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Valuing Culture

Measuring and Understanding Canada’s Creative Economy

October 21, 200821 October 2008

Economic impact / Government funding

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This detailed report from the Conference Board of Canada examines the cultural sector’s contribution to the Gross Domestic Product (GDP) and employment. The report also provides a summary of some existing research into the social impacts of the arts. The key message of the report is that the arts and culture are “cornerstones of the creative, knowledge-based economy”. More specifically, “Canada’s culture sector plays a critical role in attracting people, businesses, and investment; stimulating creativity and innovation; and distinguishing Canada as a dynamic and exciting place, where people can celebrate their heritage and realize personal and professional fulfilment”.

The Conference Board estimates the economic impact of the cultural sector to be $85 billion in 2007, or 7.4% of Canada’s GDP. This estimate includes the direct impact of the cultural sector ($46 billion), as well as indirect and induced impacts (the remaining $39 billion). Given these repercussions throughout the economy, the report notes that, “for every $1 of real value-added GDP produced by Canada’s culture industries, roughly $1.84 is added to overall real GDP”.

The impact of the cultural sector on employment equals 1.1 million jobs, or 7.1% of total employment in Canada.

With this level of economic impact, the cultural sector generated approximately $25 billion in taxes for all levels of government in 2007. This is more than three times higher than the $7.9 billion that was spent on culture by all levels of government in 2007. Over the long term, the report estimates that “government spending on culture as a share of GDP is below 1999 levels by roughly 0.3 percentage points”.

The report recognizes that it probably underestimates the cultural sector’s economic impact, because of the exclusion of video games and interactive media, which are not captured in the Statistics Canada definition of culture that is used in the report. The value of volunteer activity in the cultural sector is also excluded.

Macroeconomic models of the Canadian economy were used to estimate the indirect and induced impacts of the cultural sector. The indirect impacts capture the re-spending of the expenditures of cultural organizations, while the induced impacts concern the re-spending of wages earned by cultural workers. However, the report did not attempt to estimate the impacts of ancillary spending (cultural attendees’ spending on hotels, restaurants and transportation associated with cultural activities). Also excluded from the estimates are other potential benefits of culture, such as the possibility that the existence of cultural organizations contributes to a region’s attractiveness for people and businesses. On the other hand, the report does not attempt to subtract from the economic impact of culture the opportunity costs of spending on culture (that is, the economic impact that would result if the money spent on culture was spent in another sector).

The report notes that the Canadian estimates cannot be compared to other countries, because of the lack of a standard international definition of culture. In addition, at the municipal level, “the availability of data for the culture sector is even more restricted than at the national level”. The report does not provide provincial or municipal estimates of the impacts of the cultural sector. Because of changes in definitions over time, the report does not provide longer-term historical estimates of the cultural sector’s impacts.

Exports of cultural goods and services are estimated at $5 billion, and the report notes that “the success of many culture products and services depends significantly on international trade”. However, cultural exports are eclipsed by imports, leaving a net trade deficit in the cultural sector.

The report highlights some key issues in the cultural sector: “demographic and technological changes, expanding global interconnectivity, new consumer trends, intellectual property and copyright issues, and the role of arts and culture in generating, regenerating, and branding creative cities”. The sector is attempting to appeal to “prosumers” – consumers who participate directly in creating cultural content. The report argues that “producers and consumers co-drive the creative economy”. Recent fluctuations in the value of the Canadian dollar have also had a substantial impact on the cultural sector.

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