising Association, the largest regional creative gathering to date. All activities are not large in scale, however: the exhibition celebrated creativity in art, crafts and the design of jewelry manufactured in Dubai. The exhibition was organized to make a strong case for jewelry as one of the creative industries with strong potential for cultural expression and commercial growth in Dubai.

In nearby Abu Dhabi, which produces the television show, “Poet of Millions”, the Emirate, as part of an initiative to preserve heritage, has begun a $10 billion plan to build and operate Middle Eastern branches of the Louvre and the Guggenheim museums on a huge arts and culture development meant to preserve Gulf culture even as it embraces the arts and culture of the West. Meanwhile in Saudi Arabia, Rotana Music, the region’s largest media company, has acquired more than 80 per cent of the music libraries of the Arab world and almost as much of its film libraries in an effort to put talent from the Gulf in the spotlight. Recent facts indicate that creative industries have started to receive serious consideration in the region. In 2006, the international auction house Christie’s held the first contemporary art auction in the Middle East in Dubai. Its second auction of contemporary Arab, Iranian, Indian and Western art drew collectors from India, the Arab world and beyond and topped the house’s own expectations with $9.4 million in sales. From Arabic calligraphy to American icon Andy Warhol, 190 works of contemporary art went under the hammer in Dubai, the commercial hub better known for its glass skyscrapers and malls than its arts scene.

The cultural industries are regarded as those industries that “combine the creation, production and commercialization of contents which are intangible and cultural in nature. These contents are typically protected by copyright and they can take the form of goods or services”. Thus it can be seen that the concept of the “creative economy” has evolved along several paths over the last ten years. It has emerged as a means of focusing attention on the role of creativity as a force in contemporary economic life, embodying the proposition that economic and cultural development are not separate or unrelated phenomena but part of a larger process of sustainable development in which both economic and cultural growth can occur hand in hand.

In particular, the idea of the creative economy in the developing world draws attention to the significant creative assets and rich cultural resources that exist in all developing countries. The creative industries that use these resources not only enable countries to tell their own stories and to project their own unique cultural identities to themselves and to the world but they also provide these countries with a source of economic growth, employment creation and increased participation in the global economy. At the same time, the creative economy promotes social inclusion, cultural diversity and human development. The linkages between traditional knowledge, culture, art and the economy can be illustrated with reference to the sorts of cultural festivals that occur regularly in many developing countries

Countries in both the developing and the developed world are enormously rich in cultural diversity and creative talent. Their traditions provide a unique heritage of music, craft, visual art, rituals, dance, performance, story-telling and cultural practice. All of these manifestations of local and national cultures are assets, representing the indisputable cultural capital, both tangible and intangible, on which the lives of the community are founded. These assets can, in turn, give rise to a complex array of creative products – goods and services (both commercial and noncommercial) with cultural content that are expressions of the creativity and talent of the people.

The creative industries are more developed in countries such as the Islamic Republic of Iran and Turkey. Istanbul especially is well known as a rapidly developing metropolis that plays an important role as a bridge between Europe and Asia. Government authorities in Turkey are moving towards enhancing the socio-economic impact of cultural life while enhancing creative industries not only in the capital but throughout the country. This decision is also motivated by the fact that Istanbul has been selected to be the Cultural Capital of Europe for 2010. Arts and cultural festivals are no longer seasonal affairs but are spread out during the year.

In China, the “cultural creative industries” have started booming over the last five years. China became the leading player in the world market for creative goods. This development reflects a clear determination of the Government to fully explore the potential of the creative industries as a development strategy, as emphasized in the 11th Five-Year Plan (2006-2010). Moreover, the impressive economic performance of China over the past several decades has made its development experience rather distinct from those of many other economies.

However, policies and incentives are required to promote cultural policy while exploring new trade opportunities. These two objectives are mutually supportive and can promote inclusive development at the grass-roots level. In addition to their role as essential expressions of local, national and regional cultures, these creative products and activities have real potential to generate economic and social gains. The production and distribution of creative goods and services can yield income, employment and trade opportunities, promote growth and development, and foster social cohesion and community interaction. Globalization and the rapid uptake of new ICTs have opened up huge possibilities for the commercial development of creative products. Indeed, it is the adoption of new technology and a focus on market expansion that are distinguishing characteristics of the creative industries as dynamic sectors in the economies of the industrialized world.

Other areas of economic and social policy with linkages to cultural policy include: tourism; urban and regional development (especially the “creative city” area); cultural rights and cultural diversity; education and training; and copyright and intellectual property. It is apparent that, if the widened scope for policy towards the creative economy is to be entertained, it will require significant collaboration between the various ministries and bureaucratic departments. Only by such cooperation will, the full development potential of the creative economy be realized. It is a fundamental function of government to create and maintain the conditions under which the economic, social and cultural life of the citizens can prosper.