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ORGANIZATION OF AMERICAN STATES

Inter-American Council for Integral Development

(CIDI)




Study for Theme 1: "Culture as an Engine for Economic Growth, Employment and Development"

IndEX


Introduction ..............................................................................................................………………1




  1. CULTURE AS AN ECONOMIC SECTOR …....................................………………1




    1. Status of current relationships between culture and economics ......……………..1




    1. Culture, growth, and employment ...................................................……………..4




    1. Towards a broader vision: culture and development ......................……………10




  1. POLICY ISSUES ……...........................................................................……………14




  1. CONCLUSIONS ...................................................................................…………….19

BIBLIOGRAPHY ...................................................................................………………………...23


CULTURE AS AN ENGINE FOR ECONOMIC GROWTH, EMPLOYMENT AND DEVELOPMENT1

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.


  1. 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. 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 endnote1

B

Brazil 1

6.7%

5 %

1998

Ibid. Argentina

B

Brazil 2

0.8%

0.8%

1994

See endnote2

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.


  1. 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.


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