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Why creative production and the importance of the creative economies are on the rise

The creative economy can have a positive and transformative effect on economic growth and social cohesion

Why creative production and the importance of the creative economies are on the rise

Wednesday April 22, 2020,

5 min Read

creative producer

Creative services actually continued to grow during the recent global economic and financial crisis, and could grow considerably more as income increases and technology advances in emerging economies. Creative services are very important as they produce financial returns with minimal distribution and production costs, enable people to escape poverty, and encourage cross-cultural exchange and understanding. What is the best way to ensure they serve these functions?

An underappreciated bright spot of the global economy

There is no universally accepted definition of creative economy or creative services, terms frequently utilised interchangeably; but according to the definition used by the UN, world trade in creative services grew over a 100% in a decade to reach a total of 624 billion dollars in 2011. The definition used by the United Nations includes arts and crafts, graphic and interior design works, printed media, books, fashion, music, new media, music, visual and audiovisuals.

Their growth is clearly fastest in developing countries. In the last decade, exports of creative services grew by an average of twelve per cent in emerging economies, compared with a global average of about nine per cent. Creative services seem to be decoupled from the rest of the verticals, in that they grew intensely during the economic and financial crisis of 2008, in a time when many other verticals contracted: during these years, international trade contracted by about twelve per cent, while creative services trade continued to raise at a rate of fourteen per cent per year worldwide. This solid performance was a consequence of a rapid income growth in emerging economies, the transition of developing countries into a services-sector stage and the rise of information and communication technologies.

Increased income and Internet usage are key

The current demand for creative services can be explained by the increase in disposable income and the growth in Internet usage. There is even room for further growth as millions more people start using the internet. In low-income countries, only thirty per cent of people actually use the Internet, compared with eighty-one per cent in high-income countries. From 2012 to 2013 alone, an additional hundred and seventy six million people in low-income countries started using the Internet for the very first time. This was a twelve per cent increase compared to the previous year.

As more people go online, they have more to spend online. In 1960, the average global income was just $455 per person per annum in current USD dollars. In 2012, it was as much as $10,206 per person per annum in current USD dollars. Estimates suggest it will reach $44,000 by 2060 approximately, with the very same purchasing power as today’s dollar.

Internet as a distribution channel

The growth of the Internet as an easy distribution channel and a useful tool for collaboration can also explain the ever-increasing supply of creative services. Digital technologies allows a creative product to be produced and ultimately delivered to a customer at zero marginal cost, and thus creative production agencies that provide non-physical goods or services such as digital content generation or digital asset management will have no real risk of incurring in extra costs that could get out of control and eventually endanger the survival of the organisation. As technology improves, so it does our skill to design, generate and distribute bespoke creative services tailored to meet specific requirements and  preferences. Future developments in information and communication technologies – such as remote communication systems, voice recognition, A.I. or artificial intelligence and virtual reality – are very likely to further expand the economy of creative services by enabling the evolution of totally new kinds of services.

Alleviating global challenges

The development of the market of creative services can potentially assist in the alleviation of certain major challenges, like poverty reduction and youth unemployment. Virtual goods can be generated and distributed at a very low cost compared to other verticals and industries – very frequently all that is needed to become part of the global economy is a decent Internet connection and a great idea. In the near future 3D printers will progressively lower production costs of physical goods by allowing an object of any shape to be constructed rapidly and quite inexpensively on demand. It will no longer be a requirement to own an office or factory, a wholesale warehouse or distribution mechanisms in order to capture value in manufacturing. In fact anyone with creative design capabilities will be able to do so, further reducing the entry barriers into the global market.

Creative services playing a bridging role

Creative services could potentially play a bridging role across humankind and societies in a world that currently looks increasingly fragmented. Creative services can act as an engine of cooperation, understanding and trust between societies and cultures. Exchanges enabled by trade have historically enriched cross-cultural relations. Could we find actually ways to increase the likelihood that virtual and physical cross-cultural exchanges in creative services will have this same effect?

Transformative and positive effect on social cohesion

The creative economy could also have a positive and transformative effect on economic growth and social cohesion, if we are able find ways to catalyse it. But how can we foster the full potential of its growth? From awareness creation and investment in education and infrastructure to regulatory environments, what are the most efficient ways in which businesses, governments and communities can develop a platform for the creative economy to grow? We will see the answer over the upcoming years.