Rebuilding a More Resilient Cultural and Creative Economy after Covid-19

In a time marked by social distancing and quarantine, the important role of cultural and creative industries in our lives is more evident than ever. The cultural and creative economy is one of the fastest-growing sectors in the world, with the value of the global market for creative goods increasing from $208 billion in 2002 to $509 billion in 2015. Aside from direct GDP contributions, a well-developed creative economy supports employment, socioeconomic development, innovation, and cultural preservation within a country or region. The cultural and creative economy also has a nonmonetary value as well; it contributes to inclusive social development by encouraging dialogue between communities, which can ultimately lead to heightened levels of understanding and soft power influence.

The Benefits of a Strong Creative Economy

Nurturing and developing the cultural and creative economy is not only key to economic growth, but it also has benefits for social development, such as empowering women and girls and promoting dialogue between communities. Employment in these sectors often favor women and youth: as of December 2018, the cultural and creative sectors in the European Union employed more people aged 15-29 than any other sector.

A resilient creative economy can also be a source of soft power. Economic security translates to national security, and the cultural and creative economy exists at the intersection of these two areas. For example, Taiwanese leadership in Asia’s creative economies can be adapted to other regional contexts and provide Taiwan with the opportunity to counter Chinese influence. UNESCO, the United Nations Educational, Scientific, and Cultural Organization, has exercised and supported cultural soft power, which seeks to foster the exchange of views and ideas, promote knowledge of other cultures, and build connections between communities. Two-way cultural engagement through skills sharing, projects, and cross-cultural collaborations develops future business opportunities while simultaneously building relationships and trust.

The Effects of the Covid-19 Pandemic

The United States, France, and Colombia have emerged as leaders in their respective regions, investing in and promoting their cultural and creative industries. The French creative economy includes over 300,000 businesses and generates twice the revenue of the automotive industry. Colombia has been building its creative economy over the last three decades, a flagship initiative of President Iván Duque. The United States has long supported economic growth via the cultural and creative economy by providing grants through the National Endowment for the Humanities (NEH). However, along with the tourism industry, cultural and creative economies are some of the sectors hardest hit by the Covid-19 pandemic and subsequent lockdowns across the globe. As of May 2020, 90 percent of museums around the world were shut down, with 16 percent of U.S. museums at risk of closing permanently.

In France, spending on recreation and culture is down 6 percent, and the National Centre of Music estimates losses on live performances to be between 1.7 and 2 million euros. Average revenues within the cultural sector have dropped 25 percent compared to 2019, with the performing arts showing the sharpest declines.

By April, one month into the pandemic, the Colombian creative economy had shrunk 34.7 percent, leading to increased unemployment, especially among those who were working informally. As of early November, the country’s creative economy lost more than 61,000 jobs, almost 12 percent of the sector’s jobs. The sectors that rely heavily on household spending, such as film and theater, have been impacted the most.

In the United States, an estimated 2.7 million people lost their jobs in the cultural and creative industries between April and July 2020. New York and California have been disproportionately affected, as their creative industries account for 7.5 percent and 8.2 percent of each state’s GDP, respectively.

Responding to the Economic Crisis

Yet, noting the importance of the cultural and creative economy in these three countries, governments have taken steps to begin the recovery process despite continued surges in Covid-19 cases. France’s cultural recovery plan dedicates 2 billion euros to creative industries, with a strong emphasis on rebuilding heritage and cultural patrimony policy. On May 6, French President Emmanuel Macron unveiled the Plan for Culture, which protects workers via the extension of unemployment benefits, a compensation fund for canceled series and shoots, and a solidarity fund for the self-employed and very small businesses. The government has focused on digitalization, setting up Culture Chez-Nous, a platform that brings together a variety of creative and cultural resources for virtual consumption. Additionally, nonprofit organizations like Adami and the French Society of Authors, Composers, and Music Publishers (SACEM), are providing grants and funds for artists and cultural organizations.

Colombia has also made a significant effort to support those working in the cultural and creative economy. The government has approved six tax and economic relief programs since the beginning of the pandemic, which include support for lost wages, improved delivery of resources and aid, and “ingreso solidario” (income solidarity), a program that provides economic assistance specifically to those working in the informal sector. While the informal sector and creative sector are not interchangeable, more than 1 million people work informally within creative sectors, leaving them without a safety net during times of financial hardship. Approximately 65,000 artists, creators, and cultural managers are receiving money transfers of around $132, which opposition members of the Colombian Congress argue is not enough. The government is also implementing the plan ReactivArte, which seeks to safeguard heritage and recuperate the creative sector’s growth through access to financing, incentives for investment in creative and cultural sectors, and other efforts by the Ministry of Culture.

In the United States, cities like Sacramento, California, and Austin, Texas, have implemented their creative economy recovery programs to support local artists and cultural institutions. On a national level, the NEH received $75 million in relief funding from the CARES Act, $30 million of which was sent directly to the 56 state councils. This money will be used to assist museums, libraries and archives, historic sites, and colleges and universities, specifically supporting at-risk humanities positions and projects. The agency has made their grants more flexible, as many recipients are not able to complete all outlined activities due to the pandemic-related restrictions. Furthermore, the CARES Act has protected the consumption of the arts by putting money into consumers’ pockets. However, the cultural and creative industries are often seen as recreational and therefore a luxury, meaning the United States needs a paradigm shift to emphasize the importance of creative industries to the overall economy.

Rebuilding Resilience

While these relief efforts are essential for cultural and creative industries and their employees to survive, rebuilding the creative and cultural economy will require targeted, substantive initiatives over the medium and long term. Self-employed creatives and smaller organizations, for example, will likely require technical assistance to adapt their business models to shifting consumer habits, implement new digital tools, and comply with new health and safety requirements. Many artists, especially those away from the major urban centers, are isolated, so establishing regional hubs and coworking spaces could create more interconnected creative networks. Similarly, countries can create economic and social value by nurturing artists’ business abilities. To make cultural and creative economies more resilient to future shocks, it is imperative that countries diversify the economies of cities and other cultural centers to not have an excessive reliance on tourism. This can also be the impetus to address socially and environmentally unsustainable practices within large-scale and intensive tourism centers.

Furthermore, governments can incorporate previously overlooked areas of intervention in the creative economy. Developing and involving more artist advocacy organizations would better promote the interests of the creative industries and improve the social safety net for many employees in these sectors. And while the process of digitalization has ramped up in the last nine months, there still exists a large disparity in access to digital tools and resources, especially between countries. Continued development and innovation in digitalization will not only support the resilience and growth of the creative economy, but can translate to innovation in other sectors such as education and health care as well.

Future Opportunities

The pandemic is potentially a perfect opportunity for France to focus on how it connects audiences with arts and cultural activities, whether that be through digital infrastructure or focusing more on local creative initiatives. The government may also consider focusing on clearer lines of communication with creative industries, providing updates on how it will support these sectors moving forward and what the recovery process will entail; an open letter published in Le Monde was signed by a number of high-profile French artists, expressing that the cultural sector felt forgotten or abandoned.

In Colombia, economic diversification is at the top of the agenda to avoid excessive dependence on tourism. Furthermore, the government and other stakeholders may consider rebuilding heritage virtually. Colombia has recognized the value of culture in peacebuilding, investing $530 million to revitalize 428 cultural sites over seven years. Continuing these efforts will require adaptations to meet new health and safety regulations and prepare for the possibility of a delayed return to in-person tourism.

As for the United States, cultural and creative sectors must be actively included in recovery efforts. As of April 16, only 1 percent of loan monies from the Paycheck Protection Program went to businesses in the arts and entertainment sector. Adequate funding should reach small towns and rural areas, not just the major cultural hubs; while New York and California’s creative economies have been hit the hardest by the Covid-19 pandemic, Alaska, Hawaii, Nevada, New Mexico, and Louisiana have lost a greater share of cultural jobs and revenue.

Creative Economy around the World

Across the region and the world, countries are supporting the creative economy in different ways. Mexico City has partnered with Barcelona, Buenos Aires, Bogota, Lima, and Lisbon to highlight a wide range of artistic and cultural resources from all six cities. The platform provides residents of Mexico—and the world—with access to concerts of diverse musical genres, dance and theater performances, cinematography, historical collections, virtual tours, educational resources, and more. Indonesia put forth a successful proposal to the United Nations that 2021 be the International Year of Creative Economy for Sustainable Development. Confirmed in November 2019, 2021 will be used to raise awareness, promote cooperation and networking, share best practices, and enhance human resources capacity among member states, international and regional organizations, civil society, and the private sector.

In Hong Kong, the Arts Development Council launched the “Support Scheme for Arts and Cultural Sector,” which has disbursed over $25.7 million to general applicants and $14.9 million to 340 Art Development Council-funded organizations and projects. Since March, Taiwan has focused on switching to virtual events and fostering the reach of local digital streaming platforms. In particular, the government has encouraged startup film companies and new scriptwriters to cooperate with international media companies, such as Netflix and Fox.

From economic, social, and diplomatic standpoints, supporting the resiliency of creative industries is good public policy. The cultural and creative economies in the United States, France, and Colombia are rapidly developing but still hold untapped potential and represent key sectors in the post-pandemic recovery. Cultural and creative economies are central to a democracy’s ability to maintain influence; thus, states have a key role to play in these industries. Cultural and creative initiatives are not simply recreational or discretionary, but instead are vital to a country’s growth and development, both economically and socially.

This commentary is made possible with the generous support of the National Endowment for the Humanities. All opinions expressed should be understood to be solely those of the authors and are not influenced in any way by any donation.

Daniel F. Runde is senior vice president, director of the Project on Prosperity and Development, and holds the William A. Schreyer Chair in Global Analysis at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Margarita R. Seminario is senior fellow and deputy director of the CSIS Americas Program. Margaret Thompson is a research intern with the CSIS Americas Program.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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