Chapter 1·Concept and context of the creative economy

1.1 Evolving concepts and definitions

Fundamental to an understanding of the creative economy — what it comprises and how it functions in the economies of both developed and developing countries — are the concepts of “cultural industries” and “creative industries”.

Much debate surrounds these terms. This chapter provides an overview of the development of the concepts of “creativity” throughout this decade leading to what became known as the “creative economy”. Our intention is not to reach a final consensus about concepts, but to understand its
evolution. It also considers the emergence of the associated concepts of “creative class”, “creative cities”, “creative clusters”, as well as the most recent innovative notions relating to the “experience economy” “creative commons” and “creative ecology”. The major drivers of the growth of the creative
economy and its multiple dimensions are examined in the light of recent developments including the world economic crisis. This chapter also provides evidence on the economic contribution of the creative industries to the economies of various advanced countries.

1.1.1 Creativity

There is no simple definition of “creativity” that encompasses all the various dimensions of
this phenomenon. Indeed, in the field of psychology, where individual creativity has been most
widely studied, there is no agreement as to whether creativity is an attribute of people or a
process by which original ideas are generated.

Nevertheless, the characteristics of creativity in different areas of human endeavour can at least be
articulated. For example, it can be suggested that:

■ artistic creativity involves imagination and a capacity to generate original ideas and novel ways of interpreting the world, expressed in text, sound and image;

■ scientific creativity involves curiosity and a willingness to experiment and make new connections in problemsolving; and

■ economic creativity is a dynamic process leading towards innovation in technology, business practices, marketing, etc., and is closely linked to gaining competitive advantages in the economy.

All of the above involve technological creativity to greater or lesser extent and are interrelated, as shown in figure 1.1. Regardless of the way in which creativity is interpreted, there is no doubt that, by definition, it is a key element in defining the scope of the creative industries and the creative economy.


Another approach is to consider creativity as a measurable social process. From the economic point of view, however, a relationship between creativity and socioeconomic development is not apparent, particularly the extent to which creativity contributes to economic growth. 

In this case, it is important to measure not only economic outcomes of creativity but also the cycle of creative activity through the interplay of four forms of capital — social cultural, human, and structural or institutional — as the determinants of the growth of creativity: the creative capital.

The accumulated effects of these determinants are the “outcomes of creativity”. This is the framework of the creativity index, also known as the 5 Cs model.1 There are debates about a possible establishment of a European Creativity Index to be applied to the countries of the European Union; the proposal builds upon existing indices and suggests a model with 32 culture-related indicators grouped in five pillars of creativity:

human capital, technology, the institutional environment, the social environment, openness and diversity. The goal of such an index would be to highlight the potential of including culture-based indicators in existing frameworks related to creativity, innovation and socio-economic development with a view to assessing the creative performance of EU member states and facilitating policy making.

Creativity can also be defined as the process by which ideas are generated, connected and transformed into things that are valued. 2 In other words, creativity is the use of ideas to produce new ideas. In this conceptual debate it should be pointed out that creativity is not the same as innovation.
Originality means creating something from nothing or reworking something that already exists.

Nowadays the concept of innovation has been enlarged beyond a functional, scientific or technological nature to also reflect aesthetic or artistic changes. Recent studies point to the distinction between “soft” and technological innovation but recognize that they are interrelated. 3

There are high rates of soft innovation in the creative industries, particularly in music, books,
arts, fashion, film and video games. The focus is mainly on new products or services rather than processes.

1.1.2 Creative goods and services

The scope of the creative economy is determined by the extent of the creative industries. Defining “creative industries”, however, is a matter of considerable inconsistency and disagreement in the academic literature and in policymaking circles, especially in relation to the parallel concept of “cultural industries”. Sometimes a distinction is made between the creative and the cultural industries; sometimes the two terms are used interchangeably. A sensible way to proceed is to begin by defining the goods and services that these industries produce.


The concept of “cultural products” can be articulated if the notion of “culture” is accepted whether in its anthropological or its functional sense. It might be argued, for example, that cultural goods and services such as artwork, musical performances, literature, film and television programmes, and
video games share the following characteristics:

■ their production requires some input of human creativity;
■ they are vehicles for symbolic messages to those who consume them, i.e., they are more than simply utilitarian insofar as they additionally serve some larger, communicative purpose; and
■ they contain, at least potentially, some intellectual property that is attributable to the individual or group producing the good or service.

An alternative or additional definition of “cultural goods and services” derives from a consideration of the type of value that they embody or generate. That is, it can be suggested that these goods and services have cultural value in addition to whatever commercial value they may possess and
that this cultural value may not be fully measurable in monetary
terms. In other words, cultural activities of various
sorts and the goods and services that they produce are valued
— both by those who make them and by those who consume
them — for social and cultural reasons that are likely
to complement or transcend a purely economic valuation.
These reasons might include aesthetic considerations or the
contribution of the activities to community understanding
of cultural identity. If such cultural value can be identified,
it may serve as an observable characteristic by which to
distinguish cultural goods and services as compared with
different types of commodities.
Defined in either or both of these ways, “cultural
goods and services” can be seen as a subset of a wider category
that can be called “creative goods and services”, whose
production requires some reasonably significant level of creativity.
Thus the “creative” category extends beyond cultural
goods and services as defined above to include products such
as fashion and software. These latter can be seen as essentially
commercial products, but their production does involve
some level of creativity. This distinction provides a basis for
differentiating between cultural and creative industries, as is
discussed in the following sections.

LInk: UNCTAD 
Link: Creative Economy Report 2010