Culture and Development - Action and Impact Project

Culture as a vehicle for local and regional development: the EU experience

In spite of the diversity of identified problems and solutions, there are common methodological elements on how to approach culture in the context of local and regional development strategies between the European Union and its partners across the world that can be of mutual interest.

Within the European Union, culture-based investments are possible through a range of policies and instruments, including regional development, rural development, skills development and social inclusion, support to enterprises, innovation, research, information society and support to digitisation. Examples across European cities and regions show how culture can be used within an integrated approach to sustainable development (1). These experiences also offer interesting material to demonstrate the pertinence of a culture and development approach when considering cooperation with the partner countries of the EU.

Although the societal value of culture is largely recognised by policy makers, its potential as a factor of economic development is not always fully grasped. The examples presented here aim at illustrating both dimensions of culture – social and economic – as a vehicle for development.

The cultural and creative sectors have a strong territorial dimension. Investing in these sectors can help diversify local economies or boost economies in decline by creating growth and jobs. Such investments can also have positive “spill-over” effects on other sectors of the local economy and society through the creativity and innovation potential they generate. Furthermore, cultural contents play a crucial role in the deployment of information society, fuelling investments in broadband infrastructures and services, in digital technologies, as well as in new consumer electronics and telecommunication devices (4).

// Which culture?

In addition to traditional art and heritage fields, the cultural sector expands onto a broader circle of cultural industries (2), which largely comprise media such as cinema, music and publishing, but also press, radio and television. Around these two circles lie the so-called creative industries (3), business-to-business creative services such as fashion, interior and product design, which use culture as an input although their outputs are mainly functional.

Moreover, the cultural and creative sectors contribute to stimulating research, product development and service innovation, marketing and communication, “branding of cities” or community identity building. At a more peripheral level, many other industries rely on content production for their own development and are therefore to some extent interdependent with the cultural and creative sectors. They include among others tourism and the new technologies sector. 

// What contribution of culture to local development?

Research conducted in recent years indicates that the cultural and creative sectors are among Europe’s most dynamic sectors with a great economic potential, contributing around 2.6 % to the EU GDP and providing quality jobs to around 5 million people across EU-27. Beyond their direct contribution to GDP, the cultural and creative sectors are also important drivers of economic and social innovation in many other sectors (5). 

The cultural and creative sectors still have less of a profile than many of the traditional industries that they outperform. Nonetheless, they move towards and beyond 10% employment in some of Europe’s most dynamic areas.

// Culture-based investments and European cities

During the last few decades a number of European cities have emerged as creative hubs. From Bilbao to Berlin and Amsterdam and from Helsinki to Copenhagen and Barcelona, the cultural and creative sectors have been used as a vehicle for local growth and development. London already had nearly 15% of its workforce working in the creative sector by 2002. In Amsterdam the creative sector employed 7.4% of the local workforce in 2009, while in Berlin it had reached around 10% of the workforce by 2006. Milan, Rome and Madrid also had just short of 10% of local employment in the sector nearly a decade ago6. In Helsinki 9% of the business turnover was from the creative sector.

How can culture contribute to local growth and development? How may culture-based investments enhance overall performance of local economies? What role do they play in terms of social cohesion? What are the key features emerging from the experience of different European cities?

// Branding of a city: the “Bilbao effect”

Strategic investment in infrastructure (metro, airport, green zones) and the creation of a service sector, combined with large scale investment in creating infrastructure (i.e. Guggenheim Museum, Music and Exhibition Hall, spaces for cultural activities), have helped Bilbao move from the brink of economic collapse in the 1970s to a thriving city and a rising tourist destination.

The Guggenheim Museum received 905 000 visitors in 2009 while the Leisure, Culture and Physical Activity Centre, which opened in May 2010, received 1 million visitors in four months. In general, tourism figures in Bilbao have seen a steady increase (169 166 visitors in 1996; 615 545 in 2009).

Bilbao is much more than the “Guggenheim effect”. Long-term strategic planning sets out to develop valuable economic initiatives and creative activities in the city and create a quality of life for its inhabitants.

// European capital of culture: the multiplier effect of culture-based investment

From 1985 to 2010, 43 European cities or metropolitan areas have received the title of “European Capital of Culture” (ECOC). Although the artistic and cultural programme lasts one year, preparation is a multi-annual undertaking, often with long-lasting results.

The ECOC title presents an opportunity to reap local benefits in cultural, social and economic terms and raise the international profile of the city. It helps develop a vision for local communities, often putting new life into local assets and traditions, giving direction and coherence to disparate activities and rediscovering a sense of pride. The most successful capitals have sought to embed the event within a long-term strategy on culture-led development.

Beyond the obvious benefits for the cultural sector itself, the ECOC title has lateral positive impacts:

• Boost number of visitors during the ECOC year and in the following year. On average for capitals between 1995-2004, the number of overnight stays rose by 12%.
• Generate a return of EUR 8-10 for every EUR 1 invested. In the case of Lille 2004 it is estimated that EUR 1 invested from public funds has generated EUR 10 in the economic cycle of the city in the long term.
• Promote social inclusion and intercultural dialogue through community outreach programmes and effective use of volunteers.

Liverpool 2008, one of the most successful examples, has yielded some impressive results. An increase of tourism of 25-27% led to additional spending by visitors of GBP 753.8 million. The average expenditure of day visitors in the city was GBP 47 in 2008, compared to GBP 35 in 2006. The number of creative industry enterprises grew 8% since 2004. Promotional and city branding objectives linked with the ECOC title have contributed towards GBP 800 million of economic benefits, while the costs of ECOC event were GBP 117 million.

• Indicative budgets of capitals for the period 1995-2004:
• Total operating expenditure – EUR 8-74 million
• Total capital expenditure – EUR 10-220 million
• 77% of funding from public sources; 13% from private sponsors

// A policy for culture and regional development in the European Union?

A key policy for the development of European regions and cities is the so-called cohesion policy. Its core aim is to reinforce the conditions for a balanced regional development within the European Union, by boosting employment and growth potential and by strengthening the human and social capital at local and regional level.

How are culture and the cultural dimension taken into consideration in the context of cohesion policy? How can culture be financed through the relevant instruments and what funds are available? What types of culture-based investments are foreseen and what is their possible impact on local and regional development?

Culture and Structural Funds

Culture-based interventions may be financed under all three objectives of cohesion policy (convergence, regional competitiveness and employment, territorial cohesion) and through two structural funds (European Fund for Regional Development and European Social Fund).

The overall budget for the current programming period (2007-2013) amounts to EUR 344 billon.

Priorities are jointly decided upon between Member States and the European Commission, but the funds are managed by Managing Authorities in the Member States. In addition, under the European Territorial cooperation objective, the Commission manages two programmes which finance cross-border, transnational and interregional cooperation (INTERREG IVC and URBACT II).

In the current programming period (2007-2013), culture is integrated into different horizontal priorities. Funds allocated to culture are approximately EUR 6 billion (1.7% of total funds). EUR 2.9 billion is allocated for the protection and preservation of cultural heritage, EUR 2.2 billion for the development of cultural infrastructure, and EUR 797 million to support cultural services.

Investments in culture have been largely linked with the protection and promotion of cultural heritage and the creation of cultural infrastructure and services with a view to enhancing local attractiveness and boosting tourism. Restructuring of urban areas and sustainable urban development is another important area of action that may be invariably linked to valorisation of cultural heritage or development of “cultural districts” and “creative hubs”. Investments also tend to target cultural and creative industries through the creation of hubs, incubators and clusters of local businesses. Such investments may also relate to research and innovation (entrepreneurship, SMEs, clusters, networks), information society (digitisation), urban regeneration (as part of integrated projects), improvement of human and social capital and skills development.

To what extent culture-based investments appear under other headings, such as innovation or entrepreneurship, is largely unknown, as allocation of funds per horizontal priority at Member State level does not allow sector-based activities to be identified,and less ‘classical’ cultural investments may be “masked” within disparate priorities.

A recent study has unearthed a number of culture-based investments under the Structural funds with a wider impact on local economy and society (8).

// Culture and regional development in the European Union: An urban bias?

Although there seems to be an apparent urban bias, culture-led development is equally relevant to rural areas, where new business models can help bring innovation and sustainability to traditional forms (i.e. local crafts, heritage), thereby leading to economic viability.

Projects financed in the context of EU regional development have yielded interesting results (9).

// The county of Cornwall in the UK has a population of half a million, but no large urban centres. In the period 2000-2006, the sub-region was successful in turning disparate creative activities (i.e. small galleries, artists’ workshops) into a coherent “creative region”: almost GBP 43 million was invested, GBP 33 million in capital projects and GBP 9.88 million in business and skills support programmes. The investment of GBP 9.88 million in business and skills support generated an estimated GBP 104 million extra income. 560 jobs were created in the sector (2000-2004); employment grew by approximately 19%. There are now an estimated 10 200 people employed in the sector in Cornwall, while turnover grew from GBP 326 million to GBP 421 million between 2000 and 2004.

// Using local traditions and culture as the basis for marketing craft industries, the Meisterstrasse project in Austria has developed a considerable momentum. Craft traditions have been used to define the required characteristics of high quality products. Networks of master craftsmen were put together upholding the traditional nature of craft skills and products, commitment to high standards based on the traditions and common contribution to regional identity in a specific region. The aim was to rebrand traditional craft traditions, help establish commercially self-sustaining networks, increase employment and attract visitors. At first, 42 partner businesses, including bakers, carpenters, tailors, glassmakers, stovemakers and florists, were associated. In October 2009, there were 250 partner businesses in eight networks across Austria.

// Investing in culture-based development

While culture-based development is primarily linked with dramatic infrastructure developments, more balanced approaches combine investment in basic cultural infrastructure, where this is necessary, with ‘soft’ investments such as provision of support facilities, access to finance, specialised business advice training, investment in human capital and development of competences. Achieving the right balance between hard and soft investment is an important part of any effective development strategy.

// Conditions for success

Culture-based investments are meaningful in the context of an integrated approach to sustainable development and need to be considered as part of a broader development strategy.

Policies and support instruments need to be determined locally, taking into account specificities and assets and tapping into local resources.

Multi-level governance is necessary to ensure the connection between different policy and administration levels. Public and private stakeholders must be involved in the process.

Successful strategies are premised on a sequential model combining infrastructure and human capital development that are implemented over the medium to longer term (i.e. 10-20 years).

Impact assessment and evaluation tools should be built in culture-led development initiatives at the outset. This helps identify weaknesses and strengths in processes and results achieved leading to the design of evidence-based policies.

Building on the multi-faceted potential of culture and its related industries and activities represents an alternative model for growth in a globalised world.

This applies both to the European Union and its developing partners across the world.

The limited data at the disposal of the international community might suggest that Culture-based inclusive growth could have an even bigger effect in the developing countries.

--------------------------------------------------------------------------------------------------

1 Study on the contribution of culture to local and regional development – Evidence from the Structural Funds, 2010, prepared for the European Commission by the Centre for Strategy and Evaluation Services with the support of ERICARTS. See http://ec.europa.eu/culture/key-documents/doc2942_en.htm and http://ec.europa.eu/culture/eu-funding/doc2756_en.htm.

2 “Cultural industries” are those industries producing and distributing goods or services which at the time they are developed are considered to have a specific attribute, use or purpose which embodies or conveys cultural expressions, irrespective of the commercial value they may have. Besides the traditional arts sectors (performing arts, visual arts, cultural heritage – including the public sector), they include film, DVD and video, television and radio, video games, new media, music, books and press. This concept is defined in relation to cultural expressions in the context of the 2005 UNESCO Convention on the protection and promotion of the diversity of cultural expressions.

3 “Creative industries” are those industries which use culture as an input and have a cultural dimension, although their outputs are mainly functional. They include architecture and design, which integrate creative elements into wider processes, as well as subsectors such as graphic design, fashion design or advertising.

4 For more information see, the European Commission’s Green Paper “Unlocking the potential of cultural and creative industries” (2010, 183).

5 Study on the Economy of Culture in Europe, 2006, prepared for the European Commission by KEA European Affairs with the support of Turku School of Economics and MKW Wirtschaftsforschung; Commission Staff Working Document on “Challenges for EU support to innovation in services – Fostering new markets and jobs through innovation – SEC (2009) 1195; UNCTAD (2008) report on “Creative Economy, The Challenge of Assessing the Creative Economy: Towards Informed Policy Making”.

6 Contribution of culture to local and regional development, op. cit.

7 For more information, see http://ec.europa.eu/culture/our-programmes-and-actions/doc413_en.htm

8 Contribution of culture to local and regional development, op.cit. Annexes II.A and II.B.

9 Idem