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Creative Industries, Creative Class, and the Effects on Urban Economic Growth

I recently read an article by Erik Stam, Jeroen P.J. de Jong, and Gerard Marlet called “Creative Industries in the Netherlands: Structure, Development, Innovativeness and Effects of Urban Growth.” Part of their research documented in this article looks at the effects of the creative industries and the creative class on innovation and urban economic growth. The difference between the two is that the creative industries is defined by industry sectors (e.g., NAICS codes), and the creative class is defined by occupations. I think the conclusions they draw from their research is quite interesting and very useful for economic development policy.

The analyses show that, with the exception of the metropolitan city of Amsterdam, there is no relation of the presence of creative industries with employment growth. In general, it seems that a concentration of creative industries is a less important determinant for employment growth in cities than a concentration of creative people/creative class. Creative industries do not seem to act as a catalyst for the effect of knowledge (spillovers) on urban economic growth in general. This seems to occur only in the metropolitan city of Amsterdam. This role is ore likely to be taken by the creative class, which was shown to have a much stronger relation with employment growth than the creative industries. If the objective of local economic policy is employment growth, improving living conditions for the creative class…could be more effective than creating conditions for stimulating the creative industries, which is currently widespread policy in the Netherlands…If the objective is not specifically employment growth, but is more focused on the innovativeness of the business population, creating conditions to stimulate the creative industries seems a reasonable policy, as we have shown that firms in the creative industries are more innovative than firms in other industries. However, our study shows that the creative industries are very heterogeneous; businesses in the distinctive domains face different constraints. One policy to stimulate all the creative industries will be less effective than more specific policies tailored to the nature of the specific domains.

Our findings call for a focus on living conditions and labour markets…attracting and retaining individuals in the creative class, instead of business conditions for attracting firms belonging to the creative industries if growth in cities is the objective. Only in very specific urban environments, such as the metropolitan city of Amsterdam, does a policy to attract and stimulate business activities in the creative industries seem to be justified. Perhaps metropolitan environments distinguish themselves from other lower order cities by their intensive social and cultural activity (including creative industries) that provides a source of inspiration for other economic activities…, the local ‘buzz’ of unpredictable, innovative interactions…(pp. 128-129).

I agree with their conclusion that economic development is more about attracting people than attracting companies, but there has to be a place for the creative class to work, so it is also important that the appropriate conditions exist within a metropolitan economy to stimulate the creation, growth, and attraction of creative industry businesses as well. In other words, it is important, as it always has been, that innovation be catalyzed for an urban economy to develop, which brings us back to their point about the importance of creative industries in fostering innovation.

(The article cited in this post was published in the journal Geografiska Annaler: Series B, Human Geography in 2008.)

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2015 San Antonio Creative Industry Growth and Prosperity Report

I recently presented the updated economic impact of the creative industry in San Antonio at the Tobin Center. The measured impacts are for 2014. The presentation can be found here, but in brief the industry has shown steady increases across all measures from 2012 through 2014. As of 2014, the industry, employs 21,736 people who earn over $1 billion in wages. The total estimated output of the industry in 2014 was $4.3 billion. These numbers do not include any multiplier effects. This industry, maybe more than any other industry, registers an impact far beyond its standard economic impacts as previously mentioned because of  its “artistic dividend.” This is a concept coined by Ann Markusen and David King to capture the productivity enhancements and economic growth that would not occur were it not for the presence of artists and other creative workers in the area. So, besides the rather large impact the industry directly has on employment, income, and output, it is a very important industry to the development of San Antonio’s economy because of the productivity improvements it provides to every other industry. Tobin Center for the Performing Arts \

The Possible Development of a San Antonio-Austin Mega-Region

There is some thought that the San Antonio and Austin metropolitan areas will eventually grow together and become one mega-region. I know some people that regularly commute to and from Austin and San Antonio for work and pleasure. A few people I know even make the commute daily for work. I have made several drives up and down I-35 to Austin for both business and pleasure. So, there are certainly economic linkages that have already developed between the two metropolitan areas. A few economists have even speculated that the Texas triangle formed by San Antonio, Dallas-Fort Worth, and Houston will become a mega-region. I think this is too large of a geography for much economic integration to occur over the next couple of decades, but what about the development of a San Antonio-Austin mega-region?

Population growth in both San Antonio and Austin has been strong over the past decade and is projected to be strong for the next couple of decades. This growth in cities like San Marcos and New Braunfels, which sit in the middle of what would become the mega-region, has been even stronger and will continue to grow rapidly.

Based on my observations of growth in the region, I think the creation of this mega-region will occur over the next couple of decades, but I wanted to see if the population projections supported this. I pulled data from the Office of the State Demographer showing the projected population growth from 2015 through 2035 in all of the counties that would comprise the mega-region. The following table shows these projections, which support the conjecture that the mega-region will develop. (The Dallas-Fort Worth numbers are included only for comparative purposes.)

San Antonio-Austin Mega-Region
County Major City 2015 Population 2035 Population Growth Rate
Bastrop Elgin 80,780 115,997 43.60%
Caldwell Lockhart 41,100 54,485 32.57%
Hays San Marcos 182,893 308,142 68.48%
Travis Austin 1,111,829 1,407,810 26.62%
Williamson Round Rock 477,329 744,423 55.96%
Atascosa Pleasonton 48,451 63,491 31.04%
Bandera Lakehills 21,475 24,089 12.17%
Bexar San Antonio 1,839,926 2,331,743 26.73%
Comal New Braunfels 118,571 160,515 35.37%
Guadalupe Seguin 144,847 204,763 41.37%
Kendall Boerne 36,090 47,658 32.05%
Medina Hondo 49,158 62,562 27.27%
Wilson Floresville 46,488 61,693 32.71%
Total 4,198,937 5,587,371 33.07%
Dallas-Ft. Worth 6,907,216 9,059,825 31.16%

How economically integrated this region becomes is another question, though. In my opinion, just expanding the highways or adding new highways so more cars can travel back and forth will not facilitate more integration. It will be necessary to add rail between San Antonio and Austin with several stops in between and complementary rail service of different types at both ends of the region. It is also going to be vital that the development of the downtowns in both Austin and San Antonio continue. In other words, it will require an integrated, comprehensive transportation system throughout the region in order to achieve the large economic benefits from the creation of this mega-region.

BEA Releases New Data on Arts and Cultural Production for 2012

The U.S. Bureau of Economic Analysis (BEA) recently released new data on arts and cultural production for 2012. While there is a lag in the release of the data, it is exciting that they are providing such data in collaboration with the National Endowment for the Arts.

According to the BEA: “Nominal value added from all arts and cultural production (ACP) industries – a measure of this sector’s contribution to gross domestic product – increased 3.8 percent, or $25.8 billion in 2012, according to new statistics released by the Bureau of Economic Analysis (BEA). Value added accounted for 4.3 percent, or $698.7 billion, of GDP.” (Source: http://bea.gov/newsreleases/general/acpsa/acpsa0115.pdf)

Of the core arts and cultural production industries, the top five by value added (contribution to GDP) were:

  1. Advertising ($29,289 million)
  2. Independent Artists, Writers, and Performers ($19,297 million)
  3. Performing Arts ($16,116 million)
  4. Architectural Services ($13,910 million)
  5. Photography and Photofinishing Services ($8,045 million)

The core arts and cultural production contributed $129,011 million to GDP, while the supporting arts and cultural production industries contributed $547,003 million, and all other industries that have secondary production designated as artistic and cultural production contributed $22,681 million.

Total arts and cultural production amounted to 4,676.4 thousand jobs in 2012 with core arts and cultural production accounting for 956.4 thousand of those jobs. The supporting arts and cultural production industries employed 3,537.4 thousand, and all other industries contributed 182.6 thousand jobs. Interestingly, total employment continues to decline since the 2007. The core arts and production industries showed employment growth in 2011 and 2012, but the supporting arts and cultural production industries have seen declines employment in each year since 2007. I am not sure what is driving this dichotomy, but maybe the core arts and cultural industries are bringing some of the support work in-house causing a decline in employment in the supporting arts and cultural industries.

Inspired by Intimate Impressionism at McNay Art Museum

I recently went with my wife and one of my daughters to see the Intimate Impressionism exhibit at the McNay Art Museum in San Antonio. It was a fascinating exhibit, and I was in awe by many of the paintings. My favorites, in no particular order, were:

  1. “Yacht Basin at Trouville-Deauville” by Eugene Bodin
  2. “Picking Flowers” by Auguste Renoir
  3. “Meadow” by Alfred Sisley
  4. “Boulevard Heloise, Argenteuil” by Alfred Sisley
  5. “Argenteuil” by Claude Monet
  6. “Still Life with Grapes and a Carnation” by Henri Fantin-Latour
  7. “Peaches on a Plate” by Auguste Renoir
  8. “Concert at the Casino of Deauville” by Eugene Bodin
  9. “Festival in the Harbor of Honfleur” by Eugene Bodin

The one that made me say, “Wow” upon first seeing it was Renoir’s “Picking Flowers”, so it has to be considered my top pick on the list.

Picking Flowers by Renoir

Source: https://artsy.net/artwork/pierre-auguste-renoir-picking-flowers

Almost as fun and fascinating as seeing the art was overhearing the various conversations people were having about the paintings. They ranged from, “Those oysters sure look tasty”, to rather in-depth discussions about what the artist was actually trying to portray or might be thinking at the time. It was a clear example of the role the arts and museums on the economy. From the looks of bumper stickers on some of the cars, it appeared that the exhibit did attract visitors from Austin and other areas outside San Antonio, but the more profound impacts, in my opinion, are the enhanced quality of life and the creative inspiration it provided many of those who saw the exhibit. While the ability of an art exhibit to attract visitors to the area is important, It is the impacts to quality of life and the inspiration they provide that attract the skilled, creative workers in all industries to a region, and it is exactly why the arts are so important to the continued development of a regional economy.