By David Sutherland, Senior Lecturer for University of Georgia’s Terry College of Business.
For the past six years I have immersed myself in the dynamics of what has become known as the “Creative Economy.” I have come to understand that globally the Creative Economy generates over $2 trillion annually, while in the U.S., it is just over $1 trillion annually.
In Georgia, the U.S. Bureau of Economic Analysis reports that our Creative Economy contributes $23.8 billion to Georgia’s economy annually, representing 4.0% of the state’s GDP, and 134,217 jobs. In comparison, Georgia’s Agricultural Industry is 4.1% and Construction is 4.3% of the state’s GDP.
But the impact of the Creative Economy is not just financial. In fact, some of the less obvious effects like social well-being, cultural definition and quality of life are equally important outcomes of a robust Creative Economy. Research shows that creativity has a significant positive impact on mental health, an issue all states are currently confronting. It also shows a robust Creative Economy impacts a sense of general well-being and happiness.
With a recent focus on the film industry, a renewed focus on the music industry and very active growth in the performing arts, Georgia’s Creative Economy is growing. Obviously, the Creative Economy is essential to Georgia’s economic health, but how is this robust economy being understood, measured and managed?
The idea of a Creative Economy has been around since the 1960s, but in 2001, John Howkins, a British author and professor, focused the concept of the Creative Economy as an economic system where value is based on novel imaginative outcomes rather than the physical outcomes of the Industrial Economy or the data-driven outcomes of the Information Economy.
In his book, “The Creative Economy: How People Make Money from Ideas,” Howkins says, “Creativity is the fastest growing business in the world. Companies are hungry for people with ideas, and more and more of us want to make, buy, sell and share creative products.”
The industries included in a Creative Economy vary from state to state and nation to nation. The Georgia Council for the Arts has film, music, digital entertainment, and arts and culture, which includes museums, public arts and performing arts. If we were to look at Texas, it includes 14 industries in its definition, including publishers, graphic design and culinary arts.
This variance in “what’s in and what’s out” makes it difficult to compare Creative Economies. Regardless, it is essential a state’s Economic Development Office agrees on the definition of what its Creative Economy is and what industries are to be included to ensure better measurement and management.
What must we need to enhance our Creative Economy? Foremost is attracting creative individuals and creative projects, like making movies, holding music events and performances and designing unique experiences for visitors. Attracting these projects depends on several factors: financial incentives, capabilities and talent, and performance locations, incubators, and studios.
Creativity is essential to the human race. Without it, there is no advancement in our social systems or our economic systems. Without it, we are left with a hollow sense of unfulfillment and lack of direction.
There are key constructs that hold the Creative Economy together and must be nurtured to ensure full success. This will include how creative industries are funded and measured to ensure success.
Individual artists in a creative industry, such as film, music or visual arts, are structured around “Project Based Organizations,” or PBOs. According to Robert Deflillippi, Professor at Suffolk University and a PBO expert, PBOs are a temporary organizational structure focused on achieving a specific result, such as the making of a film, the production of a musical event or the curation of an art exhibit.
Represented in the PBO are all the skills, crafts and technical capabilities necessary to achieve the result. Those represented in the PBO only come together as needed and only for the time they are needed, then they disperse and wait for the next project to come along.
Let’s take the film industry for example. In Tom Hanks’ recent book, “The Making of Another Major Motion Picture Masterpiece: A Novel,” he eloquently portrays the production process of a film from concept to result. In his rendering, we see the complexity of such an undertaking, and we are amazed at the breadth of involvement, writers, directors, funders, production management and assistance, location management, studio staff, crew, caterers, housing management, and on and on. Many skilled people work in a temporal vertically integrated PBO.
But to bring this PBO together requires funding. Someone may have a great idea, but without funding, nothing gets done. For example, a film producer may have access to the funding, but generally these projects are looking for incentives provided by public sources (like state and local governments) in addition to private sources (investors, non-profits and individuals). Today, 35 states offer incentives, including Georgia, with local communities like Columbus and Savannah providing additional incentive/funding options.
Finally, measuring the results of such PBO efforts is not easy because the impact of these creative industries is so broad. Continuing with our film project example, Georgia’s film production tax incentive has grown to just over $1 billion, while film and TV spending in the state has grown to over $4 billion.
In this, we can show the economic direct impact of a given film project through dollars spent on the production and that production’s success in the marketplace, but often we don’t consider the indirect or induced impacts of a given production (how a dollar made from the production makes its way through the local economy). Generally, this induced impact is calculated in a defined multiplier.
But limiting our measurement of the impact of creative industries in Georgia to such multipliers overlooks the broader impact of creative productions; that being the degree of overall innovation in Georgia, cultural clarity, tourism and the state’s leveraging of this impact.
To read more features from the Creative Economy Journal, visit here.
