Creative industries are key to economic growth

IN Tuesday’s editorial we explored the impact Korean popular culture has made on the world, which is the result of a sustained, disciplined policy and investment effort on the part of the South Korean government and people. While Korea’s culture is certainly unique, its approach to maximizing the economic and geopolitical value of it need not be, yet the opportunities offered by developing the “creative economy” are often overlooked or underutilized by policymakers.

A report released last week by the UN Commission on Trade and Development (Unctad) highlighted the importance of the “creative economy” for development. The implicit point of the report is that although not every country has easily accessible, conventional economic assets it can rely on, every country has a culture of creativity that serves as a potentially formidable diversified resource1 base.

Unctad defines creative industries as “cycles of creating, producing, and distributing 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.”

The report also explains that creative services exports vastly exceed those of creative goods, and while services should be easier for developing countries to expand, as they require very little material input, developing countries “are underrepresented and face hurdles in exporting these services,” leading to a significant trade gap between developed and developing countries. Some of the barriers faced by developing economies include lack of skills training, relevant infrastructure (such as reliable telecommunications and internet networks), and policy support from government.

Nevertheless, the creative economy is still growing in some developing countries, and in some places is recovering faster from the effects of the Covid-19 pandemic than other parts of the economy. The Unctad report also notes that more countries introduced policies to support creative industries in 2020 and 2021, utilizing the rapid shift toward digitalization brought on by the pandemic to try to accelerate their economic recovery.

What may come as a bit of a sting to policymakers in the Philippines is the Unctad report having identified — without singling the country out, however — the precise issues creative economy advocates here have long identified as handicaps to the Philippines reaching its full potential.

First, there are challenges posed in even consistently defining and identifying creative industries, and effectively tracking relevant data about them. This makes it difficult to benchmark and compare economic performance, on the one hand, and on the other, complicates the creation of supportive policies and regulation. After all, the government cannot form an effective strategy for something that it does not fully understand.

Second, Unctad identifies three areas in which “multidisciplinary policy responses” are needed to “enhance the development impacts of the creative sector.” The first of these is education; the second, digital infrastructure; and the third and perhaps most problematic, legal frameworks related to the creative economy. Areas of particular concern in this include protection and management of intellectual property rights, taxation and labor issues. In many countries, creative workers as well as others in the so-called gig economy fall outside legal definitions on which labor protections are based. This can lead to a harmful perception that creative work is “not real work,” and puts creative workers at risk of exploitation, or being relegated to the informal economy. Obviously, this kind of environment is not conducive to growth, either on the scale of individual creative workers or businesses, or for the sake of advancing the national economy.

To be fair to some lawmakers and concerned agencies such as the Department of Trade and Industry, the potential value of the creative economy has not been entirely overlooked, and various initiatives and measures to address it have been proposed in recent years. However, a strong and comprehensive national policy, such as that which has been the key to overwhelming success for South Korea, is yet to be considered. We think this is a mistake; perhaps not a deliberate omission, but a detrimental omission nonetheless. As we said in Tuesday’s editorial, the Philippines is a virtual gold mine of potential creative talent and output. Cultivating and encouraging the growth of these resource1s should be a priority, not an afterthought.