_The Cultural Trade Index_ Page | **3** of **14**

words, they comprise the cycle of creation, production and distribution of goods and services that use intellectual capital as their primary input. Today’s creative industries involve the interplay of traditional, technology-intensive and service-oriented subsectors. They range from folk art, festivals, music, books, paintings and performing arts to more technology-intensive subsectors such as the film industry, broadcasting, digital animation and video games, and more serviceoriented fields such as architectural and advertising services. All these activities are intensive in creative skills and can generate income through trade and intellectual property rights.”<sup>4</sup> In a broader context, “the interface among creativity, culture, economics and technology, as expressed in the ability to create and circulate intellectual capital, has the potential to generate income, jobs and export earnings while at the same time promoting social inclusion, cultural diversity and human development. This is what the emerging creative economy has already begun to do as a leading component of economic growth, employment, trade, innovation and social cohesion in most advanced economies.”<sup>5</sup> The contribution of cultural trade cannot be underestimated in the mandate to promote economic diversification, boost shared prosperity, and to reduce extreme poverty in a sustainable manner. This because even low-income countries have a wealth of cultural diversity that could be a viable source of export earnings.<sup>6</sup>

# **II. Why the Cultural Trade Index?**

At the outset, one big caveat deserves attention: indices incorporate tradeoffs. And these have to be made explicit. In this case, for instance, if country X’s total movie trade is divided by X’s GDP or population, the two methods might render totally different results. GDP’s great merit is that since trade-offs are measured by market prices, we know the terms at hand. That noted, the immediate purpose of this index is to achieve the following objectives:

- 1) To shed light on patterns of cultural trade effectively.  The index would assemble cultural trade data in one place where they can easily be studied.  And as a database, it could function as a public good (for anyone who wishes to learn about patterns of international cultural trade).

- 2) Policy action: To pursue policy action that may help promote effective cultural trade policies for development.  Ranks and comparisons are not often golden gates to truth. But, in our context, if country X is number one in attracting global cultural tourism, that rank might serve as a proxy for country X to stay competitive in this sector.  This is not new.  And indeed policy makers elsewhere could consider what allows X to succeed while others, with more or less similar features, have not.

- 3) Improve research on cultural data: Anyone who has done research on the cultural or creative economy perhaps faces the same challenge that inspired the creation of this index: the paucity of data.  This can be a major challenge in convincing skeptics and policy makers to allocate scarce resources to promote the creative sector — although, of course, data availability does not automatically lead to policy priority; nor does availability necessarily lead to access, better

> 4 Panitchpakdi and Kemal Derviş 2008, pp. iii-iv. 5 Ibid., p. iii.

> 6 See Kabanda 2014.