Local economy supported

Full description

This outcome relates to the existence of locally produced goods and services on which the cultural industries rely and which help the industries and local economy to be resilient. The endpoint is that the producers of the goods and services required for the creation of cultural products and services are situated within the local economy and their businesses are patronised.

Theory underpinning this outcome

A resilient economy is one which has the ability to resist, absorb and recover from shocks such as economic recession, natural disaster or political instability (Han & Goetz, 2015). Characteristics of a resilient economy are economic diversity, complexity and participation. (Briguglio, Cordina, Farrugia, & Vella, 2006; Bristow et al, 2014; Hill et al, 2011; Rose & Krausmann, 2013). Other factors noted to contribute to an economy’s resilience include innovation and entrepreneurship, level of income inequality and services industry orientation.

Diversity within a local economy is reported to be helpful in fending off external shocks (Briguglio et al, 2006; Rose & Krausmann, 2013; Brown & Greenbaum, 2016). For smaller local economies, a lack of diversity, including a reliance on a single employer or industry over many years, can lead to a rapid downturn during an external shock to the economy (Han & Goez, 2015; Brown & Greenbaum, 2016). The Australian cultural industries, which contribute just under 7% of GDP, a percentage that is currently growing (Australian Bureau of Statistics, 2014), are an important part of a diverse economic landscape. They offer an important balance to other local industries that are dependent on finite resources, and/or subject to economic upheavals that do not affect the cultural industries.

Complexity relates to the existence of locally produced good and services upon which an industry relies; that is, local availability of everything within the product chain needed for that industry to function. While economic diversity helps fend off external economic shocks, complexity appears to contribute to both resistance to, and bounce-back from, shocks (Han & Goetz, 2015). Complexity with the local cultural industries is evidenced by the presence of the skilled people and locally produced goods and services that are required in the production of cultural products and services, such as theatre productions.

Economic participation includes employment, self-employment, volunteerism, enterprise development and education and training (Rogers, Stevens & Hough, 2008). Economic participation enables the redistribution of economic resources within the community. It also contributes to economic resilience. It is identified as a critical output that contributes to growth in GDP or other local product measures, by which the resilience of an economy is partly measured (Bonici, 2015). Higher levels of labour force participation are associated with more resilient economies (Bristow et al, 2014; Briguglio et al, 2006). Furthermore, a flexible, multiskilled labour force can assist in absorbing shocks from negative externalities that affect sectors of economic activity and enable demand to be relatively easily met by shifting resources to another sector enjoying stronger demand (Briguglio et al, 2006).

Evidence that this outcome occurs

There is some evidence to suggest that the existence of adequate cultural institutions has been an important factor in attracting business and tourists to a region (Bille & Schulze, 2006). In this case, the arts may form part of the social infrastructure that some see as a necessary condition for locating/working in an area (O’Hagan, 2016). The arts may also be a factor in influencing tourists to visit an area, city or country, thereby enhancing employment prospects in hotels, restaurants and so on (O’Hagan, 2016)

A study of two Victorian regional arts festivals found that they made a considerable contribution to the local economy with businesses in the area benefitting from visitors to the region. The research particularly highlighted “in-scope” expenditure generated by people visiting the region specifically to attend the festival, noting that this income would be lost to the region if the festival did not occur. (Masters, 2007)