By Jennifer Reynolds
The tumultuous events of the past several years concerned economy watchers. As fears of recession frequently loom, there is one factor economists are beginning to examine—one that could help insulate the financial system in the event of future downturns—our own creativity.
New research into the Creative Economy suggests it is an important consideration when determining the health of the economy overall. Take a recent Deloitte study, which suggests that “it” is likely to be a key driver of economic growth.
This is hardly surprising given the recent rapid growth within the creative sector. The Creative Economy grew by nearly 14% between 2020 and 2021, whereas the overall economy grew by less than half that rate.
The Deloitte study says that the importance of the Creative Economy for overall economic performance is therefore likely to grow. This means its importance for policymaking also is likely to grow, with countries more or less well-positioned to take advantage of that underlying growth in global demand.
Film is just one aspect of the larger Creative Economy, which includes industries such as television, music and advertising. The Motion Picture Association says the film industry pays out $21 billion per year to more than 260,000 businesses in cities and small towns across the country, adding that as much as $250,000 can be injected into local economies per day when a film shoots on location.
In May 2022, the Motion Picture Association released data on the economic impact of “Top Gun: Maverick” on the California economy. Filmed by Paramount Pictures, the studio reported that the film added more than $150 million into the economy. That resulted in $80 million in wages for local workers, $3.9 million on lodging, $2 million on transportation, $1.4 million on catering and food, $1.2 million on hardware and more than $6.7 million on rentals and purchases for set decoration, production and other supplies.
By examining the data for just one film, it is clear the economic impact of making a movie transcends the bottom line alone.
In Georgia, creative industries contribute 5% of employment and 4% of all business revenue in the state, according to The Georgia Council for the Arts. This amounts to $37 billion in revenue with a total economic impact of $62.5 billion.
And the impact isn’t limited to just large cities.
Stephen Weizenecker, Barnes & Thornburg LLP, says the film industry continues to make a difference in rural Georgia. He cites a dry cleaner in rural Georgia that was going out of business until it was hired to clean costumes for a show. Today, that same dry cleaner does the majority of dry cleaning services for the film industry in Georgia and has multiple locations—all of them outside of Atlanta.
Another example of how thriving creative industries can provide flexibility and risk aversion to a dynamic economy is how Georgia restarted filming during the pandemic earlier than other locations. Led by Gov. Brian Kemp, the state forged a safe and appropriate path to allow the film industry to return to operations.
“We delivered Georgia Made productions to eager consumers all around the world—even when some states continued to stay shut down and stifle the industry’s return to normalcy,” Kemp says. “Because of this partnership approach and the resiliency of our state’s film and television infrastructure, which state and local economic development officials have been working (for years) to build, we are once again celebrating incredible growth and investment from industry leaders.”
In spite of the research done by Deloitte and others, the Creative Economy is an emerging area of study. David Sutherland, a Senior-Lecturer at the University of Georgia’s Terry College of Business, says a major constraint to understanding the impact of the Creative Economy on the overall economy, like many places, is that it is not defined what makes up the Creative Economy. Different places define it in different ways.
For example, the European Union has outlined 16 distinct industries that make up its Creative Economy. In a 2016 study on the economic impacts of the Creative Economy in Texas, the study’s authors broke the creative sectors down into four distinct areas with 35 subcategories under each.
Georgia has no such clarity, and that makes measuring it difficult. Sutherland says the Creative Economy is a difficult thing to measure to begin with. As with the example of “Top Gun: Maverick,” the impacts of creative endeavor often go far beyond the immediate project itself.
Sutherland teaches a graduate level course at the University of Georgia titled, “Business Analytics for the Creative Economy.” His students created a dashboard to measure the Creative Economy in Athens. In addition to financials, they also looked for ways to measure the cultural and societal impacts of that Creative Economy. While measuring these factors is not simple, it is necessary to understand how the Creative Economy indirectly affects the overall economy.
Other states have limited opportunities to multilayer their economies. Yet Georgia has created leadership in various sectors like fintech, biosciences, electric mobility, agriculture and now a booming Creative Economy. This, along with world class educational and workforce development programs allows Georgia a unique opportunity to weather inevitable turbulence.
To read more from The Creative Economy Journal, visit here.
