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.