More on creative cities

Last week I wrote a blog about creativity, growth and development and where South Africa ranks in the Global Creativity Index. Since then I seem to be reading about creativity and the creative class everywhere. The Mail and Guardian has asked "Can creativity fix South Africa?", they mentioned the CGI and reported on an initiative called Culture Shift. The Future Cape Town blog asked "Why do we want to be a creative city?" and linked to an article at the Global Urbanist that argues that ranking creative cities is an exercise in futility. Oli Mould of the Globalisation and World Cities research network at Loughborough University states that:

The 'creative city' — the city of tolerance and cycle paths, gays and galleries — is qualitatively different from the creativity that Jacobs alludes to. The impulse to quantify the former is, unfortunately, usually to the detriment of the latter. In striving to climb to the top of the league tables, cities focus on how they can create the conditions that stimulate creativity quickly and cheaply (although it rarely ends up being either), missing or neglecting the role that individualised, neighbourhood creativity plays; and which is often already present in the city. 'Creativity' has been hijacked as a pseudonym for the promised land of economic prosperity, in effect reduced to marketing a city, creating a competitive city brand.

Though I agree that creative city branding may get to be too much, I do want to argue that there is a clear link between the nature of the local labour market and city growth and the creative class cannot be dismissed.

A thick city labour market allows for better matching between workers and jobs and there are two models in the literature. Helsley and Strange (1990) showed that a large city allows for a better match between different workers and firms’ job requirements and this enhances efficiency.  On the other hand, Duranton (1998) argued that a large market allows workers to become more specialised and, therefore, to be more efficient.  Either way, the better matching gives rise to increasing returns and growth. The cheerleaders for the importance of the creative class are thinking about these benefits and specifically for a subset of the labour force in high-skilled, high-value added occupations. There is enough evidence that innovation and creative destruction are key drivers of growth.

However, local policymakers' efforts to foster the creative class are often flawed. There are clear external benefits to having the creatives in your city, but will you be able to crowd them in with a flagship opera house or a bike sharing scheme? The relationship between creative places and agglomerations of technology, talent and tolerance probably runs both ways. But in a South African economy, competing on the world stage, it won't hurt to have good bistro's, or maybe some bike paths!
 
 

Creativity, growth and development - where does SA rank?

We all know that South Africa faces significant challenges in low economic growth rates and high levels of unemployment, poverty and inequality. Recently the National Planning Commission produced a comprehensive diagnostic overview of the challenges and possible solutions (check out their cool Vision 2030 video here). In the Budget speech the Minister of Finance proposed large increases in infrastructure spending and industrial development measures.

Recently I have come across a different view of the possible drivers of economic growth and development in the form of the Global Creativity Index (GCI), compiled by the Martin Prosperity Institute in the U.S. It builds on Richard Florida’s work about the creative class and they argue that the GCI is a different way to look at issues of jobs, wages, inequality and sustainable prosperity: “What you measure affects what you do. If we have the wrong metrics, we will strive for the wrong things”.

The Global Creativity Index evaluates and ranks 82 nations on Technology, Talent, and Tolerance. The technology index is broad assessment of the technological and innovative capabilities and from Schumpeter to the growth theorists economists have emphasised the importance of technology for growth. The CGI uses the standard educational attainment measure of human capital, but also includes the share of a country’s workforce in high-skill, high wage Creative Class jobs. That is the share of workers in the fields of science, technology, and engineering; business, management and finance; design and architecture; arts, culture, entertainment, and media; law, healthcare, and education. The argument is that these occupations, rather than university degrees, provide a more accurate measure of the key skills that comprise human capital. Finally, the ability to attract both talent and technology depends on openness to new ideas and openness to people. The tolerance index is as a combination of two variables, based on Gallup surveys of openness to ethnic and racial minorities and openness to gays and lesbians.

The full report is available here, so I just want to focus on South Africa’s scores. The table shows the measures and South Africa’s index rank.

Technology		Talent		Tolerance
R&D spending to GDP	34	Educational attainment	65	Openness to minorities	7
STEM researchers per capita	46	Creative class occupations	48	Open to gay community	21
Patents per capita	32
Technology index ranking	45/75	Talent index ranking	68/82	Tolerance index ranking	15/81

The above numbers clearly show that human capital challenges facing South Africa. We rank low in terms of the educational attainment and proportion of researchers. The creative class share 21.71 of employment is 21 per cent. Overall, South Africa has a Global Creativity Index score of 0.459 and ranks 45th of 82. This is below the emerging economies of central and eastern Europe, but above, Brazil, Chile and India (50th). China ranks 58th on the index.

The following graphs show the relationship between the GCI scores and other metrics of growth and development. The GCI score is a good predictor of South Africa’s economic output and Global Competitiveness Index score. However, in terms of entrepreneurship, HDI, happiness and inequality South Africa performs worse than the GCI score would predict.

  

Overall, I thinks this tells a familiar study from a different perspective: education and training matters if a country aims to pursue high-skilled, high-wage growth in a globalised economy. Maybe we need more private schools for the poor? Maybe we need more bad jobs? I would be interested to see how different places in South Africa would stack up in a Local Creativity Index.