Dr. Lisa De ProprisBirmingham Business School, UKl.de_propris@bham.ac.uk

10th European Week of Regions and CitiesBrussels 8th-11th October 2012

Rebalancing the economy: it is all about

content

Content

1. Rebalancing… what?2. Sector balance3. Rebalancing or resetting 4. ‘Re-inventing’ manufacturing5. Policy issues

Rebalancing… what?

• Sector balance: Finance vs. Manufacturing• Regional balance: north vs south, rural vs. urban• Public Vs. Private sectors• Balancing public finances: deficit reduction• Balancing the current accounts

Sector imbalances

NESTA 2010

NESTA 2010

NESTA 2010

In the UK

CRESC, 2011

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

500000

1000000

1500000

2000000

2500000

UK - Employment trends

KIBSHigh techCI-DCMS

UK – creative industrie Regional trends

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

100000

200000

300000

400000

500000

600000

No. employees

EastEast MidlandsLondonNorth EastNorth WestScotlandSouth EastSouth WestWalesWest MidlandsY&H

Recent research

1. What are creative industries?

DCMS classification includes:

Advertising, Architecture, Arts and antique markets, Computer and video games, Crafts, Design, Designer Fashion, Film and video, Music, Performing arts, Publishing, Software, Television and Radio

Why do CIs matter?

No firms up 5% and increasing (from 4.86% in 2009 to 5.13% in 2011)

Employment • DCMS: up slightly for a total of 5.1% of tot UK• WF: down 10% during the recession- back to pre-recession levels in

2020

Exports in 2009 accounted for 10% of total UK (publishing, advertising & film/video)

GVA just below 3% of UK total- stable in 2008-09

Regional dimension

PublishingSoftware, computer games & e-publishing

Employment in creative industries Great Britain, France, Italy and Spain

Boix R., Lazzeretti L., Capone F., De Propris L., and Sánchez D. (2012) The geography of creative industries in Europe. Comparing France, Great Britain, Italy and Spain, in (eds) Luciana Lazzeretti, Creative industries and innovation in Europe - Concepts, measures and comparatives case studies, Routledge.

The impact of the recession

• Demand shrunk; e.g. advertising• Public funding is disappearing• More difficult access to finance• WF: job losses

DCMS 2012

How do CIs impact on wider economy?

• direct impact • indirect impact • inter-sectorally (across creative and non-

creative industries)• geographically (regional spillovers)

Understanding innovation in creative industries

Innovation in servicesServices: “their intangibility, co-production with customers, simultaneity,

heterogeneity and perishability” (Nijssen et al., 2006:242).Broader def of innovation as “the implementation of a new or

significantly improved product (good or services), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.” (Oslo Manual, OECD, 2005:46)

Innovation in creative industries aesthetic, artistic, stylistic or soft innovation (Schweizer, 2003;

Handke, 2006; Stoneman, 2008 Castaner and Campos, 2002) soft innovation is “innovation in goods and services that primarily

impacts upon sensory perception and aesthetic appeal rather than functionality.” Stoneman (2008:2)

Recently, innovations at the content-generation stage vs. forms of innovations that intersect other sectors’ value chains (Stoneman, 2008:2-3)

Further...What measures? a proxy of soft innovation

intellectual property rights, such as trademark or copyrights , (Mendoca et al 2004, Stoneman, 2009)

CIs tend to be more innovative than the rest of the economy in terms of technological innovation and organisational and marketing innovation (Miles and Green, 2008), due to forms of ‘hidden product and process innovations’.

What linkages between creative industries and the rest of the economy? economic sectors that sell to and/or buy from creative

industries are more innovative Bakshi et al. (2008) Frontiers Economics (2007) shows that creative

industries generate high spillovers in terms of products, knowledge and networks

NESTA 2010 reportTypes of innovation: product innovation, process innovation, categories of innovation, management related changes

NESTA 2010 introduces the creativity index: it captures firms’ use of formal (registration of design, patent, trademark, copyright, confidentiality agreement) or informal (secrecy, lead-time advantage or complexity of design) IP protection methods.

Comparison between CIs with engineering-based manufacturing, other manufacturing, KIBS and other services

Table 1 – Firms in creative industries by type of innovation outputs (% of all firms; 2004/2006)

Good innovation

Service innovation

Process innovation

product or process

innovation

Index of creativity

Advertising NA* 26% NA* 26% 65% Architecture 11% 28% 17% 32% 61%

Arts and Antiques 11% 20% 10% 23% 33% Designer Fashion 31% NA* NA* 32% 57%

Film, Video and Photo 10% 18% 9% 20% 45% Publishing 30% 19% 14% 35% 62% Softwarre 38% 55% 26% 59% 81%

Total Creative Industries 17% 30% 16% 34% 57%

Engineering-based Manufacturing 32% 14% 21% 39% 63%

Other Manufacturing 32% 14% 23% 40% 59%

Retail & Distribution 13% 18% 8% 21% 34%

KIBS 9% 26% 18% 31% 53%

Other Services 6% 16% 6% 18% 27%

All industries 14% 18% 12% 26% 41%

Source: ONS. Note: NA*The finding in this cell cannot be disclosed for data protection

3. Can CIs aide rebalancing the economy and how?

Rebalancing Recovery

Prosperity

Exports and Innovation

Seize the opportunity:Economic growth &technology shifts

K1 K2 K3 K4 K5

1800 1850 1900 1950 2000s

Indices of economic activity

Steam Cotton Iron

RailwaysIron Steel

Electricity Chemicals Autos

Electronics Synthetics Petrochemicals

Kondratiev’s Long Waves

• Knowledge economy

• Green• biotech

Premium manufacturing• PwC 2011 report on clusters “by 2040 auto assembly clusters will

move to Nanjing and Tianjin.”• Which cars?• Those cars still have to be invented. • Who will invent them? Radical innovation will come from

auto clusters in Europe.

• High tech manufacturing• Manu-services• Personalised manufacturing

WoodTextilesPaper

Bio-refinery Bio-fuel and new materialsSmart textiles Technical textilesPrinted electronics

Take

Vinnova Reeport 2011 Ready for an early Take Off? International Evaluation of the VINNVÄXT Initiatives in early stagesDe Propris L. and Cooke P. (2011) A Policy Agenda for EU Smart Growth: the Role of Creative and Cultural Industries, Policy Studies,

Vol.32, No.4, 365-375.Bailey D. and De Propris L. (2011) UK Cluster Policy, Sviluppo Locale, Vol. XIV, No. 36.

New sectors- value creation

High Value added

Value chainR&D-Design assembly logistics marketing-advertising

New sectors- value creation

High Value added

Value chainR&D-Design assembly logistics marketing-advertising

Create & anchor new sectors – new markets

• Prepare for the 2050 socio-economic challenges– Energy, pollution, aging urban congestion– New industries: genetics/biotech; new materials;

digital; renewable energy; green car

• Rebalancing the economy– Designing, making and doing– Anchoring skills, people and industries in

European regions– Translating traditional sectors in industries for the

problems of tomorrow

Design public policies that are ambitious and bold, but ‘cheap’

• It is not only about money, but rather about creating a vision, converging ambitions taking the risk, sharing the risk with businesses trusting and endorsing the ambitionused to leverage other funding

• Public policy can mobilise local and regional stakeholders

• Set goals, but above all be present along the process

Crucial Issues

• Target creative activities and new technologies• Nurture talent and anchor it – human capital• Triple helix: research institutions; government and

firms– National innovation eco-system = national innovation

system (Sweden and Finland have been investing about 4% of GDP in public R&D in 2009 vs 1.8% for the UK)

– Appetite for a clear steering

• Re-capture the value chain: onshoring and co-location of the value chain

Policy for EU prosperity

EU policy must remain a beacon of foresight for growth and jobs

Key drivers • Investment in ‘infrastructure’• Universities basic research for new innovations and

skills• Public procurement create and secure new markets • Regulations upgrade standards and push innovation

(Porter’s hypothesis)

Thank you for listening