1) The document discusses using culture and creativity as drivers for local sustainable economic development (LSED). It critiques the traditional LSED approach for its narrow focus on competitiveness and lack of resilience. 2) It argues that culture, creativity, and innovation are key intangible assets that can foster endogenous growth and development. Territories have unique institutional and cultural characteristics that influence economic outcomes. 3) The document examines initiatives taken by the Apulia region of Italy to enhance new cultural services, promote cross-sector activities, attract external demand, and exploit local comparative advantages in cultural industries as part of its strategy for a cultural-based LSED.

1. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
CULTURE AND CREATIVITY AS
DRIVERS FOR LSED
PIERLUIGI MONTALBANO
SAPIENZA UNIVERSITY (ITALY) & SUSSEX UNIVERSITY (UK)
pierluigi.montalbano@uniroma1.it

2. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Standard LD: A critique
P. Montalbano – SAPIENZA

3. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Background:
Limits of the traditional LD approach
3
• Focus on productivity and attractiveness of firms and labor
(Buck et al., 2005; Bristow, 2005, 2010)
• Consequences:
• ‘ubiquitification’ of regional development strategies
(Bristow, 2005; Maskell and Malmberg, 1999);
• narrow vision of “competitiveness”
• Lack of resilience of local economies
• The recent global ‘credit crunch’ has highlighted the
advantages of being less dependent upon globally footloose
activities, having greater economic diversity, etc., Ashby et al,
2009; Larkin and Cooper, 2009).
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4. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Main assumptions of the dominant approach
4
• Capital and labor completely mobile
• Business environment matters the most in attracting
footloose investment and high skilled and creative labor.
• What’s wrong with it?
• factors of production are rarely perfectly mobile
• Innovation and creativity are not placeless
• Agglomeration
• Spatial inertia of the ‘new’ economy industries applying
distance-shrinking technologies too (e.g. Rodriguez-Pose
and Crescenzi, 2008).,
P. Montalbano – SAPIENZA

5. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
What’s new? Territories matter !
5
• Trade is not placeless (from HOS to Gravity)
• Not all firms relocate
• Relocation brings its own costs and upheaval
• Local ties are too strong
• Local institutions matter for business
• Territories have institutional and cultural specificities
We lack a deeper understanding of the causal effects of the
endogenous processes that generate territory-specific economic and
institutional framework (Harrison, 2006; Malecki, 2004).
P. Montalbano – SAPIENZA

6. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Rethinking Local Development
P. Montalbano – SAPIENZA

7. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Economic Theory knows already…
7
• Since the seminal work of Arrow (1962), the role of
knowledge has been a key driver for economic growth
(i.e., marshallian externalities)
• From the Nineties the endogenous approach highlights the
role of intangible factors as key drivers of growth and
development (Barro, et al, 1995).
• Endogenous growth fosters additional externalities
linked to the intangible assets (such as learning,
networking, personal and social capabilities, etc.) that
impact positively the productivity of factors.
P. Montalbano – SAPIENZA

8. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Krugman (1997) ’s “rethinking”
and the role of Geography
8
• NP Krugman (1997) argued that the Silicon Valley cluster in
California, owing its existence to ‘‘small and historical accidents
that, occurring at the right time, set in motion a cumulative
process of self-reinforcing growth’’ (no placeless competition)
• More recently, an evolutionary approach of regions’ development
have drawn attention to their cultural, institutional and social
contingencies that determine their ability to adapt to changing
market conditions, the emergence of new technologies and
competitors, and thus their capacity to create new development
trajectories (Boschma, 2004; Boschma and Martin, 2007).
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9. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Hence: what role for culture and creativity?
9
• Tacit Knowledge (Culture) is one of the key intangible assets for a self-
sustaining process of consumption/accumulation of human capital that,
among other things, fosters Local Sustainable Economic Development
(LSED).
• In 1990s, the New Labour government’s Creative Industries Mapping
Documents in Britain put the notion of creativity at the center of the
debate.
• It has been seen as the occasion to revamping the notion of the
economics of territories and promote new development strategies able to
overcome the crisis of the mercantilist approach (Valentino, 2012).
• Information societies, knowledge economies, smart cities has become
since then the key factors for a breakthrough of the spatial organization
of towns, social relations and even political participation (Castells, 1996-
1998).
P. Montalbano – SAPIENZA

10. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
However: culture and creativity are not synonymous…
10
• Culture is generally understood as the set of knowledge, customs and levels
of artistic and scientific development that defines an era or social group
(EECS 102/2004) – e.g., information society---
• Creativity is specifically interpreted as the capacity to think in an innovative
way, or to produce new ideas that bring together existing elements in a new
way (be they processes, objects, knowledge, etc.). --e.g., Steve Jobs--
• Innovation refers more generally to processes and products developed from
knowledge, techniques and tools. –e.g., ipad --
Who cares?
1. These concepts that are often blurred in current language;
2. It highlights the deep interconnections between culture, creativity
and innovation;
3. the lack of a clear distinction makes it difficult to pinpoint a single
analysis approach
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11. 2.6 % of EU-27 GDP
5 million of people
+ 3.000 euros trade surplus for EU-
27
+9% average world rate of growth
99% of enterprise are SMEs
(EU, Green paper, 2010)
CCIs - Cultural and Creative Industries:
What we talk about?
7% of EU-27 GDP
14.4 million of people
862 billions of euros –contribution
to EU-27 added value
(TERA study, 2010)

12. WHY FIGURES DIFFER?
• No a single and universal
definition of CCI
• creative people are often
brokers across disciplines
and industries
• WE SHOULD ACKNOWLEDGE
the distinction between
culture, creativity and
innovation
• At the same time, we should
separate conceptualization
analysis and governance of
the creative processes
(KEA, 2009)

13. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Please mix and match…
13
P. Montalbano – SAPIENZA
(UNCTAD, creativity report, 2008)

14. EU SUPPORT TO CULTURAL AND CREATIVE
INDUSTRIES“UNLOCKING THE POTENTIAL OF
CULTURAL AND CREATIVE INDUSTRIES”….
WITH A PARTICULAR ATTENTION TO SMES.
- Communication from the Commission on a
European agenda for culture in a globalizing world –
10/05/2007
- Conclusions of the Council On the Work Plan for
Culture 2008-2010 – 10/06/2008
- EC, The Green Paper COM(2010) 183
- An European CCIs workgroup (to be established);
- Sector studies (contribution of culture to creativity;
CCIs entrepreneurship;, contribution of culture to
local and regional development, etc.)

15. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Towards a cultural based LSED
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16. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
A naïve cultural based LSED
16
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cultural resources
attract visitors
(external demand)
Visitors
generate an
expenditure
this expenditure
is transformed
into revenue
and capital for
local
development
The revenue is
partly transformed
into new demand for
local production
(multiplying effect)
and, partly, in new
imports (net value of
exportable services)

17. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
A naïve cultural based LSED (cont.d)
17
• Thanks to technological innovation and creativity it is nowadays
possible to sell outside an increasing amount of cultural services
associated to the same resources, and to foster a sustainable long-
term process of growth:
• The impact on the local economy will be then multiplied and determined
by: the net value of exportable services (i.e., the difference between the value of
services sold externally and the costs of goods and services the area has to import in
order to produce them)
P. Montalbano – SAPIENZA
Creativity
and
Innovation
New
Cultural
Services
New
External
demand
Creativity
and
Innovation
New
Cultural
Services
New
external
demand

18. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
A first set of Policy Recommendations…
18
• Cultural resources are a necessary but not a sufficient
condition to start a process of cultural based economic
growth;
• Creativity & innovation are the key determinants of long-
term growth.
• Hence: not the same thing but a self-sustaining process !
P. Montalbano – SAPIENZA

19. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Consequences:
Cultural based LSED:
19
a) does not produce any relevant effect if an area is poor
in terms of services
b) Its rate of growth depends crucially on creativity &
innovation (human capital/skills)
c) It requires a “critical mass” of demand (to cover the
start-up production)
d) It is driven by specialization and comparative
advantage (The higher the level of dependence of the area on
the outside the lower will be the multiplier for the internal income)
P. Montalbano – SAPIENZA

20. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
The Apulia Strategy and empirical initiatives
In accordance with the LSED conceptual framework, Apulia strategy developed some
empirical initiatives in terms of key components of the cultural based model for LSED.
APULIA STRATEGIES FOR LSED EMPIRICAL INITIATIVES
1) enhancement of new cultural services;
‐ ENVIRONMENTAL AND CULTURAL SYSTEMS (ECS)
‐ URBAN LABORATORIES
‐ INHABITED THEATRES
‐ INTRAMOENIA EXTRA ART and CONTEMPORARY CIRCUIT
2) promoting cross‐activities: creativity &
innovation (human capital/skills)
‐ ACTIVE PRINCIPLES INITIATIVE
‐ LIVING LAB and SMART CITIES (ECS)
3) The attraction of a critical mass of
external demand mainly by a strong
financial and technical support to a
number of local cultural activities and
initiatives
‐ PUGLIA EVENTS (Night of Tarantula music festival)
‐ APULIA FILM COMMISSION BIFEST – BARI INTERNATIONAL
FILM FESTIVAL and the FILM FOUND
‐ PUGLIA SOUNDS and THE MEDIMEX
4) Exploiting the local comparative
advantage by investing in the entire value
chains of live entertainment, cinema,
audio‐visuals and visual arts value chain.
‐ APULIA CREATIVITY DISTRICT
‐ PUGLIA SOUNDS and THE MEDIMEX
‐ APULIA FILM COMMISSION FILM FUND

21. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
The cultural based system of revenue
21
• the expenditure allocated to the purchase of locally produced
goods and services is transformed:
• partly into revenue (wages, profits and unearned income)
• partly in an additional demand for other production sectors
located in the same area (spill over effect)
• partly in additional imports;
• the demand, deriving from the additional revenue and from the
new local production is, in turn:
• partly transformed into income and new demand for the local
production sectors (multiplying effect)
• partly, in new imports and so on…
…………………………………………………………
up to the point where the initial impetus is
exhausted.
P. Montalbano – SAPIENZA

22. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
How cultural based LSED works…
22
Elaborated by P.A.Valentino
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23. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Conclusions
23
• The cultural based LSED must be sustained both by internal
demand and demand external to the area and this, in turn, crucially
depends on the availability of new services fostered by innovation
and creativity.
• Local demand plays a strategic role in the determination of the
critical mass necessary for the startup of the entire process, but the
external demand (e.g., tourism) represents the real “engine” for
development.
• While the economic impact associated with tourism is commonly
considered the most significant one, it is the entire cultural chain
who contributes to the growth of income levels and to that of local
employment.
P. Montalbano – SAPIENZA

24. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
It is worth stressing the irreplaceable role of
cultural industry in :
24
• Promoting “local identity”,
• Supporting pluralism and cultural diversity;
• Contributing to a better quality of life;
• to tolerance and to countering behavior contrary to human dignity,
to integration and to visitor capacity
• and, generally speaking, to individual and collective capabilities
and all the multidimensional facets that collectively constitute the
sustainable livelihoods of local communities (Sen, DFID, Unctad).
P. Montalbano – SAPIENZA

25. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
Policy Recommendations
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26. APULIA REGION
Unit for the promotion of territory, knowledge and abilities
The final set of Policy Recommendations
26
1. Need of a better definition of the culture and creativity sector and more
accurately statistics;
2. Focus on four key determinants of a cultural based LSED: services,
innovation, critical mass of demand and comparative advantage;
3. Look at the start-up phase as a peculiar stage characterized by the need of a
greater amount of local input (goods, services and human capital);
4. Overcoming the approach of individual attractors by strengthening the
relation btw landscape, history, environment and cultural immaterial assets;
5. Reverting the approach of the scarce added value of cultural and touristic
events by:
1. Properly assessing “ex-ante” the local culture base system of revenues, building
a local strategy based on comparative advantage
2. Evaluating “ex-post” the impact of public investments in culture and creativity by
taking advantage of the most recent evolvements in matching econometrics for
counterfactual analysis
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