IndEX
Introduction
..............................................................................................................………………1
I.
CULTURE
AS AN ECONOMIC SECTOR …....................................………………1
1.
Status of
current relationships between culture and economics ......……………..1
2.
Culture,
growth, and employment
...................................................……………..4
3.
Towards a
broader vision: culture and development
......................……………10
II.
POLICY
ISSUES
……...........................................................................……………14
III.
CONCLUSIONS
...................................................................................…………….19
BIBLIOGRAPHY
...................................................................................………………………...23
Introduction
Studies and
policies in the Hemisphere have for many years addressed the relationship
between culture and economics. However,
this relationship has taken different forms in different countries and
regions. Furthermore, initially, studies
took a sociological or, in any case, theoretical, approach. It is only relatively recently that the
cultural sector has been formally studied from the perspective of economics and
statistics. Therefore, only now is a
framework being created of economic structures for the Hemisphere’s cultural
sector. And, for the same reason, only
for the last 10-15 has there been discussion of pertinent policies to address
the cultural sector as one generating significant dynamics from an economic
perspective. This document seeks to
provide a regional vision of culture as an economic sector, emphasizing today’s
crucial topics, rather than constitute an exhaustive list of all specific
interrelationships between culture and economics.
This document
contains two sections. The first
discusses the cultural sector from an economic perspective. After briefly reviewing the relationships
between the concepts of culture and economics, it proposes a definition of
“cultural sector,” used throughout the document. Then, based on recent statistical and
analytical studies in the Hemisphere, it examines the relationship between
culture, economic growth, and employment.
This analysis provides an overview of the contribution of the cultural
sector at the economic level, and is more a synopsis than a comparative study,
as the data identified is not fully uniform.
Section I concludes with a discussion of the cultural sector from the
broader and more complex perspective of development.
Section II
suggests some economic and social policy themes for the cultural sector, with
two aims: first, to facilitate further
growth of cultural sector production and employment, and secondly and
especially, to recognize the specific characteristics of cultural sectors and
markets in order to propose key aspects where policy is called upon to play an
essential part in creating diverse and equitable cultural development. At the end of the document, conclusions are
drawn.
Section
I: Culture as a economic sector
1.
Status of
current relationships between culture and economics
Culture is the
human endeavor that par excellence produces feelings and imaginaries in
society. It also reinforces the feeling of identity and citizenship. From the
start, this concept supposes certain specificities in the American continent:
the co-existence of cultural manifestations close to, what we can define as,
traditional culture, which is product of a multiplicity of ethnic groups and
subcultures that has participated in the construction of the identity and
history of the region; and the manifestations closer to what we can define as
modern culture or, further more, as industrial culture, which is also a
characteristic of the contemporary continental culture. The sustainability of
these cultural manifestations without exception is then, the inevitable
guarantee of multiethnic and pluricultural society.
Some of the
activities related to culture generate, additionally, an analogous economic
impact to the one produced by other sectors of the economy. In one word,
culture is, besides an indispensable element for social cohesion and the
reconstruction of an identity, an economic sector equally or even more
important than any other productive sector of society. The economic
transactions that take place in the deepest heart of culture generate positive
economic effects such as learning and knowledge. That is, the cultural sector
contributes to development from the social and identity sectors, such as from
the economic ones.
Culture and
economics as disciplines have engaged in dialogue for only a relatively short
time. A first approach to the economics
of culture was developed in the United States in the 1960s. Studies based on this approach noted two main
issues: legitimacy of state intervention
in the cultural sector; and efficient utilization of public funds by their
beneficiary entities (Farchy, 1994; Heilbrun, 2001). The topics of such studies range from arts in
the Anglo-Saxon sense (inter alia, theatre arts, painting, sculpture, museums,
and heritage) to what used to be considered “high” culture. From that perspective, everything not covered
by this definition remained in the hands of the market and was, therefore, a
matter for industrial economic analysis.
A second
approach to cultural economics began to be developed in the late 1970s/early
1980s, when cutbacks in European governmental budgets led to a re-examination
of the role of public expenditure in the cultural sector. In a context of economic crisis, expenditure
priorities had to be assigned in order to stimulate the most productive
sectors. In that context, the then-French
Minister of Culture, J. Lang, made two points:
first, he noted the many instances where the cultural sector had made
the transition from subsidy to generation of employment and added value. Secondly, he asserted that support for
cultural creation should not be provided at the expense of sound management and
then, among cultural policy priorities, assigned priority to that criterion.
To demonstrate
that the cultural sector generated growth and employment, it became necessary
to look beyond an examination of “high” culture. This was the point where cultural industries
became the focus of cultural policy concerns.
Statistics and statistical analyses began appear that focused attention
on previously peripheral cultural forms, such as rock concerts, jazz
recordings, and television - in general, all forms of creative expression that
could be mass produced. The findings
were that cultural industries not only generated considerable added value and
conveyed traditional art content, providing them with fresh support, but that,
above all, signified a true revolution in the way in which the general public
experienced culture. From that
perspective, public cultural expenditure would find new objects, ones much
better withstanding the economic cost-benefit test.
The strengths
but also the weaknesses of these two concepts of culture have been generating a
new approach to the economics of culture.
Although early studies contributed pertinent elements for analysis of
public investment in the cultural sector, they omitted the maze of cultural
industries, and their impact on economic growth and on the way in which the
public experienced new cultural manifestations.
For its part, the point made regarding the important additional
contribution of cultural industries to the productive system implied that
cultural policy actions needed to cover a broader spectrum, but said nothing
further regarding the survival capability of forms that did not necessarily
find a market niche. Finally, the realities of a continent such as the American
continent, where the development of the cultural industry have not entail the
destruction of traditional cultures, although it has entail its transformation
and rearrangement, sets a challenge in the conception of culture from a mere cultural
industry stand point. The evidence of the production of culture from an
industrial level cannot leave behind other sectors that have manage to subsist
and readapt in this specific modernity of our continent, such as the hand
crafted art or the immense intangible heritage generated by customs and
knowledge particular to our richness and multiplicity of ethnic groups and
cultures.
We now needed to
take a fresh look at the economics of culture.
Increasingly, studies conducted worldwide, including some very recent
studies in the Americas, have shown that trade liberalization and investment on
a global scale as the necessary consequences of economic globalization have led
to tremendous development of cultural industries. But it is also true that, in this same
context, heterodox market structures have been established in which
transnational media oligopolies occupy increasingly large segments of the world
cultural market, while at the same time occupying a large segment of the chain
linking the creator to the public. To
that extent, what circulates on the globalized cultural market and what does
not is, for the most part, decided by such groups. Or, put otherwise, cultural manifestations
that are not profitable for the conglomerates will not be placed on the global
market. In any case, this vision of the
economy of culture concludes that the diversity of cultural expression is on
stake as long as what the market favors is not inevitably bonded with the
multiplicity of the cultural production of independent actors, ethnic groups or
countless cultures.
In addition,
this new approach has sought to describe in detail from a sociological
standpoint the production and consumption processes for cultural industry
products. Broadly speaking, the
sociological vision has shown that trade in such markets obscures the true
dynamics of the change in the conception of the societal arena. In fact, according to these studies, what we
today understand as citizenship and identity is unquestionably reshaped by the
vast amount of content that cultural industries provide.
Incorporation of
these two elements, the economic and the sociological, has proven a real
challenge for cultural policy. Such
policy must, on the one hand, seek to develop cultural industries and, on the other,
to ensure that the public has equal access to the greatest possible variety and
quality of cultural content. In a
context of convergence of the production and marketing of such products, states
are confronted with the dilemma of intervention in cultural markets. This decision is particularly difficult in a
context in which it is rather difficult to maintain the traditional balance
between efficiency and equity.
For all the
above, what is understood as cultural sector have being growing to the point
that it now includes the cultural industries, but it has not set aside the
manifestations that exists in the verge of mass and traditional production. The
universe that encompasses cultural activities is therefore quite ample: “from
the expressions of folklore, the popular culture and the culture of the media,
to manifestations of culture of the “elite” or “Fine Arts” and historical
heritage. The economic manifestations that belong to this typology are also
ample. Some are developed in the market, others are subsidized, and others
sponsored by patrons; in many cases, the motivations of the creators are not
necessarily driven on by profit incentives and thus does not necessarily
participate in the economic dynamisms of supply and demand where the price is the
result of the economic value. Regardless if cultural activities are part or not
of the market, they have economic dimensions because they presuppose the use of
resources as any other economic activity” (Colombian Ministry of Culture,
Convenio Andrés Bello, 2003).
For these
reasons, the concept of cultural sector is being broadened to include the
concept of cultural industry. To
paraphrase the economic impact study on Colombian cultural industries (Ministry
of Culture of Colombia, Andrés Bello Convention, 2003), we may employ the
UNESCO definition of cultural industry.
In that definition, cultural industries have the following
characteristics:
• Their raw material is a creation protected by
copyright and set on a tangible or electronic support;
• Their products are mass produced and preserved, and
distributed on a massive scale;
• They have their own processes of production,
circulation, and social appropriation;
• They are organized based on the logics of markets and
marketing, or have the potential to be so;
• They are places for the integration and production of
social imageries, development of identity, and promotion of citizenship.
This definition fully acknowledges the inherently
economic nature of cultural industries in the context of a globalized market,
but at the same time has the virtue of taking account of the part they play in
affirming and defining citizen cultural identity. For that reason, the analysis made in this
study will prefer this definition.
However, this study will not ignore everything that economics as an
analytical framework has to say regarding the allocation of public expenditure
to other cultural manifestations not mass produced, such as theatre arts, the
art crafts or museums – for one essential reason: it is now virtually impossible to separate
“high” from “low” culture at a time when the ties between cultural industries
and traditional arts are growing closer than ever. The theatre arts are an advertising showcase
for recorded music. The art craft’s production is starting to be reproduced
massively. The sale of mass produced products is a source of museum
financing. In general, any unrepeatable
creation may be packaged and reproduced on industrial scale. All this makes it possible to formulate a
rather rich and truly complex concept of the economics of culture.
2.
Culture,
growth, and employment
Owing to the increasing importance of cultural industries on the
cultural agenda of many of the countries of the Americas, studies of varying
depth and different scopes have been conducted to measure the economic impact
of such industries on national economies.
Such studies take widely different approaches and the contributions they
claim may be summarized as follows:
•
Generation
of common economic concepts among heterogeneous cultural sectors for the
purpose of analysis, comparison, and overall interpretation;
•
Measurement
of the economic impact of culture using variables such as: impact on GDP, copyright payments,
production, sales, exports, imports, employment, and piracy;
•
A better
understanding of the structure of supply and demand, i.e., identification of
the structure of the different cultural markets. Specifically, seeking to
identify suppliers and demanders and to understand the structure of the chain
linking the two (in particular, raw materials, distribution, concentration of
ownership of the factors of production, and capital flows, etc.)
•
At
attempt to ascertain the specific particularities of cultural employment that
define it and differentiating it from other industries. For example, wages paid for cultural
activities are compared with those paid in other sectors; cultural workers are
categorized on the basis of whether they work a full workday or must finance
their activity working half-time in another sector; calculations are made of
compensation levels in relation to years of training; assessment of whether
there is genuine attraction to risk on the part of workers who decide to carry
out a cultural activity, as their income will be more irregular than that of
other workers.
•
Demonstration
that culture many times is not an activity without economic viability, but
instead may be viable. In that
connection, an attempt to raise awareness of and to discuss the cultural sector
at the macroeconomic level.
Specifically, an attempt compare the contribution of the cultural sector
to GDP and employment as compared with the contribution of other economic
sectors. This is done taking a
statistical (at a given time) or dynamic approach (by considering and comparing
the rate of growth of GDP and employment of the cultural sector over time ???
as compared with those rates in other sectors and in the economy in general).
•
In view
of the foregoing, such studies also suggest a policy objective, as their
findings provide justification for more decisive state intervention in the
cultural sector. “This means that new mechanisms and negotiating arguments for
obtaining budgetary resources must be available which, on the one hand, are in
keeping with the economic contribution made by the sector and, on the other,
meet at least two key objectives:
subsidization and co-financing of all cultural activities that are not
marketable and do not generate economic benefits, but do generate social
benefits and to promote industrial processes of undeniable importance for the
country’s economic and cultural development” (Ministry of Culture of Colombia,
Andrés Bello Convention, 2003: 26).
•
(While
not mentioning all topics discussed in such studies), lastly, an attempt to
ensure that in understanding the economic dynamics, a much more precise concept
is formulated of the processes of formation of social imaginaries, identity,
and changes in perception of the meaning of citizenship, all of which is
channeled through cultural industries.
This series of
studies, although far from covering all countries of the region, can provide
general indications of the capability of the cultural sector to generate
economic growth and employment.T Most studies
have also sought to provide a more complex vision of the economics of the
cultural sector in an analysis that takes account of every subsector or
sub-industry of the global cultural industry.
Although in this section we use this subsectoral analysis only to
explain the overall sector growth, in Section II we will address the issues of
each sector of the cultural industry by making policy suggestions.
It would be
hazardous to make a comparative table of the findings of the studies consulted,
for three main reasons. The first is
that not all studies use the same methodologies. More than one method in fact exists to
evaluate the contribution of an economic sector to the growth of gross domestic
product and national employment.
Secondly, the cultural sectors included in the calculations usually vary
from one country to another, depending on what each study deems pertinent to
include as a cultural industry or, an equally determinant factor, depending on
political concerns. In addition, the
productive subsector breakdowns used in national accounting statistics vary
from one country to another, meaning that the information for some sectors is
at times inconsistent or incomplete.
Lastly, each study provides results for a specific year or period, which
rarely coincide with periods used in other studies. Accordingly, it must be said that the table
below needs to be viewed more as a summary than as a comparative
framework. Only very general conclusions
should then be drawn based on this summary, and useless rankings of countries
should not be attempted.
|
Country
|
Contribution
of the cultural sector to GDP
|
% of
employment in culture sector as a % of total employment
|
Sample
year
|
Activities
included in the study
|
Sources
(See
footnote * on preceding page)
|
|
Argentina
|
Approx.
4.1%
|
Approx.
3.5%
|
1993
(GDP) and 1994 (employment)
|
See
endnote[1]
|
B
|
|
Brazil
1
|
6.7%
|
5 %
|
1998
|
Ibid.
Argentina
|
B
|
|
Brazil
2
|
0.8%
|
0.8%
|
1994
|
See
endnote[2]
|
A
|
|
Colombia
|
2.01%
|
27,724
jobs in three sectors
(publishing,
phonography, and filmmaking)
|
2001
(GDP) and different data from 1999 to 2002 (employment)
|
See
endnote [3]
|
F
|
|
Chile 1
|
Approx.
2%
|
2.7%
|
1990-1998
Average
|
Ibid.
Argentina
|
B
|
|
Chile 2
|
1.8%
|
-
|
2000
|
See
endnote [4]
|
E
|
|
Ecuador
|
1.79%
|
-
|
2001(?)
|
-
|
F
|
|
United
States 1
|
7.75%
|
5.9%
|
2001
|
Ibid.
Argentina
|
G
|
|
United
States 2
|
0.002%
|
-
|
1997
|
See
endnote [5]
|
D
|
|
Paraguay
|
Approx.
1%
|
3.3%
|
1995-1999
Average (GDP) and 1992 (employment)
|
Ibid.
Argentina
|
B
|
|
Uruguay
|
6%
|
4.9%
|
1997
|
Ibid.
Argentina
|
B
|
|
Venezuela
1
|
2.3%
|
-
|
2001(?)
|
-
|
F
|
|
Venezuela
2
|
3%
audiovisual and telecommunications sectors (taken as representative of all
cultural industries)
|
35,329
in four sectors (graphic arts, radio, advertising, and filmmaking)
|
Various
data 1997-2000
|
-
|
C
|
An
examination of the above table yields the following general conclusions
regarding the contribution of the cultural sector to GDP or growth of economic
output. As indicated above, the table
has relatively little explanatory or comparative usefulness, as the appropriate
context for the figures is not provided.
Accordingly, the following interpretations are based on the explanations
provided in each study.
•
The indices
of the contribution of the cultural sector to gross domestic product may be
divided into two groups. Countries with
indices of economic development that may be described as medium-low, such as
Colombia, Ecuador, Paraguay, and Venezuela, show very similar percentages of
the contribution of the cultural sector to GDP, hovering around 2%. Countries with medium-high development
indices, such as Argentina, Brazil, Chile, and Uruguay, show slightly higher
than average rates, although these are very uneven (a maximum of 6.7% for
Brazil and a minimum of 1.8%-2% for Chile).
However, gaps between indices may also be explained by the different
methodologies and information used. It
should be recalled that it is precisely the countries with high indices that adopted
a regional MERCOSUR study with similar methodological guidelines. To be noted are the cases of Brazil, Chile,
and United States, for which more than one study is available. In the Chilean case, the two studies arrive
at very similar indices, which is not surprising as the sectors taken into
account in their calculations are not much different. In the case of Brazil, whose first study
yields an index of 6.7% and the second of 0.8%, the difference may be explained
simply by information utilized. We may
say without fear of error that the Ministry of Culture study (0.8%)
intentionally defines cultural sector to include only strictly creative
activity and, therefore, does not take account of dissemination activities and
inputs. This definition acquires real
importance as it does not take account of the media sector (radio, TV,
advertising) which, as we shall see, largely accounts for the higher
indices. Lastly, the United States data
is somewhat similar to that of Brazil.
If the cultural sector is taken in its broadest sense, the findings are
surprising (7.75%). If, on the other
hand, only a purist definition is used, measuring only “high” culture, the
results are negligible (0.002%).
•
With
regard to the relative contribution of each activity to the cultural industry
total and, specifically, in explaining the index of contribution to GDP,
interesting coincidences among the more detailed studies are found. For all countries included in the MERCOSUR,
Chile, and Colombia study, activities directly related to copyright account for
approximately 50% of the index of contribution of the cultural sector to
GDP. The remaining 50% is split between
distribution activities and inputs; the first clearly has greater weight. For direct activities, similar patterns are
found. In the direct activities group,
media industries (press, radio, television) are those of greatest weight. In the Colombian and Argentine cases, also
to be noted is publishing, and in the case of Brazil, the publishing and
information technology industries. For
many of the countries, these industries are followed by industries such as
phonography and filmmaking. In general,
activities more closely related to the definition of “high” culture (museums,
theatre arts) account for very little of the index of the economic importance
of direct activities and, therefore, of the cultural sector in general. This has nothing to do with the size of the
economy: let us recall the index
achieved by these activities in the United States (0.002%). Lastly, and again in general, as regards
distribution activities and inputs, to be noted are telecommunication
activities, which account for much of the group’s index.
•
The
economic behavior of the cultural sector is highly correlated with the growth
rate trend in the economy in general.
For countries such as Colombia and Chile, it was shown that income
elasticity of culture is greater than 1.
This means that the cultural market is highly dependent on general
economic activity. If the economy grows
by one percentage point, the cultural sector will grow more than
proportionally; the reverse is also the case. This may be explained by the fact
that these goods are not absolutely essential to life so that, in periods of
recession, consumption of them is more than proportionally reduced, and in
expansionary periods, large amounts of surplus income is allocated to cultural
consumption. With regard to the sector
trend over time, in countries such as Chile and United States, it has been
shown that sector growth rates are far higher than growth rates for the economy
in general. In Chile, the sector doubled
in size from 1990 to 2000, and, in the United States, over the last 20 years
more than doubled. This is due, inter
alia, to the fact that the world economy, particularly, the Latin American,
performed well in the 1990s. But perhaps
still more determinant was the explosion in new forms of communication, such as
the Internet, cable television, etc., which made cultural content a more
accessible mass product.
•
Lastly, a
notable aspect is the emphasis placed by some studies on comparisons with other
economic sectors. It was demonstrated in
Chile that the cultural sector slightly exceeded the fishing sector, one viewed
in that country as economically powerful.
In Colombia, the cultural sector has slightly more weight than
production of processed, unroasted coffee.
The studies emphasize that, in both the case of fishing and coffee,
governments have devoted great effort and budgetary resources to maintaining
statistics and promoting these sectors, whereas culture has not been accorded
the same treatment.
•
Although
in some regions of the continent there still is a lack of studies that measure
the economic impact of the entire cultural sector, there are investigations
that have outlined the economic importance of cultural manifestation through an
economic scope. In the case of countries such as Trinidad y Tobago in the
Caribbean region, Keith Nurse has demonstrated the importance of the national
carnival, not only on a social and identity level, but also on an economic one.
This carnival has a significant impact on the micro economy of the country,
attracting more than 40,000 visitors per year and generating 15 million of US
dollars in foreign currency. It has been calculated that the marginal
cost-benefit of the event is 1 to 7. Similar marginal cost ratios have been
found in other festivals around the region. Effectively, and proving as well
what was stated above about the importance in the continent of other cultural
manifestations that are not necessarily included in the industrial sector,
popular and traditional culture has been transformed to a phenomenon that is
not important just from an identity stand point, but also from an economic one.
Besides Nurse’s study, we found studies about the Rio de Janerio Carnival, the
Carnival in Barranquilla, and the Labor festival in New York, among others,
which proves that the fusion between traditional popular culture and industrial
culture in the continent is the best way to keep alive the dynamism of the
intangible heritage and to create strong external economies.
Since
Hugo Achugar (in Canclini and Moneta, et
al., 1999) wrote about the invisibility of cultural employment in Latin
America, which “means not only that society does not ‘value’ cultural work as a
source of employment and wealth, but also that there is a lack of awareness of
its importance and meaning,” the situation remains virtually unchanged. As the studies cited above discuss cultural
employment in less detail and scope, the conclusions are drawn below on a
case-by-case basis, and it is hazardous to draw general conclusions.
•
It may
generally be said that some correspondence exists between the contribution made
by the cultural sector to the GDP and to national employment. The few available statistics provided in the
table so indicate.
•
In the
MERCOSUR countries and Chile, the general trend is for employment in cultural
distribution activities to be slightly higher than employment generated by
principal or direct activities as a group.
The reverse is true in the United States. These two groups of activities also provide
nearly all employment in the cultural sector.
In terms of employment, the most important distribution activities are
trade and sales (Argentina), and telecommunications (Brazil). Furthermore, in the direct activities group,
the same activities that generated a large economic product are those that
generate a high level of employment (communications and advertising). In connection with employment, among
principle activities, the contribution of the publishing industry is to be
noted. Cross-referencing these findings
with contribution to GDP we find that, although activities directly related to
copyright account for much of the cultural GDP in MERCOSUR and Chile, they
account for a smaller percentage of employment.
In distribution, in contrast, employment generated is greater than the
contribution to GDP made by these activities.
From every standpoint, this finding is to be expected as direct activities
employ more skilled, hence more productive, labor (from the same number of
workers, more product); whereas distribution activities employ less skilled
labor with lower productivity, so that they generate more employment than they
contribute to GDP.
•
The study
prepared by the Ministry of Culture of Brazil makes a detailed description of
cultural employment in that country. In
studying employment from a regional perspective, it finds that cultural
employment is an urban phenomenon, found mainly in the cities of the country’s
southeast. Another major finding is the
average productivity of the cultural worker.
While according to this study, cultural workers as a group account for
0.8% of national employment, wages paid for cultural work account for 1.7% of
wages paid in the economy as a whole.
That is, the wage paid for direct cultural activities is far above the
average wage. This demonstrates that, on
average, cultural work is highly productive, probably owing to the relatively
large amount of skilled labor it employs.
It must not be forgotten that this study is based solely on direct
activities, which make intensive use of skilled labor, and it corroborates the
findings of the MERCOSUR and Chile study.
In this study, cultural labor is also broken down into employees and
self-employed workers, cross-referenced among three groups of activity: cultural industry, services, and trade.
•
The
following are the findings of the Colombian study: The publishing sector employs large numbers
of sales workers (52%), followed by technical workers (28%), and administrative
workers (17%). Self-employed workers
account for approximately 32%, most of whom work in sales. As regarding the phonography industry,
unsurprisingly, we find that production activities, directly related to direct
activities protected by copyright, use large amounts of skilled labor. Distribution, in turn, uses large amounts of
unskilled labor. The phonography sector has
a large, uncalculated, number of temporary workers. Lastly, we find that the filmmaking sector
uses large amounts of temporary labor (in this sector, workers work an average
of 3.5 months per year in this activity).
With regard to exhibition, it was found that each cinema screen generates
approximately 6 direct and 2 indirect jobs.
At this
point, we should make certain key points regarding the available statistics on
the contribution of the cultural sector to economic growth and employment in
the Americas. From an economic
perspective, the cultural sector is undeniably dynamic. Its percentage contribution to GDP is
comparable to that of the lead sectors of national economies. In addition, its growth rate remains above
that of the rest of the economy.
Regarding the contribution of the cultural sector to employment, we may
say that it is similar to its contribution to GDP. Such jobs, owing to the diversity of cultural
industry activities and subsectors, are also highly diversified, and are filled
by both skilled and unskilled workers.
This demonstrates that cultural industries in the Hemisphere are
effective vehicles for economic growth and job creation.
As noted
above, one of the main objectives enumerated by these studies is to begin to
position the cultural sector in terms of policy on national policy agendas and,
more specifically, in the allocation of public budgetary resources. It is sought to demonstrate that public
investment should be made in the cultural sector because it is profitable, in
contrast to what was thought before these studies had been conducted. Such reasoning has greater weight in
situations such as those found in Latin America, whose governments are faced
with economic reforms entailing cutbacks in public expenditure, which is
therefore allocated to key activities.
This situation is similar to that in Europe in the 1980s, mentioned
above. And, as there were at that time,
in our Hemisphere we now have authors highly critical of such arguments.
A first
criticism, by J. O. Melo (Andrés Bello Convention, 2001), has to do with the
fact that demonstrating that culture is profitable may lead to a paradoxical
conclusion, as it in some sense shows that culture is a sector that has
operated in the market without major state investment. Therefore, asks the author, why should public
sector support now be given to cultural industries? For Melo, we must distinguish between what is
profitable and what is not; what really is worth supporting and what is
not. It should be recalled that in these
studies, the more nearly directly protected by copyright the cultural sector,
the less its economic weight. Total
statistics tend to be inflated by the weight of media and advertising
activities, and sometimes include activities that are in fact quite removed
from what might be appropriate under any definition of culture. Other activities that would be very difficult
to carry out on a commercial basis would be obscured in these global
statistics.
Following
this same line of argument, J. Farchy and D. Sagot-Duvauroux (1994: 15 and 148)
assert that if the argument for funding the cultural sector is that it is
profitable, nothing demonstrates a priori
that state investment in other alternative sectors would not be still more
profitable in terms of growth and employment.
Put otherwise, if it is shown that culture is slightly less profitable
than any other sector or that it generates less employment, this would be
sufficient justification to withdraw support or subsidy. What would happen, the authors ask, if the
justification for a subsidy were based on a democratic or social argument, even
where there is no economic profitability?
For these
authors, even if culture has genuine economic advantages, they are unlikely to
be more significant than those of other economic sectors. Public expenditure on culture as an issue
common to all approaches relating culture to economics may only be justified,
in their view, by culture’s intrinsic value.
That intrinsic value must be identified in terms of a broader
relationship, one seeing culture as an essential component not only of growth
but also of development. As is evident,
in demonstrating the high correlation between culture, growth, and employment,
we do not exhaust but merely introduce the topic of the economics of culture.
3.
Towards a
broader vision: culture and development
In view of the foregoing, although it may be said that, among the
numerous consequences of globalization is the growth of cultural industries as
a whole, it is not yet clear whether development is among such
consequences. But, to answer this
question, we must know what is meant by development.
Defining development may obscure the long historical process that
enabled such a definition to be reached.
According to Germán Rey (2000), this process may be understood as a
series of “displacements.” The first is a
displacement from a vision of development as a gradual linear process to one
seeing it as a flexible and discontinuous process, involving different tensions
and permitting different developments.
The second is a displacement from a single model of imposed development
to different development possibilities that incorporate the numerous players
participating in defining that model. In
the third displacement, acknowledgement is preferred to knowledge. It is no longer a question of the politician
having linear knowledge of his subject of development. On the contrary, as development is a concept
formulated by all societal players, such players must acknowledge their
differences (nationality, ethnicity, gender, sexuality, etc.). Therefore, in the final displacement,
development ceases to be a purely economic concept that erroneously considers
development to be equivalent to economic growth, and incorporates the whole
range of disciplines and realities in formulating a more complex concept.
Rey discusses what may be a broad concept of development now current,
taking as his basis United Nations texts, in particular, those of the
UNDP. First, human development is
synonymous with the progress of human life and welfare. Secondly, human development is correlated
with the opportunity for individuals to enhance and make the best use of their
capabilities in any area - cultural, economic, political, etc. Third, development has to do with the freedom
of individuals to live as they wish (freedom of access to material goods, to
education, housing, and to life in society) - in short, the freedom to develop
their civicism. Lastly, development must
afford all subjects equal access to its benefits.
Culture and especially cultural industries play a lead part in the scope
of development as conceived above, first, through their contribution to the
economy, employment, and material welfare, but above all, according to Rey,
because cultural industries “participate in both the construction of social
identities and in promoting a fabric of symbolic production and cultural
appropriation. In that fabric,
development itself is depicted, the drama of modernization is staged, and
aspirations and collective demands of broad segments of society are
mobilized.” From this perspective,
construction of development has an inherent cultural dimension.
Now, does globalization make it possible to realize this concept of
development? And, more specifically, does globalization assist in realizing the
cultural aspect of development? This aspect has been discussed at length,
especially in the sociological field.
Diana Crane (2003) identifies four major approaches in the field of
cultural globalization. The first, which she calls the theory of cultural imperialism,
asserts that there is a cultural imperialism that is imposed by the rich
countries on the poorer and more peripheral countries, one that is no more than
an extension of economic imperialism made possible through globalization. Multinational and transnational financial
organizations are key players in this explanation as, through their control of
markets and their products, the richer countries, in particular, the United
States, impose a lifestyle, beliefs, values, in short, an alien culture, on the
peripheral countries. This vision has
limitations as the concept of imperialism supposes a degree of control by force
by the rich over the poor, or by the powerful over the weak, which never occurs
in the case of cultural markets. In
addition, globalization is a system to balance forces and tensions, in which
all players are interdependent, although such interdependence is in fact
problematic.
A second approach to the process of globalization of culture is what
Crane calls the theory of cultural flows.
This maintains that cultural transmission flows do not emanate from a
single center or move in a single direction; in other words, the receivers are
also the transmitters. This process has
little coherence; flows cause globalization to create more cultural
hybridization than homogenization.
A third approach, the theory of receipt, states that publics of
different countries, of different races, creeds, and cultures, respond
actively, rather than passively, to global cultural messages. That is, each group interprets these messages
in differentiated and innovative fashion.
Therefore, from this perspective, local cultures and identity would not
be diminished by the globalization of culture.
Critics of this view emphasize that the voices of the audiences have
little weight in comparison with those of the cultural conglomerates, who treat
their receivers as an undifferentiated mass.
A fourth and final approach suggested by Crane seeks to view the
cultural globalization process as a complex relationship of forces among
nations, states, publics, and cultural entrepreneurs. This relationship is developed through
competition and negotiation among participants.
In this approach, cultural globalization is a process constantly moving
from balance to conflict.
Each of these four models makes some contribution to a complex
conception of cultural globalization and its relationship to development. In other words, none of them is fully
valid. Their degree of validity depends
on the cultural subsector to which they are applied or the country of study. The cultural imperialism model, which until
recently predominated, may be reformulated as a model of media imperialism, in
which, according to Crane, for economic more than political reasons, in the
cultural messages transmitted, a few suppliers predominate. In fact, the globalization of worldwide
trade in content enables those countries with large domestic markets to develop
much greater competitive advantages than those of other countries.
There is an economic explanation for this (McFadyen et al., 2000). As the cost of production in cultural
industries, especially audiovisuals, does not increase with the number of
consumers, when the domestic market is sufficiently large, huge economies of
scale are generated. As language and
culture differences generate a sort of natural barrier to trade in content, the
industry that will develop most will be that whose domestic market is, in
economic terms, the largest. This will
therefore be the one that is able to dominate international trade in cultural
content. This is the case of the
audiovisual industry in the United States or, to some extent, the case of
television in Brazil and Mexico, to cite two examples from the region.
It may be said that the three remaining models serve to assess the
relative value of the conclusions yielded by the media imperialism model. The cultural flows model assists in
understanding the complexity of the relationships that regional cultures
establish with global cultures. This is particularly relevant in developing
countries that export or return increasingly greater numbers of cultural
messages to developed countries. The
third approach, that of the receiver, assists in understanding attitudes of
publics to global culture, to the extent that it does not reshape and destroy
local identities. The last model, that
of the relationship of forces, recognizes the role of each player (local media,
the public, and government) in a difficult negotiation process. In particular, this redeems the role of the
public sector and cultural consumers in resisting and defending their values
and identities. As indicated at the
beginning of this section, this approach emphasizes the role of policy in a
broad sense, including cultural policy and public concerns, in a model of
development that is constructed and not impose.
To summarize, these three visions restore the possibility that actors
other than media conglomerates may play a major role determining their cultural
environment.
Having seen the sociological perspective that examines globalization and
its impact on culture, we may return to the question of whether globalization
contributes to development and the cultural dimension thereof. As Crane’s analysis shows, the answer is
unclear. The existence of media
imperialism is not compatible with development as defined herein as, given that
international circulation of content is dominated, individuals have limited
capability to develop their civicism, identity, and a model for their own
lives. But we also know that publics are not passive. They utilize channels to return messages;
they express themselves politically, negotiate, reinterpret, etc. This
ambiguity means that the original question must be reformulated. It is more useful to ask what basic conditions
must be met for globalization to generate development as well as growth.
Different authors of the Hemisphere suggest different answers. Below we present two arguments grouping these
authors together.
The first condition is that globalization must go hand-in-hand with
equity. Some authors (Hopenhayn, 2001;
Prieto de Pedro, in Andrés Bello Convention 2001 and 2002; Achugar, 2003) argue
that globalization and its impact on culture must not jeopardize equity as an
essential element of development. There
are several slight differences in the concepts of equity, but they all
generally point in the same direction.
For Hopenhayn, cultural democracy or symbolic equity is the core of
democracy in its most general sense. The
first is a guarantee to societal and cultural players that they may constitute
a public voice, participate in political dialogue, and form part of the
symbolic exchange that increasingly defines each player’s place in political
negotiations. “And in speaking of symbolic equity, we are now in the sphere of
political economy, as greater access today to symbolic assets (information,
education, new forms of consumption, information processing, and acquisition of
knowledge) translates tomorrow into enhanced productive capabilities. In other words, better distribution in
cultural industry of the assets of production, circulation, and consumption
generates a more equitable relationship of economic competition, especially in
an economy where the knowledge-information component is key” (in Andrés Bello
Convention, 2001: 71-72).
For Prieto de Pedro, equity includes the right to culture, which “must
be interpreted as the right to the full array of dimensions of culture, the
universal dimension and the other community and societal dimensions surrounding
it (state or national, regional, of ethnic communities, of social groups,
etc.); or, put otherwise, the right to the full array may only be exercised in
a context of cultural pluralism (…) as the right to enjoy all cultural spheres
and to be able to access all media through which those spheres are expressed”
(in Andrés Bello Convention, 2001: 223-224).
To summarize: we may say that the
condition of equity requires:
•
Promotion
of democratic access to and redistribution of symbolic assets (education,
training in the use of cultural goods and services and their supports, etc.);
•
Promotion
of democratic access to and redistribution of material cultural assets
(heritage, arts, book, audiovisuals, new technologies, infrastructure, etc.);
•
Promotion
of access to diversity of cultural content produced by minorities not
necessarily recognized by the market (ethnic groups, alternative urban groups,
regional associations, peripheral countries, etc.).
However, according to these and other authors (Canclini and Moneta,
1999; Hopenhayn, 2002; and Kalmanovitz, in Andrés Bello Convention, 2001), the
condition of equity must not give free rein to the state to dispose of citizen
will. Thus, freedom must be a
complementary requisite if globalization of culture is to be translated into
development. Accordingly, an attempt is
made to ensure respect for individual sovereignty, as this makes two things
possible: first, the development of
cultural consumption practices as a space for reshaping the public arena,
cultural identities, and civicism and, therefore, for broadening an updated
conception of citizenship; and, secondly, the growth of cultural industries and
the generation of employment and welfare.
“As the part played by individual consumption, both material and
symbolic, is enlarged in the life of society, the sense of belonging is shifted
from the nation-state axis to a large dispersion in the production of
consciousness and interaction among subjects.
The republican idea re-emerges - not in the context of political
participation, but rather as a wide array of cultural practices - associative
or communicative – which do not necessarily converge in the public-state
arena.” (Hopenhayn, 2002).
To summarize, the condition of freedom supposes:
•
That the
development of cultural industries as generators of economic growth and
formation of citizenship is permitted and promoted;
•
That
producers’ and consumers’ priorities and interests (associations, producers’
associations, entrepreneurs, regions, etc.) are recognized in designing and
formulating cultural policy.
In view of the foregoing, globalization of culture may simultaneously
represent a threat to and an opportunity for development. Whether globalization is not only a factor in
economic growth but also in development as conceived in this document also depends
on the capability of cultural policy to maintain the difficult balance between
conditions of equity and freedom. From a
more pragmatic point of view, this dilemma restates the question long asked by
economists, researchers, and the state:
To what extent should the state intervene in the cultural sector? Section II of this paper sets out some
central economic and social policy themes for the cultural sector, based on an
implicit analysis of the particular sectoral characteristics of some cultural industries
and of international aspects affecting them.
Section
II: Policy issues
The dilemma of development translates into practice. Going beyond an analysis of the cultural
sector as a bloc generating growth and employment, we find that not all cultural
activities contribute equally thereto.
Effectively, cultural markets are far from perfect and cultural policy
must address and correct the imperfections of these markets while nonetheless
seeking to ensure minimal impact on sector productivity, consumer sovereignty,
and international free trade negotiations, and at the same time include market
players in the formulation of this policy.
Therefore, it is not easy to determine what action should be taken by the
state.
The more traditional cultural production hardly subsists due to the fact
that there is little investment in creating mechanism that would bring it
closer to the dynamics of the market. Paradoxically, perhaps this is the reason
why the more traditional cultural production has not disappeared or has not
been transformed into merely museum objects. At the margins of the
commercialized tradition (vallenato, reggae, hamacas y sombreros) there is
always a fertile land for the inquiry and the evolution of what is our
identity, which would be difficult to have outside the boundaries of the
economy. To underestimate the capacity of these cultural manifestations to
recreate themselves in the eyes of modernity is the most effective way to
archive them in the past. However, there still is the need to create better
mechanism to integrate them, in a harmonious way, into the economic
sphere.
As regards production in sectors such as publishing, phonography and,
above all, audiovisuals, in the Hemisphere, we find that globalization of trade
and investment has generated a process of concentration of that activity in
large transnational conglomerates. In
fact, cultural industry production processes may be characterized as generating
economies of scale in large domestic markets protected by cultural barriers. This means that, although the initial
investment made to produce a cultural good may be very large, no additional
costs are incurred in enabling ever increasing numbers of people to enjoy that
good (a film, music CD, a book). This
means that countries with large domestic markets will develop unique
competitive advantages with which small countries, with less purchasing power,
cannot compete. This imperfection of
international markets generates high concentration of production in large
companies which, in merging, increase their market power. Another major problem for development and
growth of the cultural sector is the high levels of piracy in sectors such as
publishing, phonography, cable television, etc.
Furthermore, distribution of culture is also a space where the market is
imperfect. It has been shown that
distribution of cultural goods and services, likewise concentrated in the hands
of a small number of players with large amounts of capital and large market
shares (chains of bookstores and large retailers of cultural products, movie
distributors linked to large producers, etc.) is an area which in a majority of
countries has been shown to be key to the development of a pluralistic and
diverse supply of industrialized culture.
This is a pertinent problem, especially for independent production,
which is rapidly reaching a limit in the small scale of national markets. Feeble efforts have thus far been made to
develop more aggressive sales and marketing strategies and to search for
external markets.
Lastly, the poor coverage and quality of education, especially in most
Latin American countries, has limited the volume of cultural demand. This is particularly relevant for sectors
such as publishing and the new technologies, which are, nevertheless, key in
the dynamics of development. In fact,
flows of high quality cultural supply and demand are closely correlated with
the educational levels of the public.
Accordingly, education must be a policy priority.
International aspects of hemispheric integration and liberalization of
trade and capital flows pose a challenge not always addressed by the cultural
sector. In the integration and
negotiation forums (MERCOSUR, Andean Group, FTAA, and NAFTA, among others), the
cultural industry sector is usually sidelined or made subject to
exceptions. These forums are not yet, in
any case, discussion frameworks appropriate for the defense of sectoral
strategies utilized in addressing liberalization of trade and capital
flows. International cooperation entities,
on the other hand, have made slightly more progress. International cooperation in the form of
co-production and co-distribution of cultural products and services, and of
recognition and exchange of knowledge and market strategies, have proven to be
essential elements of the development of diverse cultural production and in
expanding domestic markets.
Based on these general findings, we may propose some cultural policy
themes. These result from analyses of
studies that view the cultural sector both from the perspective of its specific
characteristics and as a productive bloc.
•
Policy
formulation
Many of the analyses consulted insist that cultural
policy must update its role, in two senses:
first, it must broaden its vision of culture so that policy covers and
fully acknowledges the forms of cultural expression channeled through cultural
industries. The above taking into account, nevertheless, a special care for the
activities that are still away from the margins of commercial culture, or
better still, to incline towards their successful integration in the economic
sphere without erasing their identity aspects (intangible heritage and art
crafts, among others).
Secondly, the state must take account of all players
in the cultural industry value chain in the process of designing and
formulating sector policies, as it is such players who may generate assessments
of the major problems they face. This is a complex task due to the fact that
these actors are heterogeneous. The specialists of the different cultural
manifestations fields should make sure that investment in content innovation is
not absent of any governmental programs. Although necessary to the development
of a dynamic and original culture from a creative standpoint, innovation can be
of an exclusive character (e.g. experimental theater or music,
reinterpretations of art or traditional heritage, etc). That is why it is
necessary that other agents insert the democratic value of state investments.
We are referring to the creators, the PYMES, the media industries, the agents
of cultural diffusion, and specially the average cultural consumers. We are
also referring to the creators whose expressions do not fit necessarily inside
the industrial dynamics or in the innovation criteria that is characterized by
an “elitist” tone. This group, for example, includes the artisans, the creators
of minority ethnic groups, and the popular public at carnivals and festivities.
Finally, one problem generally identified by
specialists is the great lack of pertinent information for use in policy
formulation for cultural industries.
States must provide support for the compilation and analysis of such
information in at least two ways: first,
compilation of annualized statistics on the industries’ basic economic indicators
(contribution to GDP, employment, production, sales, copyright payments,
exports, imports, and piracy); and secondly, analyses and recommendations based
on such information (market structures, legal framework, sectoral strategies,
but also social impact, forms of consumption, etc.). The last aspect is
central, since the study and assessment of the social impact of the policies
and activities of the cultural sector provides the economic aspect of culture
with a more comprehensive scope. If we see culture as an engine for the
creation of employment opportunities, seeing culture through solely an economic
standpoint would just explain partially what way and how much does culture is
changing society. The state’s support to the analyusis of the social impact of
the cultural manifestation is a fundamental element on the definition of the
criterions of a cultural politic that tends toward development.
•
State
funding
Subsidies to the publishing industry as a means of
indirect finance are in many countries sheltered under a book law, which
recognizes the function of subsidies as essential to development. Such legislation, broadly speaking and with
exceptions, makes it possible to: (a) exempt from any type of customs tariff
the importation of fixed and variable capital for the publishing production
industry; (b) import and export the end product (books) also entirely
duty-free; (c) exempt from income tax publishing companies for a determined
period; (d) exempt from income and other taxes income received as copyright
payments; (e) exempt books from sales tax.
The authors assert that it is important to preserve such legislation,
where it exists, as its benefits have been demonstrated, and to evaluate the
benefits of implementation of such legislation where such evaluation has not
been made.
Subsidies are particularly justified in the filmmaking
sector, as production and distribution involve substantial costs that cannot be
recovered by countries with a limited domestic market. Subsidies are usually allocated by means of a
sector fund, whose funds come from different sources depending on the
country: direct public funds; a tax
imposed unevenly on producers, distributors, exhibitors, and the public; a tax
on national exploitation of foreign audiovisual products, etc. Although the reason for the existence of such
funds and their modes of operation appear clear, consideration must be given to
what financing structure is most viable in the context of inter-American and
world trade liberalization, market efficiency, and budgetary cutbacks at the
state level.
In the cultural industries as a whole it is crucial to
make possible the financial viability of small and medium-sized industries
(SMEs) (producers, distributors, partnerships, etc.) as sources of diversity
and innovation. To that end, some texts make two, possibly complementary,
proposals: (a) subsidization or
co-financing of infant industries in direct proportion to the content produced
by the self-employed creators they handle; (b) taking advantage of flexible
lending channels (moderate interest rates and longer terms) for SMEs, where
they exist, or to create them where they do not. The government may also serve as a guarantor
of loans to players who assume greater risk, that have been made by regular
financial institutions.
One of the problems identified in several sectors is a
lack of infrastructure (inter alia, movie theatres in remote locations,
computerized public libraries, telecommunications, and the Internet) and its
scant democratization in relation to cultural industries. It is the function of the state to finance or
co-finance the construction and expansion of such infrastructure based on
criteria of quality and equity.
Lastly, efficient administration of subsidies must be
a condition that applies to all proposals made.
The state must establish clear priorities if cultural policy is to
generate both growth and development of cultural industries, as was suggested
at the beginning of this paper. For
their part, decisions made regarding the allocation of public funds must
reflect such priorities precisely, but must be made independently, as has been
noted, taking account of the views of cultural experts and of all agents in the
industry’s value chain. We set out two
views: first, allocation of subsidies
must achieve balance between criteria of equity (expansion of cultural
infrastructure, projects whose design and results bring together the general
public, education and training, etc.) and innovation (support for self-employed
creators, risk initiatives, etc.).
Secondly, balance must be established between public and private
funding, depending on the specific characteristics of each cultural industry
sector, criteria of independence, etc.
•
Private
funding
As a complement to effective administration of public
subsidies and the condition of independence of creation vis-à-vis culture
centered entirely on state criteria, incentives may be offered to private
investment in all cultural industry subsectors.
The means most utilized is to design tax deduction schemes for private
agents in the economy who invest independently in cultural production and
distribution (as investments are made in some countries to support the arts,
heritage, and the movie industry). This is
usually done either by means of a tax deduction for the investing company,
equivalent to the investment made, or by means of an income tax deduction
itself, not to exceed a certain amount.
The private co-financing system for independently produced culture
acquires particular value in the context of international economic
liberalization and, specifically, of conclusion of free trade agreements.
•
Distribution
In all cultural industries, distribution appears to be
the most sensitive topic. Distribution
creates the possibility of financial viability for independent and diverse
production and enables it to reach the public effectively. Together with independent companies taking
advantage of the above-mentioned lines of finance available for them, policy emphasizing
distribution must focus on the following aspects:
Generation of spaces for gaining understanding and
providing advice for industry experts, representatives of companies with best
market performance (including majors and conglomerates), and media mediators,
on the one hand; and, on the other, the indies [independent filmmakers],
industry SMEs, local communities, radio, television, and all community
expertise, cultural NGOs, and public representatives. This would make it possible for at least three
key things to occur: (a) an exchange of
value added in awareness of distribution and market strategies in general. To
that end, it is sought for recognition of these different players to generate
joint strategies with small players in order to identify new market niches and
to ensure the sustainability of such players; (b) creation of productive ties
among players in the same link of the chain.
Specifically, this means forming alliances for productive projects or
joint ventures among independent companies, which would lead to cost reduction
(in production or distribution) and an increase in their market power. This may
be particularly important in projects that require large investment. The state may also participate in such
alliances via the mechanisms and conditions mentioned in the above paragraph on
financing; (c) identification of the needs of the large media windows, as they
represent distribution and dissemination alternatives for independent supply,
thus far little favored by producers. It should be noted that the state must
not necessarily be the party centralizing such activities; it is rather a
question of establishing such spaces, for subsequent appropriation by the
players involved.
In addition, as mentioned above, there is a very
strong correlation between greater distribution of cultural industry content
and international cooperation.
Specifically, international co-financing may nearly always be translated
into co-distribution on external markets.
Accordingly, policy must support the organization of such systems, which
have been shown to be particularly important as state subsidies are limited in
terms of budget and scope, a situation aggravated by international trade
liberalization and structural reforms.
Lastly, an effective and clear information system must
be created to which all players in the value chain may have recourse. Often, cultural SMEs have large transaction
costs, as they lack a basic business organizational structure. An office or, still less costly, a Web site
containing legal information, information on public and private financial
resources and on other companies involved in its sector’s chain, etc., would
vastly reduce transaction costs and would constitute invaluable support for the
economic performance of cultural industries.
•
Training
and new technologies
Support for training and education that must be
provided by the state in connection with cultural industries has two principal
themes: first, it must generate and
support a system for training and providing advice for entrepreneurs and
cultural agents. Training of
entrepreneurs must cover topics of production, management, new technologies,
marketing, and administration, among other, readily identifiable needs. Agents, for their part, must have the
capability to address traditional channels of distribution and promotion –
domestic and foreign – and identify other new channels, such as independent or
community radio stations, the Internet, alternative festivals, etc., which have
already been used as pilot cases throughout the region.
A second theme is primary, secondary, and tertiary
education. This has positive impact in
at least two senses involving culture:
first, it has been shown that demand for a higher level of cultural
goods and services is positively correlated with education and the income it
generates. Secondly, and perhaps more
determinant, education generates capabilities not only for critical
appropriation of cultural content but also for creative use of the content
production media.
Lastly, a lead part is played by support for the
appropriation of new technologies. Here
the future of the industry is at stake.
First, they are exceptional elements for use in independent production,
as they drastically reduce costs and increase innovative capacity. Secondly, the long-term sustainability of the
industry depends on the capability of agents and entrepreneurs to take optimal
advantage of such technologies (cost reduction, new channels for trade and
dissemination, distribution and sales, etc.). For that reason, training (creators,
entrepreneurs, agents) must emphasize this topic. Lastly, technology must be readily available
to any child in the educational system, as it is now a commonplace that it is
in that system that productive capabilities are determined in an economy that
is transitioning increasingly to the knowledge sector, and knowledge, in turn,
increasingly travels over technological networks.
•
Demand
incentives
The impetus behind the dynamics of the publishing
sector is, for the most part, support policies based on producer
exemptions. Although exemptions for
consumption may play a large part, as income is an important factor determining
demand for books, most analysts agree that the support policy for the sector
should be centered on the promotion of reading.
Accordingly, it is recommended that public funds be invested in books,
principally by creating a large public library infrastructure with national
coverage, and by supplying books to such libraries.
However, support for the appropriation of skills in
receiving cultural content cannot be limited to books. The cultural industry has increased many
times over the amount of valuable content capable of being stored for future
generations. It is increasingly
necessary to include in libraries the new formats on which the assets of
cultural industries are stored (CDs and MP3, videos, television, the Internet,
etc.). This, along with teams of
individuals available to train the public in the use and consultation of these
media must promote the crucial mass receipt of what is available in parallel on
the market.
•
Piracy
and copyright
Copyright protection may be justified from two
perspectives: first, copyright does not
benefit any cultural industry agent (neither the major or the independent), but
rather enhances the scope of mass produced culture; secondly, it is an
indispensable requirement of free trade negotiations in the Hemisphere. Copyright defense policy must be
cross-cutting, in two senses: first,
education and awareness campaigns must be conducted regarding the importance of
copyright and the harm caused by piracy (financial loss for the creator and
distributor, loss of lawful employment, etc.). Secondly, national police bodies
must be trained to identify violations of this right. In addition, legislation must be developed
and/or strengthened that effectively sanctions this crime at the national
level. This must lead to operations to
discourage the production and distribution of pirated materials.
•
Free
trade negotiations
Generally speaking, cultural industries do not enjoy
their own discussion framework in most of the free trade negotiation processes
consulted. For the time being, the topic
of culture is addressed principally from the perspective of defense of identities
and heritage. This has two main consequences: first, that negotiations with regard to
topics outside the scope of the arts and filmmaking remain solely in the hands
of the private sector, which accords priority to the issues of respect for
copyright and combating piracy (video, cable television, music, etc). Secondly, there is no sectoral strategy to be
defended. In that context, a strategy is
proposed for joint negotiations between the government and the private sector,
one taking account of the particular characteristics of the cultural industry
sector in the following ways:
First, cultural cooperation alliances must continue to
be fed (studies, co-financing, and co-distribution, etc.), an area where
MERCOSUR, for example, has made significant progress. Secondly, national legislation must be
harmonized in order to facilitate the circulation of cultural industry goods
and services, copyright protection strategies, and the fight against piracy,
among others. Thirdly, consideration
must be given to the advisability of exceptions for vulnerable sectors under
the Most Favored Nation and National Treatment principles, such as the
audiovisual case. Specifically, the
pertinence must be examined of screen quotas, import tariffs on foreign
cultural industry products, and ownership restrictions for national
telecommunication companies, in any event, with specific objectives and
predetermined deadlines.
•
International
cooperation
The topic of international cooperation acquires
particular importance in the context of free trade negotiations among the
area’s countries. The following
recommendations are made: first, the
scope of cooperation must be enlarged to include, in addition to other issues
of respect for national identity and heritage, culture industry-related
areas. Secondly, the approach to
cooperation must be shifted a governmental slant (which has yielded little
result) to one that includes civil society players (cultural entrepreneurs,
associations, NGOs, etc.), which has yielded positive results. This approach includes international co-financing
and co-distribution agreements in cultural industries. In the audiovisual case, the importance of
such agreements has already been demonstrated in organizing sectoral
strategies, sharing costs and risks of investment in production, and broadening
international markets, thereby facilitating distribution. Lastly, advantage
must be taken of the many spaces for cooperation provided by organizations such
as the Andrés Bello Convention or the Global Alliance for Cultural Diversity,
among many others, with the aim of rectifying the lack of studies and analyses
of the cultural industry sector, providing advice for the formulation of
sectoral strategies for the sustainability of independent production that may
be replicated in other countries, etc.
Conclusions
The most recent
studies of the relationship between economics and culture suggest a real
challenge for cultural policy. Such
policy must seek both to generate development and growth of cultural industries
and to ensure public access on equal terms to the greatest possible variety and
quality of cultural content. In a
context of regional trade integration and the development of cultural
oligopolies, states are faced with the dilemma of intervention in cultural
markets and their liberalization with a view to their opening.
At the regional
level, studies are being conducted level of the economic impact of industries
protected by copyright. Their findings
may be summarized as follows: Cultural
industries contribute considerably to GDP (from 1 to 7%, depending on the
country) and they generally grow at a faster rate than the economy in
general. In countries with large
domestic markets, the sectors of greatest weight, according to these findings,
are the media, followed relatively closely by publishing and phonography. More traditional cultural activities
contribute relatively little to this economic index. The same may be said of cultural employment,
as its weight within the economy is similar.
Cultural jobs are usually highly skilled, especially in creation and
production, and are more highly paid than the economy’s average wage. In areas more closely related to
distribution, on the other hand, jobs are less skilled. Despite the foregoing, the cultural sector
continues to be seen as one requiring resources; for that reason, it is usually
sidelined in economic and trade policies.
Although the
cultural sector contributes substantially to economic growth and employment,
this is not an argument that necessarily supports its importance to development,
conceived from a complex perspective.
There is an important economic component to development, as growth
ensures social welfare, but nowadays one could not fail to realize that the
definition of development includes other elements, such as the public’s
capability to access such benefits, and freedom for everyone, without
exception, to participate in building their civicism. Culture broadly defined
directly generates growth and employment, but it is also a space for updating
the public arena, for incorporating differences and questioning identity; hence
its contribution to the scope of development.
For culture to
make an effective contribution to development, two conditions must be met: the first is equity. This condition supposes that individuals may
access the media on equal terms in order to express and satisfy their needs,
including cultural needs. It also
supposes that individuals may access the whole array and quality of products
and services offered by culture. This is
jeopardized when large media conglomerates concentrate the decisions of what
circulates on international and national cultural markets, and what does
not. For that reason, state policy is
faced with a true challenge in establishing the necessary conditions to offset
this bias. The second condition is
freedom. This presupposes respect for
and recognition of the attitudes of a public that does not passively accept the
determination of its cultural preferences.
This means that the public reinterprets and recreates its cultural environment
in a context of economic globalization and, in the end, also plays an active
part. This must cause the state to
support conditions determined by the public and cultural entrepreneurs for
sector growth. All of the foregoing
presupposes the incorporation of all players in the cultural industry value
chain in defining national and international free trade policies for culture.
The dilemma translates into practice.
Cultural markets are in fact far from perfect and cultural policy must
address and correct these imperfections while seeking, nonetheless, to ensure
that there is minimum negative impact on sector productivity, consumer
sovereignty, and international free trade negotiations, and at the same time
include market players in the formulation of such policy. For these reasons, it is not easy to identify
what action should be taken by the state.
The imperfections of cultural markets vary from one sector to another,
but some are common to more than one.
First, cultural industry production processes are characterized by
generating economies of scale in large domestic markets protected by cultural
barriers. This means that, although
initial investment to produce a good may be very high, no additional costs are
incurred in allowing increasing numbers of people to enjoy this good (a movie,
music CD, book). This means that
countries with large domestic markets will develop unique competitive
advantages with which small countries with less purchasing power cannot
compete. This imperfection of international
markets generates high concentration of production in large companies which, in
merging, increase their market power.
This appears to be the most important reason why cultural policy should
support cultural production in countries where independent producers are unable
to generate competitive advantages owing to the small domestic markets. This has been understood for some time, as is
demonstrated by policies developed, in particular for the audiovisual sector.
Subsidy policies, however, must be formulated on the basis of clear
criteria, ones that reflect cultural policy priorities as regards diversity,
innovation, and democratic access to cultural goods and services, among
others. To that end, an efficient and
independent system to administer such subsidies is proposed, in whose
allocation criteria must participate all players in the chain linking the
creator to the public with a view to decentralization of state power. This system must therefore maintain two
balances: first between democratization
of criteria of cultural supply and creative innovation; and secondly, between
state and private funding, essential to the sustainability of cultural industry
players. To that end, it is essential to
broaden tax deduction schemes for private agents investing in cultural industry
firms. Policies that create legislative
frameworks for tax exemptions for production and consumption may be justified
for sectors which, first, are key to development, such as publishing or,
secondly, whose independent production is particularly costly, such as
filmmaking. Other measures supporting
production, such as screen quotas, ownership restrictions on cultural firms,
and taxes on foreign production, are much discussed in the context of free
trade agreements, under which barriers to international flows of investment and
trade tend to disappear. Accordingly, it
is proposed that criteria for the public and private sectors be brought
together to create a sectoral negotiation strategy for culture that takes
account of the cultural industry sector, which has traditionally been
sidelined. In any case, this is urgent,
and deadlines and specific objectives for that strategy remain must be set if
it is wished to preserve any type of exception for culture in the international
framework.
The topic of production is not in any way the only problematic aspect of
the cultural industry. It has been
demonstrated that distribution of cultural goods and services, also
concentrated in the hands of few players with large amounts of capital and
large market presence, is, in most countries, also a key issue in the
development of a pluralistic and diverse supply of industrialized culture. Here too policy has been weaker. Accordingly, policy is proposed to create
spaces for strategic alliances among players in the cultural production and
distribution chain and the public. It
has been demonstrated that forms of co-financing and co-distribution among
small players are capable of generating ambitious sectoral strategies and of
undertaking projects that are impossible for a single independent player to
execute. Policy action must, in
addition, promote the formation of cultural agents capable of creating not
always self-evident mechanisms to bring cultural products to the national and
foreign public. In other words,
promotion and distribution initiatives must be as important as the production
efforts made.
Here international cooperation plays a key part. It has been shown that co-financing
initiatives among countries for cultural industry products generate
co-distribution processes, which enlarge markets and therefore permit the
sustainability of independent initiatives which otherwise stagnate in a market
of limited size. Cooperation also plays
a key part in defining the above-mentioned sectoral strategies and in the
recognition of each subsector’s players.
Policy must therefore promote such spaces for cooperation, taking into
account civil society and cultural entrepreneurs, while decentralizing this aspect
within the state. Cooperation then
becomes a key alternative at a time of integration and liberalization of
international trade. Here the dynamics
needed for the sustainability of independent cultural production are generated
as a complement to production support policies, policies which are participants
at a time of liberalization of trade and investment.
Training is another issue.
Education in its broadest sense is a factor closely linked to the volume
of cultural demand. In addition, it
produces the skills needed for innovative participation in generating and
creating content. In a context of rapid
technological change, policy concerns must seek to ensure that individuals are
able effectively to utilize the available media, beyond efforts to distribute
the ownership of such media. This applies to creators, producers, distributors,
and the general public, for whom the means of production are useless if they do
not generate and utilize cultural media, goods, and services in an innovative
manner.
Lastly are the two international and policy topics that are the
responsibility of all sectors: first,
virtually all cultural sectors are faced with the crime of piracy. In addition to the fact that copyright violations
lead to the loss of major cultural markets, which decreases the number of
formal jobs generated in the industry and causes governments to lose a major
source of revenue, piracy has no impact on the key problems of concentration of
cultural production and supply.
Accordingly, it is proposed to continue promoting and strengthening
education policies regarding the harm it causes and operations to dismantle
networks for the production and sale of pirated materials. This is key to the success of and
negotiations for regional integration treaties in which the large cultural
industry conglomerates have already made proposals and suggested objectives.
The second topic is the new technologies.
In fact, the new technologies and forms of information exchange are an
unparalleled opportunity for policy formulation in all areas discussed. For the producers, cost reductions and
possibilities for innovation that arise with the new technologies are
enormous. For distributors, information
and communication networks have become crucial in long-term enlargement of
national and foreign markets. For the public, they have become a direct and
innovative way to access cultural production and, yet more surprisingly, to
create new products and social alliances, based on what it receives.
To summarize, the existence of economic and social dynamics that weave
themselves into a cultural sector that is tending to become integrated in the
Hemisphere makes it possible to identify major challenges and major
opportunities. It is no longer possible
to limit state action to traditional support for production and creation. In any event, in the context of market
liberalization, state action must be expanded on the basis of specific
commitments and for specific purposes.
Innovative partnership and cooperation alternatives in distribution and
within the reach of publics must become a priority of policy, in which new
players, entrepreneurs, and publics are called to participate. This is perhaps one way to strike the
difficult balance between growth of the cultural sector and the development of
diverse cultural content in the context of necessary and, in any case,
inevitable, economic globalization.
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|
[1] The Study was commissioned by the Unit for Social Development and
Education of the Organization of American States with the intent of supporting
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Highest Appropriate Authorities of Culture. The document was elaborated by
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[1] For the United
States, the IIPA has been conducting a study of the economic impact of the
copyright sector from 1987 to 2001. A
similar study has been made for the MERCOSUR countries and Chile (Campinas,
WIPO, 2001) with a joint perspective, although with slight differences of
methodology and taking account of slightly different sectors. To calculate the contribution of the cultural
sector to GDP and employment, the study identifies four different groups of
economic cultural activities so defined.
A first group of principal activities includes those to create products
or jobs primarily protected by copyright.
This group includes database activities; radio and television
activities, photographic activities, production, exhibition, and distribution
of films and videos; news agencies; libraries; museums, information system
consultancy; development of information technology programs; newspaper and
magazine publishing and printing; publishing
and printing of books and other printed products; publishing and reproduction
of records, videos, films, and programs; operation of dance halls,
discotheques, and other similar places; other publishing activities; other
entertainment activities; data processing; advertising; theatre, music, and
other artistic activities. A second
group is that of industries partially covered by copyright. It includes a wide array of activities such
as manufacturing, types of negotiation, architecture, and design, among
others. A third group of activities is
related to distribution, covering the transportation of goods, bookshops,
record stores, telecommunications, and other forms of retail distribution and
wholesale trade in products protected by copyright. The fourth and final group is known as
copyright-related industries. It
includes the production and technical support of equipment used exclusively
with copyright-protected material. This
category includes, for example, computers, radio and television equipment, and
other sound and recording equipment. The
results given in the table summarize reflect the totals for the groups, in
order to provide an overview of the contribution to growth of the MERCOSUR and
Chile cultural industries.
[2] An alternative
study for Brazil (Ministry of Culture, Fundaçao Joao Pinheiro, 1998) examining
in depth the qualities of that country’s cultural employment used a somewhat
more restricted definition of the cultural sector vis-à-vis that used in the
MERCOSUR study. This study categorized
cultural activities as industrial, service, and commercial. The results presented represent the totals
for the three categories. Industrial
activities: publishing of newspapers,
other periodicals, books, and manuals; printing of newspapers, other
periodicals, books, and manuals; performance of other unspecified printing
services; publishing of records, tapes, and other recorded materials;
manufacture of optical and photographic equipment, instruments, and materials;
manufacture of sleeves, films, papers, and other materials; manufacture of
musical instruments; reproduction of records and tapes. Service activities: photographic activities; film and video
projection; management of entertainment halls.
Commercial activities: trade in
books, newspapers, magazines, and stationery stores.
[3] The Colombian
study (Ministry of Culture of Colombia, Andrés Bello Convention, 2003)
calculates the contribution of the cultural sector to GDP based on three groups
of activities: a first group of direct
activities related to cultural production; a second group, “Related Activities
I,” is related to the use and dissemination of cultural creations; and a third
and final group, “Related Activities II,” is related to the inputs required by
the cultural sector. The result of the
cultural GDP shown in the table is the total for the three groups. These are the activities included in
each. Direct activities: Publishing of books, brochures, scores, and
other publications; publishing of periodicals, magazines, and periodicals;
publishing of recorded materials; experimental research and development in the
fields of social sciences and the humanities; advertising; photographic
activities; production and distribution of films and videos; television and
radio activities; recording activities and record production; theatrical and
musical activities and other artistic activities; library and archive
activities; museum activities and preservation of historic places and
buildings. Related activities I:
Printing activities; service activities related to printing; other publishing
work; manufacture of non-heat resistant ceramic products for non-structural
use; manufacture of jewels and related articles; wholesale sale and exportation
of books and magazines; retail sale of records, cassettes, compact discs,
videos, musical instruments and related products, retail trade in books and
newspapers; retail trade in photographic equipment in specialized
establishments; radio and television program transmission services; cable
transmission services; other telecommunication services; entrepreneurs and
representatives of national and foreign artists; other entertainment activities
not previously classified (n.c.p.); news agency activities. Related activities II: Manufacture of cellulose pulp: chip and
cardboard; manufacture of radio and television transmitters and telephony and
telegraphy equipment; manufacture of radio and television receivers, recording
equipment and sound and image reproduction equipment, and related products;
manufacture of optical instruments and photographic equipment; manufacture of
musical instruments. In addition, the
employment figure only includes three sectors for which information was
available (publishing, phonography, and filmmaking) for different years (from
1999 to 2002), so that this figure is merely indicative and it was not intended
to determine a percentage of total national employment.
[4] In this study
for Chile (National Council for Culture and the Arts of Chile, ARCIS
University, Andrés Bello Convention, 2003), calculations were made based on a
general group of cultural activities identified in the national accounts of
that country. The following activities
are included: publishing of books,
brochures, scores, and other publications; publishing of newspapers, magazines,
and periodicals; other
publishing activities (photography, recordings, cards, postcards, schedules,
forms, posters, art reproductions, etc.); printing activities (periodicals,
books, maps, scores, posters, catalogues, postage stamps, paper currency) for
publishers, producers, government agencies, etc.; printing-related service
activities (bookbinding, production of print characters, printing plates,
etc.); publishing of recordings, films, and videos; contracting of artists,
films; distribution of films and videos; film exhibition; production or radio
and television programs whether or not broadcast; rental of theatre equipment;
activities of agencies hiring artists for sports and entertainment events;
theatre productions; other entertainment activities n.c.p.; recording of
gramophone records and magnetic tapes; placement and employment agencies for
artists; activities of authors, composers, and other self-employed artists
n.c.p.; leisure and recreational services n.c.p.; motorcycle rental;
recreational equipment rental n.c.p. (for example, bicycles, saddle horses,
recreational craft, sports equipment); operation of dance halls, discotheques,
amusement parks, and similar; sports activities; other leisure and recreational
service activities; theatre productions; other entertainment activities;
recording of gramophone records and magnetic tapes; placement and employment
agencies for artists; activities of authors, composers, and other self-employed
artists n.c.p.; dance schools; news agency activities; library and archive
activities; museum activities and activities to preserve historic places and
buildings; botanic gardens, zoos, and national park activities;
operation of dance halls, discotheques, amusement parks and similar; sports
activities; other leisure and recreational service activities n.c.p.
[5] Another study
for the United States (Heilbrun and Gray, 2000), based strictly on non-profit
cultural activities includes these sectors:
theatre arts (plays and productions), museums, government expenditure to
support the arts, and private donations.
