What Is the Creative Economy?


In partnership with Otis College of Art and Design: Artbound explores the latest Otis Report on the Creative Economy with online articles and video segments culminating in a broadcast special airing on KCET.

Los Angeles' creative spirit is a wide-ranging spectrum, from the art spaces of Boyle Heights to the scientists of NASA's Jet Propulsion Laboratories. Creativity is one of the Los Angeles region's foremost economic assets and the creative economy is undeniably important to the area's economic growth.

The creative economy is defined as the businesses and individuals involved in producing cultural, artistic, and design goods and services. It consists of creative professionals and enterprises that inspire us with their artistry or take powerful, original ideas and transform them into practical and often beautiful goods.

It also includes organizations that provide a venue for artists to share their work with the public such as museums, art galleries and theaters. Finally, it includes activities one does not instinctively associate with creativity such as apparel, toy and furniture manufacturing - all industries that depend on good design.

Although entertainment is the most visible creative industry in Los Angeles, one can find creative individuals working in nearly every industry in the region. In 2012, there were 404,000 individuals directly employed in the creative industries of Los Angeles and Orange Counties. These workers supported an additional 322,300 indirect and induced jobs for a total of 726,300 jobs that generated $50.6 billion in labor income. The creative industries also employ a large number of independent contractors (over 155,000), significantly boosting total employment and income numbers. Direct, indirect and induced workers paid nearly $6.9 billion in taxes to California state and local governments. Total creative industries output was $140 billion and of that, $80 billion was value-added (labor income and profits) for a net economic contribution equivalent to 10.4% of the region's gross product of $766 billion.

Yet, if creativity is an essential fuel for the local economy, what does it take to produce it?

Katie Grinnan, "Mirage," 2011 Friendly plastic, enamel, and sand 79 x 63 x 72 inches Installation View at the Hammer Museum, 2013 | Photo: Brian Forrest

The origins of creativity remain elusive. Researchers still cannot name the specific combination of biological and environmental factors that produce creative brains, or even definitively define creativity. One definition determines that "creativity is the ability to produce something that is novel or original, and useful or adaptive." While the creative spark is often depicted as an "aha" moment, in reality, the "eureka" experience may have been the result of years of research, hard work, and experimentation that were needed to arrive at that one thought.

In short, creativity needs resources and room to grow.

From an economic standpoint, we are interested in whether creativity can be learned, or taught, and then nurtured. We also wonder whether or not creativity in the arts can be equated with creativity in the sciences or in business. Or should the latter two groups be considered separately? Is innovation in the sciences or business the same as artistic creativity, or is it something altogether different?

Research suggests that the process of creation (or innovation) in all three activities is largely the same: preparation, incubation, inspiration (the eureka moment) and production. The same, ongoing, iterative process is essential to many forms of creativity whether it be composing an orchestral work or revealing the structure of the universe.

RISK's style has gone from lettering and images to abstract washes with color. | Photo: MOCA.

Innovation is essential to today's economy, where the market value of products and services is increasingly determined by a product's uniqueness, performance, and aesthetic appeal. More companies are seeking employees with creativity as well as problem solving and communications skills. Business location decisions are also influenced by factors such as the availability of a creative workforce and the quality of life available to employees. The talent that drives the creative economy provides a competitive advantage that reaches across almost every industry in the Los Angeles region.

Regions also acquire a competitive advantage when they attract creative employees because creative thinkers encourage innovation, which fosters economic growth. Furthermore, the creative talent pool in a region is not as vulnerable to going "offshore." Historically, the development of advanced technologies that increase productivity was seen as a pathway to better jobs, but that is no longer necessarily true. Many advanced technologies can be replicated across the world using cheaper labor. But original artistic creation, innovative design and other higher-level creative work cannot be outsourced so easily. Creativity builds both brand awareness and attracts talented people to a dynamic environment. Moreover, cultural spaces can become hubs for civic engagement, often a powerful community revitalization asset, especially in economically distressed neighborhoods.

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Walt Disney Concert Hall | Photo: Adam Latham

In a broader sense, the creative economy must include a support system that teaches, nurtures and sustains creative activity: arts programs in K-12 schools, post-secondary arts institutions to develop talent, and philanthropic foundations along with other nonprofit funding organizations to provide financial resources, incentives, and services to the creative arts.

Because creativity is a dynamic function of humanity, the creative economy is also a vibrant and vital force in society. Intellectual and aesthetic sensibilities lead individuals to express themselves through the arts, solve problems through design, and seek out what is beautiful and original. The Los Angeles region is unique because of its combination of place, resources and open attitudes toward new ideas. This openness to new ideas and the ability to make associations and connections that other people do not see is one of the defining characteristics of creativity. Here, new ideas are constantly given form and brought to life by creative people.

By Robert A. Kleinhenz, Ph.D, Chief Economist
Kimberly Ritter-Martinez, Economist
George Entis, Research Analyst
The Los Angeles County Economic Development Corporation
Kyser Center for Economic Research

Christine Cooper, Ph.D
The Los Angeles County Economic Development Corporation
Institute for Applied Economics

The 2014 Otis Report is available for download online at Otis' website. View it here.

Artbound's broadcast special will premiere in Southern California on March 24 at 8 p.m. PT on KCET and nationally on March 30 at 8 p.m. PT/ET on Link TV (DirecTV 375 and DISH Network 9410). An encore presentation will air on March 29 at 6 p.m. PT on KCET and April 1 at 1 p.m. PT/ 4 p.m. ET on Link TV.


Read previous installments of our "State of Creativity" Series:

How Arts Education Fuels the Creative Economy
Education, particularly in the arts, will play a pivotal role in preparing students' creative capacities and sustaining a creative economy.

Apparel Design and the Fabric of the Creative Economy
There are more eyes on the L.A. fashion industry than ever before. The industry creates billions of dollars in labor income in L.A. and Orange County.

How Creative Placemaking Plays a Role in the Creative Economy
The concept of "creative placemaking," the integration of a community's artistic and cultural assets in community planning and revitalization, is gaining momentum in places like Boyle Heights.

Southern California's Interconnected Art Ecosystem
With an economic output of $93 million in 2013, L.A. and Orange County's galleries are punching far above their weight when it comes to their economic impact.

How Art, Science, and Technology Interact in Southern California
Over the past few decades, artists and scientists have helped bring focus to the art-science-technology track of Southern California's present creative economy.

Artbound Special Episode "State of Creativity"
A special episode on the Otis Report on the Creative Economy.


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