Inter-American Development Bank (IADB)  The Institutional Capacity and Finance Department

Francesco LANZAFAME

Cultural Industries in Latin America and the Caribbean: Challenges and Opportunities

Culture as an Engine of Economic Growth and Social Inclusion in the Americas

Organization of American StatesWashington D.C.October 1, 2007

Culture:• Determines the community’s identity

and sense of belonging, enhances quality of life and self-esteem;

• Is the basis to develop social capital;

• Helps build social cohesion;• Has an influence on the recognition and

identification of community values, factors that are important for the establishment, preservation and practice of democracy (North, 1990).

Culture and Development

IADB Instruments in Cultural Activities

• Loans and Technical Cooperations• MIF• IADB Cultural Center• Inter-American Culture and Development

Foundation

The IADB main policy areas to support the development of

culture:Three main components:

• Cultural heritage rehabilitation, including historic centers, archeological sites and intangible heritage.

• Institutional strengthening and training.• Cultural Industries development

Two examples:• Quito• Salvador de Bahia

 

Quito Historical Downtown

Cultural Heritage component• Rehabilitation of public spaces and emblematic

patrimonial buildings with the public and private sector;• Social sustainability of the project trough the

establishment of: mechanisms of participation for residents and users of the area;

a specific housing program for the area in order to control gentrification;

a program to support traditional economic activities existing in the area.

• Promotion of tourism trough improved security, environment, and services.

Quito Historical Downtown

Institutional component • Creation of a public/private institution for the

management of the Historic Center. • Creation of incentives to promote private sector

investments in the area.

• Creation of the “Fondo de Salvamento” for the rehabilitation and maintenance of monuments.

Cultural Industries component• Rehabilitate existing museums and libraries.• Recuperation of the “Teatro Sucre” and the building

for the new “Museo de la Ciudad.”• Support SMEs related to arts and crafts and

traditional products.

 

Salvador de Bahia

Cultural Heritage component • Rehabilitation of public spaces and heritage

buildings.• Housing program to attract residents to the

area.

• Promote tourism trough improved security,

services and environmental upgrading.  Institutional component • Create incentives for private sector

investments in the area.

Salvador de Bahia

Cultural Industries component

• Support the establishment (in the historic center) of businesses related to traditional

products. • Financing of a specific project and investments to integrate culture and tourism and create a “cultural district.”

 

The IADB Portfolio and Pipeline

In the last 10 years the Bank invested: • US$ 630 million to rehabilitate central urban areas (46 operations [loans and

technical cooperation]). • US$ 102 million in cultural tourism (23 operations [loans and technical cooperation]).

Currently, the Bank is planning or preparing:• Operations for more than US$ 40 million to rehabilitate central urban areas.• Operations for more than US$ 300 million in tourism.

1) Is it possible to develop local sustainable cultural industries in LAC?

2) Can cultural industries play a dual role of economic driver of growth and of cultural patterns?

3) Can public policies promote development in the sector?

4) What are the successful (and less successful) practices in the sector?

5) Is performance in the sector linked to private-public and/or international partnerships?

Key research questions on Cultural Industries in LAC

Economic component evaluates i) economic impact; ii) available data; iii) private sector investment; iv) role of the local culture, tradition, and resources in the production of cultural goods; v) impact of international trade; vi) opportunities and market niches.  

Cultural component analyzesi) cultural identity and cultural heritage values; ii) structure of the sector at the country and regional levels; iii) policies, strategies, and structural similarities in terms of language and cultural closeness.

Institutional component studiesi) regulation and agencies or entities in charge of policy-making; ii) government contributions through programs, grants, or loans; and iii) credit and business support services for existing and emerging firms and artists.

Cultural Industries in LAC: areas of investigation

The term cultural industries in the IDB study refers to those sectors that are directly concerned with the creation, production, and distribution of goods and services that are cultural in nature and that are usually protected by the copyright.

 

Based on this definition, cultural industries are a set of sectors that offer:

1) service outputs in the fields of entertainment, education and information (e.g., motion pictures, recorded music, print media, or museums) and

2) manufactured products through which consumers construct distinctive forms of individuality, self-affirmation, and social display (e.g., fashion clothing or jewelry) (Scott, 2004).

What are Cultural Industries

Moreover, following O’Connor (1999), the study focuses on individuals working in cultural industries with cultural occupations (for example, architects, librarians, authors, journalists, graphic designers, actors, etc.) and without cultural occupations (for example, in the editorial sector, employees in the printing industry).

Structure of Cultural Industries

B ooks

Printing Industry

Publishing Industry

Journals

M agazines

Newspapers

Litera ture

Libraries

Advertising Industry

Design

E d ito r ial

C inem atographic Industry

T elevision Industry

Photographic Industry

Hom e Video

Advertising Industry

A u d io v isu a l

Discographic Industry

R adio

Opera

C oncerts and Perform ances

Orchestras

P h o n o g r a p h ic

C o n v en tio n alC u ltur a l In d ustr ies S ec to rs

C oncerts and Perform ances

T heatre

Orchestras

Dance

Opera

C rafts

Design

Fashon

Architec ture

M useum s and Galleries

V isu a l a n d P e r fo r m in g A r ts

Architec ture

M useum s and Galleries

Gastronomy

T ypical Prouducts

E co-tourism

C oncerts and Perform ances

C rafts

C u ltu r a l T o u r ism S p o r t

O th erC u ltur a l In d ustr eis S ec to rs

Advertising Industry

Software

Video Gam es

M edia Supports Industry

Design

M u lt im e d ia

N e wC u ltur a l In d ustr ies S ec to rs

C u ltu ra l In d u stries

• One of the fastest growing sectors of the world economy, with forecasts placed at a 10 percent annum growth (UNCTAD, 2004)

• Constitute an important and growing element of contemporary economic systems:

• In LAC, the average contribution of this sector to GDP is around 3.5 to 4 percent (not including the cultural tourism sector)

• In Europe, an average of 5 to 6 percent• In the US, 7 to 8 percent

• Contribute to creating and maintaining local cultural values

Economic Impact

Contribution to GDP 1993-2005 (%)

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Argentina

6.6 … … … … … … 2.32 2.4 2.47 2.63 2.85 3

Brazil  … … … … … … … 1.64 1.57 1.5 1.57 1.46 1.36

Chile 2.3 2.5 2.7 2.2 2 2.8 … 2 1.8 1.9 1.9 1.8 …

Colombia … … 2.3 2.1 2.1 2 2 1.83 1.83 1.81 1.77 … …

Ecuador … … … … … 0.8 … … 1.79 … … … …

Mexico 5.4 … … … … 5.7 … … … … … … …

Peru … … … … … … … 0.4 0.4 0.5 0.6 0.6 0.6

Paraguay … … 1 1 1 1 1 … … … … … …

Uruguay … … … 2.82 3.1 3.3 … 3.05 2.92 2.97 3.15 3.36 3.43

Venezuela

… … …  … …  2.3 … 1.4 1.4 1.4 1.6 … …

Source: Authors’ elaboration on country level data from Ministry of Culture of Argentina, Convenio Andres Bello, and The Competitive Intelligence Unit.

Included sectors: Editorial, Audiovisual, Phonographic, Visual and Performing Arts, Multimedia, Sports.

Contribution to Employment

CountryContribution to Employment (%)

Year

Argentina 3.2% 2004

Brazil 5% 1998

Colombia 27,724 employee Various data 1999-2002

Chile 2.7% Average 1990-1998

Mexico 3.65% 1998

Paraguay 3.3% 1992

Uruguay 4.9% 1997

United States 5.9% 2001

Source: Authors’ elaboration on OAS (2004) and Piedras (2004).

Some Common Features across CI

• Often employ high-skill, high-wage, creative workers, and can create local sustainable jobs

• Environmentally friendly

• Densely interconnected

• Based on local, tacit know-how (e.g., a style or a sound)

• Contribute to the quality of life in the places where they congregate

• Mostly medium and small enterprises (SMEs)

• Some sectors tend to agglomerate in urban areas

• Other sectors (crafts, gastronomy, and cultural tourism) are also present in rural areas

Main issues in LAC (1)

• Need to define the role of the state and public policies

• Lack of reliable and internationally comparable data

• Lack of legal and regulatory frameworks• Problems related to intellectual property rights and

piracy• Lack of incentives for private investments and

alternative sources of financing• Difficult access to credit (lacking collateral and

guarantees)

Main issues in LAC (2)

• Lack of coordination among :– public institutions– public and private actors– private actors

• Problems related to distribution• Need better regional market integration• Treatment in international trade agreements

and risk of being absorbed by globalization and loosing local cultural contents and identity

• Low managerial skills in the private sector (entrepreneurs are usually artists)

Possible interventions at the local, national, and regional level

• Improving trade and regional integration policies

• Rationalizing fiscal policies and credit access

• Strengthening institutional and financial capacity

• Improving the regulatory framework• Supporting projects related to CI, and • Fostering technology innovation and

infrastructure

Inter-American Development Bank (IADB) The Institutional Capacity and Finance Department

Francesco LANZAFAME

Thank you

Culture as an Engine of Economic Growth and Social Inclusion in the Americas

Organization of American StatesWashington D.C.October 1, 2007