Download Cultural and Creative Index: an approach to Latin America and the

19th International Conference of the ACEI
Young Researchers Workshop
Valladolid, Spain, June, 2016.
Cultural and Creative Index: an approach to Latin
America and the Caribbean through multivariate
analysis
Authors:
Fadrique Iglesias Mendizábal (1). Consultant at the Inter-American Development Bank; Cultural,
Creativity and Solidarity Affairs Division, Washington, DC. | Ph.D. candidate of the doctorate
program “Cultural and Natural Heritage. History, Art, and Territory“, University of Valladolid, Spain.
Luis César Herrero Prieto, Associate Professor of Applied Economics and Director of the Research
Group in Cultural Economics at the University of Valladolid, Spain.
Abstract:
The current paper aims to analyze and explain how we can confirm that culture, creativity and
economic development are complementary and dependent variables. Through an empirical
analysis of variables related to economic, social, and cultural development, we will try to
demonstrate the relationship between these variables, particularly focused on inequalities and
their impact on cultural development with a breakdown by country, specifically in Latin America,
through a descriptive empirical analysis and the construction of an indicator to measure the
potential of cultural development as an important tool for local development planning.
Version: May, 2016
Keywords: Creative economy, Local economic development, culture and arts, multivariate analysis,
Latin America and the Caribbean, principal components analysis.
1
(*)Presenting Author
BUILDING CULTURAL AND CREATIVE INDICATORS: APPLICATION TO LATIN-AMERICAN AND
CARIBBEAN COUNTRIES USING MULTIVARIATE ANALYSIS
Contents
1.
Introduction ................................................................................................................................................................ 3
2.
Theoretical framework ........................................................................................................................................... 5
3.
Empirical application .............................................................................................................................................. 9
4.
Conclusions................................................................................................................................................................ 22
5.
Bibliography .............................................................................................................................................................. 24
6.
Upcoming projects: Doctoral Thesis ............................................................................................................... 25
1. Introduction
The creative economy has become one of the most interesting emerging opportunities for local and
regional development because of its contribution to GDP and employment generation. This can be
easily confirmed through the 29.5 million jobs worldwide and the $2.25 billion profit generated by
the creative and cultural industries in 20132. Despite the numbers, there are few empirical
applications on the subject, especially focused on the Latin American and Caribbean countries.
Thus, the current paper aims to explain how we can verify that culture, creativity and economic
development are complementary and dependent variables. We try to explain this by building
synthetic indicators for cultural and economic development on the basis of a territorial
disaggregation by country.
Through this paper, we will demonstrate using empirical analysis of primary variables, the
behavioral relationship between economic and social indicators; cultural participation and cultural
facilities; talent, and institutional and business indicators. Particular focus will be given to the
correlations between creativity, propensity for technological innovation and human capital
development, and its impact on cultural development in Latin American and Caribbean countries.
The statistical technique of principal components analysis will help us understand which groups of
variables are related and which geographical areas have a cultural and creative potential. This
analysis will also facilitate comparisons among countries in the region. SICLA (Sistema de
Información Cultural de las Américas), a database built by the Inter-American Development Bank
(IDB, 2015) composed of almost 80 variables related to cultural, social and economic infrastructure,
will serve as the basis for the development of the index.
1.1. Problem Justification
Although the study of the economy of culture already has some decades, statistics and data
compilation in Latin America is still an emerging issue. Until 2002, when Colombia decided to
incorporate economic information specific to culture into its United Nations System of National
Accounts, no country in Latin America and the Caribbean had done it.
Culture Satellite Accounts (CSA), as these segments of national accounts are called, try to make a
functional definition of the cultural field, based on a methodology that covers all its expressions,
EY, International Confederation of Authors and Composers Societies, Cultural times. The first global map of cultural and
creative industries (2015).
2
and that allows an economic assessment of its products and its generating activities, as well as the
social and economic context in which they occur, such as the material, natural and intangible
heritage.
Until 2015, other countries like Argentina, Chile, Colombia, Costa Rica, Spain and Uruguay have
already managed to match their CSA, while many others such as Brazil, Ecuador, Guatemala,
Honduras, Peru and the Dominican Republic are on their way.
Information disparities between countries are a reflection of the access to culture disparities by
those countries’ citizens. Thus, taking into account the region’s persistent socioeconomic inequality,
we come close to the observation of more disaggregated variables related to economic, social,
endowment and cultural development of about twenty Latin American countries, according to
demand, supply and other factors that influence the production measurement and cultural
consumption.
1.2. Objectives
The objective of this investigation is, first of all, to study the relationships between culture and
economic development as an essential relation. Secondly, to study Latin America, since there are
still few empirical approaches to the cultural and creative sector, and because it is a geographic
area with many possibilities for the creative industries’ cultural development and their value in a
period marked by the importance of knowledge economy. Thirdly, an indicator as an objective and
useful tool is intended to be built in order to analyze the disclosed relationships.
It is clear that this work does not intend to make a comparative qualitative analysis of artistic forms
of learning or aesthetic burdens of cultural products. Rather, we will analyze the minimum bases
required in order to increase this access to culture and its most essential constraints.
1.3. Structure and Methodology
The study in question will be addressed by qualitative, descriptive and statistical analysis. It will be
divided into three main sections or blocks.
The first part deals with the analysis from a theoretical perspective of the relationship between
culture and economic development, noting the notions evolution of development and culture as a
constitutive element.
The second part is a descriptive empirical analysis of economic, social and cultural development in
Latin America. To begin with, this section will define the geographical area and the countries that
will be studied. Then we will analyze the relevant indicators for this analysis that include economic
development indicators, social indicators, cultural indicators, and specific endowment indicators.
In the third part, based on some of the variables described in the previous section and others that
are part of the SICLA database, we will count on more than 70 variables in an information synthesis
and data grouping multivariate analysis, specifically on the statistical technique of Principal
Component Analysis to check the behavior relationship of relative development levels of a group of
initial correlated variables, which later will be grouped into a smaller number of variables
uncorrelated with each other (factors) that explain the basic determining factors of cultural
development. This analysis will be made among the 21 observed countries and based on the 12
socioeconomic indicators variables that we understand to be more representative. Finally, and
based on these new factors, we will achieve a hierarchy of territorial units according to the
coefficient value calculated as a basic numerical indicator of the potential cultural development.
The main component analysis is a widely used tool in similar international organizations studies
such as the Competitiveness Index Tourism Sector, the Global Creativity Index or the ICT
Development Index.
Finally, the research closes with a section that gathers the main conclusions and a compilation of
the bibliography and the used database.
2. Theoretical framework
Based on classical studies of economic development, which is explained from a quantitative aspect
focused on the impact of technology in physical capital and workforce, progress was made towards
the exploration of other qualitative variables such as human, social, and natural capital and
ultimately cultural and creative capital. In this effort to determine which variables further
contribute to the development, or those that are still not sufficiently explored, we see the relevance
of studying what role do culture and creativity play in the national and territorial development.
Cultural economy, in a clear peak and growth, attained important development effects both in the
short term, with the spending attraction and creation, as well as in the long term, influencing the
productive, social and urban structure’s changes.
On the other hand, disparities between countries and regions have often hindered the harmonious
human development and it does not only occur within a region but among territorial areas,
obstructing cohesion and integration of the area. Even though they are an old phenomenon,
inequalities in access, distribution, and social and cultural endowment contrast with the paradox
that globalization brings in terms of official cultural content homogeneity (and capital
concentration) and diversity of expressions.
2.1. The creative industries
Any possible cultural contributions to development are studied from many fields, serving a variety
of potential stakeholder groups covering the whole society, directly or indirectly, which translates
to an increasing interest for governments and their public policies.
According to UNESCO3, the cultural and creative industries are defined as:
The term cultural industries refers to industries which combine the creation, production and
commercialization of creative contents which are intangible and cultural in nature. The
contents are typically protected by copyright and they can take the form of a good or a service.
Cultural industries generally include printing, publishing and multimedia, audiovisual,
phonographic and cinematographic productions as well as crafts and design.
The term creative industries encompasses a broader range of activities which include the
cultural industries plus all cultural or artistic production, whether live or produced as an
individual unit. The creative industries are those in which the product or service contains a
substantial element of artistic or creative endeavor and include activities such as architecture
and advertising. In this article, these terms are used precisely and are neither synonymous nor
interchangeable.
Moreover, UNCTAD emphasize the evolution of the concept of Creative Economy, underlining a shift
from the conventional models towards another more multidisciplinary which includes a common
ground between economics, culture and technology, giving more predominance to creative services
and content.
Although there are several trends that according to authors include one or other manifestations
and creative facts, we can mention some common elements such as:
3
Understanding Creative Industries, UNESCO, 2006.
 Traditional Cultural Expressions: includes
crafts, festivals, etc.
 Cultural heritage sites and cultural places:
archaeological sites, museums, libraries and
exhibitions.
 Visual arts: painting, sculpture, photography
and antiques.
 Performing Arts: live music, theater, dance,
opera, circus arts, puppetry, etc.
 Audiovisual: cinema, television, radio and
other broadcasts.
 Publications and print media.
 Design: interior, graphic, fashion, jewelry
and toys.
 Creative services: architecture, advertising,
creative, cultural and recreational R&D+i
 New media: software, video games, digital
creative content.
Some classifications include sports, haute cuisine, and other entertainment industries, although
these three subsectors are more complex to define and measure. Besides, whenever there is
innovation or investigation an implicit creative element exists. The Inter-American Development
Bank has called the creative economy as an "Orange Economy"4 in a widespread communication
exercise.
2.2. Relationship between culture and economic development
The effects that arts and culture can have on the local and regional economic development can be
divided into two groups: short-term effects, which are those that have to do with the power of
attraction and creation’s spending of cultural activities, and the long-term effects, which refers to
the changes in productive, urban and social structure due to cultural impact.
The creative economy, based on creative assets, can potentially generate economic growth and
foster sources of income and generating jobs, while promoting social inclusion, cultural diversity
and human development (UNCTAD, 2008). However, its impact is much broader.
Harnessing these creative forces brings to both countries and, in particular, to cities, the potential of
new wealth creation, the cultivation of local talent and the generation of cultural capital. Having
creativity as the main driver, this sector of the economy is concentrated around products and
services bearing creative content, cultural value and market objectives. As cities transition to a
knowledge-based creative economy and society, increased emphasis is placed on developing
systems for a technology-based work force that relies on innovation, empowering people to
improve their lives, the lives of their families as well as the businesses and communities that they
operate.
4
Buitrago, Felipe; Duque, Iván, The Orange Economy: An Infinite Opportunity, IDB, 2013.
2.2.1. The creative economy in Latin America and the Caribbean
The creative industries are a net contributor to the economy, and are the source of more than 6% of
world GDP, according to John Howkins (2007).
In Brazil, the largest economy of the region, the creative industries are estimated to account for
more than 10% of GDP, while in the United States almost 11% --equivalent to the size of the entire
US manufacturing sector, according to a report prepared by Oxford Economics in 20135.
In other countries of Latin America and the Caribbean the GDP contribution of the sector is
estimated to be between 2% to 7% range (as evidenced in Argentina, Mexico, and Peru) In
Colombia it is estimated that the contribution to the GDP are in a range between 3.3% to 3.5%.
In terms of employment, the sector generates between 5 to 11% of jobs in Canada, Colombia,
Mexico and Trinidad and Tobago, and it is expected to continue growing.
These new trends can be explained because of a shift in paradigm, worldwide. The economy has
evolved from an industrial model to a model based on knowledge, creativity, design and
collaboration (Tapscott, 2014). The so-called Orange Economy or creative economy represents a
relevant subsector of the digital economy, and it is producing wealth from goods and services that
result from talent, intellectual property and cultural heritage. Several governments and private
companies are now committed to supporting accelerators that promote entrepreneurship and
innovation.
Latin America and the Caribbean is a good example of either the potential of the sector, but also the
challenges to come. If we talk about commerce, the region produces 6.12% of total goods exports
(UNESCO Institute for Statistics, 2013) but only 1.22% of exports of cultural goods. This lack of
relevance in the global context could be occurring, in part, because the talent of the creative
workers –or creative class—is migrating to more competitive territories (Florida, 2005).
2.2.2. A composite index focused on Latin America and the Caribbean
Despite the existence of approximately 30 indexes that measure the impact of creative industries in
cities, none have been fully applied and utilized in Latin America and the Caribbean. Therefore,
there is a lack of harmonized and systemic measurement tool that can be uniformly applied
allowing policymakers and stakeholders alike to assess their level of development and the areas
where investment needs to be directed to gain efficiency in public policy oriented to boost other
5
Oxford Economics, The Economic Impact of Creative Industries in the Americas, OAS, IDB and British Council, 2013.
sources of wealth and social development. Consequently, the ability of countries to identify
strengths, weaknesses and best practices is inadequate.
In 2012, researchers at the Australian Research Council (ARC) Centre of Excellence for Creative
Industries and Innovation (CCI) proposed a Creative City Index (CCI-CCI) that they called a “new
approach to the measurement and ranking of creative global cities.”6 The CCI-CCI reviews 23
different indices, including Richard Florida´s Global Creativity Index, Charles Landry´s Creative
Cities Index, and the Mori´s Global Power Cities Index.
Even other indexes such as the Creative Productivity Index7 in Asia, is focused on the productivity
and efficiency of various investments that contribute to knowledge based economic development
and how effectively the investments and inputs are translating into outputs.
It is particularly interesting to analyze Latin America and the Caribbean, for the inter- and intraterritorial disparities and their intrinsic characteristics, mixtures, exchanges and symbiosis. It is an
area immersed in culture in the sense of inheritance (cradle of ancient cultures), behavioral
diversity, singular idiosyncratic features and emotional expressiveness, which gives an extra
potential and a future opportunity for the dissemination and exchange of cultural manifestations.
In that regard, in the next segment we will explain, through a multivariate analysis, the factors that
explain the highest probability of development potential of the countries’ cultural and creative
sector through a potential creative industries’ index that takes into account demographic,
economic, social, cultural and new technologies endowment variables.
3. Empirical application
The geographical scope under study includes 21 countries in Latin America that have provided the
greatest amount of information: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican
Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, México, Nicaragua, Panamá,
Paraguay, Perú, Trinidad & Tobago, Uruguay and Venezuela.
The data collected at SICLA comes from primary and secondary sources. The primary ones were
collected between 2013 and 2014 from the ministries and secretariats of culture of the mentioned
countries by the Inter-American Development Bank. Secondary sources have also been used as well
as studies of statistical sources such as the World Development Indicators published annually by
6
7
Hartley, J., Potts, Jason, ARC Centre for Excelence for Creative Industries and Innovation. Cultural Science Journal, Vol 5 Nº1, 2002.
Creative Productivity Index, Analysing creativity and innovation in Asia. A report by The Economist Intelligence Unit for the
Asian Development Bank, 2014.
the World Bank, the data provided by World Economic Forum, the United Nations database
(UNESCO Institute for Statistics), the Prosperity Index, various reports from international
organizations (United Nations Creative Economy Report 2008 and 2013, Cerlalc: Report from the
Regional Center for Book Promotion in Latin America, the Caribbean, Spain and Portugal-Cerlalc
2010 and 2014; the 2004 and 2015 UNDP Report about human development, the United Nations
UNFPA State of World Population Report 2008, "Reaching Common Ground: Culture, Gender and
Human Rights“ and the Report "United Nations UNESCO 2009 World Report"), the ECLAC statistical
database, the Prosperity Institute 2015 database and International Telecommunications Union
database.
For the factor analysis’ own limitations for a study of 21 cases (countries), we will describe in depth
the relationship between 12 variables only; however, they have been extracted from the mentioned
database, which has about 80 indicators that below to the following categories:
Groups of indicators








Socioeconomic indicators
Demographic indicators
Infrastructure (traditional and NICT)
International cultural recognitions
Creative industries (output)
Education
Tourism
Others
For our database we seek quantitative indicators that show us the necessities and minimum
requirements of this access to culture and its most essential constraints. Since carrying out a study
in cultural valorization is a complex task, as it is often dealt with intangible variables and not easily
quantifiable, we will see to what extent the studied countries have basic provisions and elements
that permit the development of their artistic manifestations and the generating value based on
these. In Latin America’s rural areas these difficulties are even more noticeable as there is a breadth
of expressive and cultural forms that are hardly measurable with quantitative variables.
Furthermore, the data amongst countries are not always homogeneous in all the variables that we
would have liked; thus, we will focus on generic variables that enable (or in their absence, disable)
further development of cultural and creative potential.
For this work’s empirical evidence, we will focus on the possibilities of the creative economy
emerged from the cultural and creative industries, largely facilitated by the development of new
technologies and the possibilities that tourism brings, besides cultural heritage.
3.1. Data and methodology
3.1.1. Descriptive Analysis
Cultural exports have doubled over the past 10 years (UIS-UNESCO, 2016), reaching in 2013 a total
of US$ 212.8 billion. Although developed countries control a big portion of the global trade in
cultural industries, low income countries, are gaining from the expansion of the sector. During the
period between 2004 and 2013, low income economies jumped from US$71.1 to US$102 million in
2013, with a peak in 2007 of US$159.6 million, before the global crisis hit the trend.
Latin America and the Caribbean were exporting US$2,222.1 million in 2004, then the region
reached the peak in cultural exports in 2008 with US$5,025.2, and after the recession, they are again
in US$2,644.4 with a decreasing trend. This could be explained in part because certain sub-sectors
are in structural crisis, such as cinematographic goods falling by 88% worldwide, and a decline in
music goods (27% worldwide) but with an increase of other industries worldwide8, such as jewelry
(271%), sculptures and statues (180%), videogames (140%), paintings (80%) or crafts (57%).
However, in Latin America and the Caribbean there is a significant commercial deficit in creative
industries. It is estimated to ascend to US$9,993 million and that it almost doubles if you consider
payment for royalties and copyright fees, reaching US$16,574 million9.
The copyright-based industries averages a contribution to the GDP10 of 7 LAC countries of 4.26%
compared to the average of 39 countries throughout different regions of 5.26%. Panama is an
example of the huge potential that these industries have in the LAC region, with a total contribution
to the GDP of 6.35%. The average contribution of the copyright-based industries to employment is
5.07%, reaching 11% in Mexico (compared to the average of 5.49% of the 39 countries throughout
different regions). The impact of these copyright-based industries on employment generation is
significant, especially considering that the majority of these jobs are targeted to a young
population11.
Variables related to culture and creativity are frequently associated with better development
indexes. In general, the correlation between infrastructure per capita and GDP per capita or other
8UNESCO
Institute for Statistics (UIS), The Globalisation of Cultural Trade: A Shift in Cultural Consumption, International flows of
cultural goods and services 2004-2013, 2016
9 Buitrago, Felipe & Duque, Iván, The Orange Economy, An Infinite Opportunity, IDB, 2013, p.124.
10 Argentina, Colombia, Jamaica, México, Panamá, Perú and Trinidad & Tobago
11 Oxford Economics (2013).
variables such as the Human Development Index (UNDP) or literary rate, are positive. In particular,
the correlation between number of movie theaters per capita and GDP per capita is significantly
strong (r=0.66).12
Similarly, variables related to communication and information technology are strongly correlated
to variables of social and economic development. For example, the correlation between telephone
land line and GDP per capita is of r=0.81 and of the internet and DGP is of r=0.82.13
The film industry has generated14 in Latin America US$5,4 billion in income during 2013,
contributing to the generation of 115,000 jobs in the region, in addition to 105,000 jobs generated
by television.
Data on film infrastructure in Latin America indicates that the four countries with higher
population (Brazil, Mexico, Colombia and Argentina) represent 82% of movie theaters (SICLA/IDB,
2014), indicating that supply is weak in other countries of the region.
According to UNESCO, in 2011, Latin America generated box office of US$1.6 billion. Brazil and
Mexico represented 70% of the total Latin American admissions and box office. Mexico with US$
228 million and Brazil with US$146 million annually are among the 10 countries worldwide with
higher box office success15. Attendance to the movie theater (per capita) is close to one person per
year, with the exception of Mexico, which reports two per year. This may indicate that the potential
for growth is high.
Data indicates that on average, the region is underequipped, since it possesses 1.73 screens per
every 100,000 people. Only two countries have more than three screens per capita for every
100,000 people: Mexico (4.6) and Barbados (3.64), insufficient in comparison to the USA (14.19)
and the European Union (5.8).
Latin America’s participation in the international box office increased from 5.78% to 8.35% and
three countries in the region are amongst the top 20 that generated more income: Mexico (place
10), Brazil (place 11) and Argentina (place 14) in 2011.
The possibility to access cultural goods and services is not only related to the availability of cultural
infrastructure, but also with other multiple factors.
Among them, the new information and
communication technologies that gain more relevance for the consumption of cultural services.
In this case, as well as others, it is a simple lineal correlation, in which the value of the Pearson (r) correlation coefficient
reaches 1 it is considered a closer relationship between both variables.
13 Idem as in the prior correlation.
14 EY, Cultural times: The first global map of cultural and creative industries, 2015.
15 UNESCO Institute for Statistics, Emerging markets and the digitalization of the film industry, 2013 p. 18
12
According to the Latin American Survey on Cultural Habits and Practices16, 23% of respondents in
22 LAC countries responded they use internet for leisure: 16% to listen or buy music and 12% to
view movies, television shows.
Following this trend, better Access to the internet allows users not only to consume but also to
produce and offer to a wider audience potential texts, sounds and images. The internet has become
a central element of cultural flow between individuals, groups and institutions.
This new scenario brings important socioeconomic and cultural consequences, since it opens access
to information, communication, services, markets and technology to a global scale, including great
diversity of cultural and educational content.
Finally, the indicator devoted to measure “international recognitions and awards”17 (in absolute
terms) is high correlated with “new titles, books/ISBN” (r=0.936) cultural and natural heritage
(r=0.769), total exports, cultural goods (r=0.675).
3.1.2. Multivariate Analysis: Principal Components Analysis
Since for the PCA it is not advisable that the variable numbers exceed those of the individuals, we
are left with 12 variables from the indicators groups mentioned earlier of socioeconomic,
demographic, endowment, cultural, creative, public expenditure, cultural industries and tourism
industry information for the period 2011-2015.
After several trials with groups of representative variables, we have finally proceeded to select the
variables listed below:
Selected variables
Urban Population (% of total)
Health expenditure per person (US$ PPP)
Human Development Index
R&D expenditure (% of GDP)
Tertiary education per worker (years per worker)
Log of Businesses stat-up costs (%GNI per capita)
International tourism, receipts (current US$), per capita
16
17
Encuesta Latinoamericana de hábitos y prácticas culturales 2013, Organización de Estados Iberoamericanos, 2013.
We decided to measure “international recognitions and awards”, by counting the following awards and prizes:
Prestigious international literary awards (Nobel, Cervantes, R. Gallegos, Princess of Asturias, Pulitzer and Camoes; Awards
and prizes of film festivals and academies internationally renowned (it takes into account only the main prize of festivals
recognized by the International Federation of Producers a Film FIAPF): Berlin, Cannes, Shanghai, Moscow, Karlovy Vary,
Locarno, Montreal, Cairo, Venice, San Sebastian, Warsaw, Tokyo, Mar del Plata, and the Oscar for Best Foreign Language
Film and the Latin American Film Festival of Huelva; Architecture and Arts (Pritkzer Architecture and Prince of Asturias
Award for the Arts; Music Awards: UNESCO-IMC Prize (awarded between 1975 and 2005 by the International Music
Council & UNESCO) and the Latin Grammy Awards between 2000 and 2016; Olympic medals recognized by the
International Olympic Committee (IOC).
Number of meetings per country
International recognitions and awards, per million habitants
Cultural Heritage designations by UNESCO, per million habitants
Exports of goods and services, creative industries (% of total)
ICT exports (% of total exports)
Correlation Matrix and PCA’s Bartlett’s sphericity test and KMO measure of simple adequacy
In the main components’ analysis, unique factors are not considered to exist, and therefore, each
variable is explained only by common factors. This implies that the matrix from which it begins is
the correlation matrix:
Extraction method: Principal Components Analysis. Correlation matrix.
The correlation matrix has ones on its main diagonal, which represent the variance of each variable.
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Bartlett's Test of Sphericity
Approx. Chi-Square
df
Sig.
.516
161.391
66
.000
Bartlett’s statistic sample value is 161.391 and the significance degree is 0.000; so it is evident that
it is not the identity matrix. The probability of making mistakes if we reject the null hypothesis that
the correlation matrix is the identity matrix is 0%, so we dismiss it. The factor analysis is the
appropriate one.
The KMO test compares the Pearson correlation coefficients and the partial correlation coefficients.
If the sum of the partial correlation coefficients squared is too small (the relationship between each
pair of variables should or can be explained by the rest), the KMO will be a very close index to the
unit and therefore, the factor analysis will be an appropriate procedure. In our case it is 0.516. The
factor analysis is the appropriate one.
Communalities, total variance explained and factorial punctuations
The purpose of factorial analysis is to be able to interpret the correlation matrix with nine variables
using the least possible number of factors. To achieve this, a lineal combination of all variables is
necessary, in order so that the first principal component is a combination which explains the
biggest part of the proportion of the variable sample, and the second shows the second proportion
of the variable and at the same time is inter-correlated with the first one, and so consecutively, until
reaching as many components as variables. The communality of each variable after the extraction of
factors indicates the quality of the variables representation of common factors.
The factor analysis’ purpose is to be able to interpret the correlation matrix with nine variables
from the smallest possible number of factors. For that purpose, a linear combination of all variables
is achieved so that the first main component is a combination that explains most of the sample’s
variance proportion, the second component to the second largest and which in turn is uncorrelated
with the first, and so on, up to as many components as variables. The commonality of each variable
after the extraction factors indicates this variable’s representation quality by the common factors.
This explained variance chart shows the values associated with the 12 components that could be
generated at first (a number equal to the total values to begin with). The total sum of the column
matches the number of variables (12) and each value is the part of the sample’s variability (total
variability) that explains each component. If calculated as a percentage the second column is
obtained and if values are accumulated, the third one is. As for the decision on the number of
factors that we want to represent the data, the SPSS statistical program sets by default that the
number of factors or components finally extracted should be the number of eigenvalues greater
than one. In both cases, it is 3.
For the case studied the variance’s percentage that explain the 3 extracted components is 71.271%,
i.e. that 71.271% of the total data variability is collected, which is an acceptable percentage.
In consequence, we see that we have achieved the goal of synthesizing information in three new
variables that are uncorrelated with each other and that acceptably explain the fact of cultural
development. We will pay more attention to the chart on the right, to the rotated component
matrix, as with the VARIMAX method we obtain a more accurate interpretation:
Components extraction and rotation (VARIMAX)
It will be essential to interpret the resulting factors from the PCA ex-post, as will be deducted after
seeing the factors’ relationship with the original variables. The correlations’ sign and magnitude
should be studied. The previous chart shows the coefficients used to express each standardized
variable in terms of the three factors (coefficients of the matrix A). These components are also
known as contrast weights. The factorial matrix indicates the relationship between the factors and
the variables. However, it is often difficult to interpret factors from the factorial matrix.
To simplify the interpretation, we iterated the variables one more time, searching the factorial
rotations (rotating the coordinating axes) in order to better understand the meaning of the factors’
matrix. In this new rotated matrix, we will apply the most commonly used orthogonal method, the
VARIMAX, to minimize the number of variables with high weights of each factor.
3.1.2.1.
Interpretation of the components:
Analyzing the data, we recognize three different factors that can be grouped as follows:
The 1st component groups the following variables: 1.- R&D expenditure, 2.- health expenditure, 3.human development, 4.- urban population, 5.- number of international meetings per country, and
6.- log of businesses start-up costs.
All of these variables relate to efforts of the public sector to create the necessary conditions so that
industry – not only creative, but also of knowledge and of added value – can display their full
growth potential.
In this sense, so that the creative class and the goods and services on intellectual and technological
component are developed, it is necessary to invest in basic conditions (health expenditure, human
development). It will be necessary to rely on AGLOMERACION economies (high density), encourage
high value added through research (R&D expenditure), and high exposure and brand potential of
the country (number of international meetings and fairs per country). Therefore, we called the 1st
component “creative class capacity building component”.
The 2nd component groups variables of: 1.- ICT exports, 2.- tertiary education per worker, and 3.exports of goods and services, creative industries. We call this 2nd component: “creative class
outputs”.
The 3rd component groups variables of: 1.- Cultural heritage designations by UNESCO, 2.International tourism receipts, and 3.- International recognitions and awards.
We call this 3rd component: “culture, international exposure.”
3.1.2.2.
The Creative Economy Potential Index
As we intend to embody a hierarchy of social and cultural development, each country will be
characterized by the weighted sum of the 12 considered variables. For the construction of the
index, according to the variance explained by each component, the first three were taken into
account, which together retain a 71.271% of the total variance.
Since these three variables embrace aspects that have to do with the economic, social, endowment
and creative potential, the creative economy potential index will be given by:
CEPI = (0.508299308) x F1 + (0.264062522) x F2 + (0.22763817) x F3
This index is pondered according to the percentage of the variance that explains each factor,
(36.227%, 18.82% and 16.224% respectively, and 71.271% in total), which contemplated at 100%.
That means that: the first factor, the “creative class capacity building” component accounts for
50.8299% of the data; the second factor, “creative class outputs” component accounts for
26.406% of the data indicator; and finally the third factor, the “culture, international exposure”
explains a 22.7638% of the data.
Thus, to obtain the index of each country, we will multiply our index by the factorial scores
obtained in our PCA by territorial unit (by country).
Then, the index for each country would be as follow:
Brasil
Argentina
Panamá
Chile
México
Colombia
Costa Rica
Uruguay
Trinidad y Tobago
Perú
Jamaica
Dominican Republic
Venezuela
Ecuador
El Salvador
Paraguay
Bolivia
Guatemala
Belize
Honduras
Nicaragua
0.82997585
0.82936834
0.73844579
0.6732906
0.62601451
0.53630269
0.48628386
0.43967021
0.10454054
0.0866467
0.03238657
-0.10247226
-0.13024666
-0.2614931
-0.46259268
-0.48847503
-0.55191605
-0.72933624
-0.77680419
-0.86849153
-1.01110441
This index attempts to categorize the possibilities of the development of potential creative
industries with the assessed variables. By focusing mainly on relative and normalized variables
(per capita quantities, or in relative terms), the CEPI helps us see beyond what is evident “creative
and cultural development” in absolute terms, for countries with larger markets and more
developed economies, by focusing on the variables that synthetize and explain the information of
the rest.
In the graph, we observe a clear positive correlation (r = 0.742) between economic wealth
(measured in terms of GDP per capita) and the proposed index, therefore demonstrating that GDP
and
potential
creative
development are correlated and
dependent variables.
Note that within the 12 studied
variables we did not include any
direct measure of GDP; however,
it is indirectly included by using
the Human Development Index,
as in that index GDP weighs
33,33%.
3.1.3. Cluster analysis
In this phase of cluster analysis, we intend to confirm the ordinal classification made by the CEPI, so
that we group the territorial units with the average K method and based on factor scores. So, after
several trials, we have determined that the number of clusters (or groups of territorial units) will
be 4.
Initial Cluster Centers
REGR factor score 1 for analysis 1
REGR factor score 2 for analysis 1
REGR factor score 3 for analysis 1
1
1.68209
-.28095
-.02199
Cluster
2
1.13143
-1.21412
2.39921
3
-1.45705
-.52060
-.56322
4
-.43131
3.04070
.82385
Cluster Membership
Case Number
V1
Cluster
Distance
1
Argentina
1
.835
2
Belize
2
1.103
3
Bolivia
3
.377
4
Brazil
1
.876
5
Chile
1
.837
6
Colombia
1
.635
7
Costa Rica
4
.779
8
Ecuador
3
.532
9
El Salvador
3
.360
10
Guatemala
3
.605
11
Honduras
3
.673
12
Jamaica
2
.879
13
México
1
1.435
14
Nicaragua
3
.730
15
Panamá
4
.779
16
Paraguay
3
.427
17
Perú
3
.930
18
Dominican Republic
3
.889
19
Trinidad & Tobago
2
1.369
20
Uruguay
1
1.289
21
Venezuela
1
1.192
Final Cluster Centers
Cluster
1
2
3
4
REGR factor score 1 for analysis 1
1.07173
-.02939
-.76795
-.25118
REGR factor score 2 for analysis 1
-.00701
-.55720
-.32214
2.30998
REGR factor score 3 for analysis 1
-.52446
2.09048
-.42721
.62236
The grouping and belonging of countries to each cluster would be determined by:

Cluster of Argentina, Brazil, Chile, Colombia, México, Uruguay and Venezuela is composed
of counties with high-intermediate GDP, with robust cultural industries (in comparison to the
rest of the countries), and with an internal market relatively developed. This cluster also
represents countries with years of tradition in the cultural and creative industries.

Cluster of Belize, Jamaica and Trinidad & Tobago is formed by relatively small countries,
with small population, but with decent GDP per capita, specifically focused on tourism as a
primary industry, and in the Caribbean sub-region.

Cluster of Bolivia, El Salvador, Guatemala, Ecuador, Honduras, Nicaragua, Perú, Paraguay
and Dominican Republic is the one with most challenges, because of the lack of infrastructure,
appropriate regulations and international exposure. Although, Perú and Dominican Republic,
with relevant improvements in terms of GDP per capita and human development, are two
outlier countries within the cluster indicating they are the most likely to change clusters soon.

Cluster of Panamá and Costa Rica are countries with international exposure, business friendly
environment, growing economies based on tourism and creative industries. In the future, if they
persist in their improvements, these two countries could belong to the firs cluster.
3.1.4. Maps
Cluster map
Country ranking map
4. Conclusions
Culture and industries that derive from creativity have short term effects on the offer and demand,
principally driven by creative industries, that includes types of emerging businesses that have a
prominent role in tourism, sports, new communication means for the masses, IT services or gastronomy.
Long term, culture is directly related to social composition, education and urban planning of the
countries and cities.
The basis to have a vibrant and active cultural industry is on a country’s capacity to create an
environment that encourages creativity. Highly talented individuals are attracted to countries or
territories with higher possibilities of human development and societies in which basic health needs are
covered. These individual will be attracted by investments in education and research. The private sector
will fulfill its role in the capacity that the possibilities to create ventures and businesses are investorfriendly.
Countries invest more money and resources to achieve a brand that is able to demonstrate their capacity
to attract talent. This country brand will be reinforced by international exposure of its creative and
cultural attributes. Cultural industry (film, literature, sports) are powerful identity and image attributes
of each country and have a repercussion on tourism industry, directly related to creative industries.
To achieve real cultural and creative development it is necessary to reduce the inequality of the
possibility to access education and cultural appreciation, within each territory. These inequalities also
apply to access to infrastructure and ICT services. It is also necessary to mitigate inequalities of creative
aspiration or creative agency.
The largest sociocultural inequalities among countries can be found in international awards, in which
bigger and most populated countries sweep (like Brazil Mexico, Argentina and Colombia). This variable
(in absolute terms) is high correlated with “new titles (books, ISBN)” (r=0.936) cultural and natural
heritage (r=0.769), total exports, cultural goods (r=0.675).
Nonetheless, there are significant
achievements in countries with a small population (such as Chile, Uruguay and Jamaica). A country’s
international visibility and appearance doesn’t always come from its financial markets or national
economies, but also from the impact of public opinion that generates cultural and sports recognition.
The same applies to international fairs and trade shows, which generates positive impacts in the
territories that host them. This positive image is conditioned on the tourism sector and other areas of
the economy in which local productive systems emerge triggered by the multiplier effect.
It is necessary to highlight the need to educate society regarding the possibilities that derive from
management and defense of cultural heritage so that in addition to incrementing income derived from
tourism, local identities can be identified, employment generated, poverty reduced and sustainable
development attained.
The results of the multivariate analysis indicate that Latin American countries are influenced by a series
of socioeconomic factors in their possibilities to transmit creative industries. Such factors include
socioeconomic development, international exposure, permeability of tourism sector, and by the cultural
component itself.
We can observe a logical correlation between Latin American countries creative industry’s development
possibilities and income per capita. This confirms our initial hypothesis of the relationship between
economic development and creative industry development potential.
Given the different cultural possibilities among Latin American and the Caribbean countries, one
initiative that could contribute to the harmonious development of the region could be through structural
funds to invest in culture that targets sustainable development. The main components could focus on
development of physical accessibility and cultural infrastructure networks such as the ones mentioned
on employment.
We have observed that in many countries tourism (especially cultural tourism) is meaningful: in the
Dominican Republic, Costa Rica or Panama, tourism represents between one third and one fifth of the
total exports. Cultural industry is a real and emerging possibility in Latin America. The accumulated
cultural capacity, itself stimulates an important sector such as tourism, but it is not the only variable.
The territory’s competitiveness and dynamism are also decisive and are controllable variables; as
opposed to awarding a title of cultural heritage site, which is not. We have observed dynamic economies
with cultural dynamic sectors, in which the tourism sector has been able to take advantage of that
dynamism (competitive tourism sector and availability of infrastructure, especially ICT).
This
demonstrates that it is not enough to possess cultural heritage sites (as is the case with Bolivia or
Guatemala), but that it is also important to invest in current and potential local productive systems. In
this sense, the social changes brought about by ICTs will open new possibilities. It is also necessary a
dynamic private sector, capable of generating a robust creative industry.
Innovation, state-of-the-art technology and optimal infrastructure will encourage the creation of more
sophisticated products to compete in global markets. By creating an environment where industry
leaders, startups, innovators and artists want to live, work, and play, local and national governments will
contribute to generating added value in territories where traditional industries are declining.
Countries in Latin America and the Caribbean need public policies aimed at generating ecosystems of
innovation and entrepreneurship, leveraging the efforts of intellectual property protection to fully
compensate ideas, businesses and cultural vitality.
5. Bibliography
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Biehl, D., (1998) “Las Infraestructuras y el Desarrollo Regional”. Papeles de Economía Española, N. 35.
Centro Regional para el Fomento del Libro en América Latina, el Caribe, España y Portugal, Cerlalc (2008,
2014) “El espacio iberoamericano del libro”. Fundación Grupo Iberoamericano de Editores, GIE. Sao Paulo,
Julio.
Figueroa, V.F., (2000) “Una metodología para evaluar el desarrollo a nivel de unidades territoriales
menores. Aplicación al caso de la Décima Región de Los Lagos, Chile”. Universidad de Valladolid.
Florida, R., (2005) “Cities and the Creative Class”. Routledge, New York.
Herrero, L.C., (2009) “La investigación en economía de la cultura en España: un estudio bibliométrico”.
Estudios de economía aplicada vol. 27–x, art. 27.
Herrero, L.C., Bedate, A.M., Sanz J.A. (2002) “Factores determinantes del consumo cultural en España”. V
Jornadas de Política Económica. Bilbao.
Herrero, L.C., Sanz Lara, J.A., Bedate A., Devesa, M. y Barrio Tellado, M.J. (2006): “The Economic Impact of
Cultural Events: a Case-Study of Salamanca 2002, European Capital of Culture”, European Urban and
Regional Studies. Amsterdam, Netherlands.
International Telecommunication Union. (2009) “Measuring the Information Society: the ICT Development
Index”. Geneva, Switzerland.
Lévy, Pierre (2004), “Inteligencia colectiva: por una antropología del ciberespacio”; La Découverte
(Essais). Washington, DC.
United Nations (2008): “The Challenge of Assessing the Creative Economy: toward Informed Policy-making.
Creative Economy 2008 Report”. United Nations UNDP and UNCTAD. New York.
United Nations, Thoraya Ahmed O. (2008), “Estado de la Población Mundial. Logrando puntos de
entendimiento: Cultura, Género y Derechos Humanos””.
Lanzafame, F., Quartesan, A., Romis, M. (2007). “Las Industrias Culturales en América Latina y el Caribe.
Desafíos y Oportunidades”. Banco Interamericano de Desarrollo. Washington D.C.
Rausell K. P., Abeledo, R. and Martínez, J., (2008), “Cultura. Estrategia para el desarrollo local”. Instituto
Interuniversitario de Desarrollo Local. AECID. Madrid.
Sen, A., (1997) “On Economic Inequality” Oxford: Clarendon Press.
Stiglitz, Joseph E.; Ocampo, José Antonio, Spiegel, Shari; Ffrench-Davis, Ricardo; and Nayyar, Deepak;
(2006) “Stability with Growth: Macroeconomics, Liberalization, and Development”. Initiative for Policy
Dialogue Series Oxford University Press.
Tapscott, Don, “Re-Thingkin the Digital Economy: Promise and Peril in the Age of Networked
Intelligence,” (2014), McGraw-Hill
The Arts Newspaper (2010). “Exhibition and Museum Attendance Figures”. No. 212, London.
Throsby, D. (2003) “Cultural Capital”, in “A handbook of cultural economics”. Editor: Ruth Thowse. EEPL.
Northampton, Massachusetts.
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UNESCO, Robinson M., Picard, D., (2006) “Tourism, Culture and Sustainable Development Report”. Culture
Sector, UNESCO. París.
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Switzerland.
6. Upcoming projects: Doctoral Thesis
Doctoral thesis proposal:
“Searching for the Kreatópolis: Creative cities. An assessment of creative cities in Latin America and the
Caribbean using a dual-approach between the UNESCO Creative Cities Network and the Inter-American
Development Bank’s Emerging and Sustainable Cities Initiative in Latin America."
Tutor, Doctoral Degree: Jose Luis García Cuesta. Director of thesis: Jose Ignacio Molina de la Torre,
Universidad de Valladolid.
Currently, I work as a consultant at the Inter-American Development Bank´s (IDB) Cultural, Creativity
and Solidarity Affairs Division, in Washington, D.C., promoting the role of culture and creativity in
economic development. In parallel, I am a Ph.D. candidate of the doctorate program Cultural and
Natural Heritage. History, Art, and Territory at the University of Valladolid, Spain. Prior to this, I studied a
master´s degree in Cultural Industries (2007) and a master´s program in Local Economic Development
(2010), both at the University of Valladolid.
My doctoral research originated in 2010 with my master's degree thesis18, in which I built a composite
index based on inequality and culture, focused on 18 Latin American countries. Six years have passed
since then, and nowadays, we have access to more data, mainly through the Cultural Information System
of the Americas, a database developed by the IDB (SICLA, 2015). Through this study, we expect to expand
the cultural index from 18 to 21 countries, to further explore with more robust data and accuracy, how
culture, creativity and economic development are complementary and dependent variables.
The aim of this doctoral thesis is to study how to foster creativity and innovation in Latin America and
the Caribbean, and systematize the "creative ecosystems" that eventually will encourage the
development of a dynamic local industry in the region.
This proposition19, will be divided in two main research sections: The first part, focused on the paper
proposed for this congress, will include the construction of a synthetic indicator that highlights the
differences and similarities between creative territories, disaggregated at national level for LAC
countries, to help measure and develop an action plan in public policy related to creativity and
innovation. The second part will consist of a descriptive analysis of two methodologies of intervention in
cities. The first, an assessment methodology focused mainly on environmental, urban and fiscal
sustainability, implemented by the IDB in 50 cities in Latin America and the Caribbean between 2011
and 2015, called the IDB Initiative of Emerging and Sustainable Cities; the second intervention will focus
Master´s Degree in Local and Economic Development. Thesis: “Building a Cultural Index in Latin America.” Tutor: Dr. Luis
César Herrero Prieto.
19 Doctoral Program in Cultural and Natural Heritage. Thesis: “Looking for the Kreatópolis: Creative cities. indicators and
methodological study with two approaches: the UNESCO Creative Cities Network and the IDB´s Emerging and Sustainable
Cities Initiative in Latin America." Tutor: Dr. Jose Luis García Cuesta.
18
on the Unesco Creative Cities Network, centering our attention in the 17 cases of cities in Latin America
and the Caribbean, through a control group comprised of four cities (Montevideo, Nassau, Florianopolis
and Puebla) that belong to the two methodologies.
The expected outcome of this study is to contribute empirical evidence on the relationship between
economic development, urban sustainability and creative development, in order to facilitate
policymakers´ decisions at a local and regional level.
Professional areas of interest: Urban planning, policy making, consultancy, cultural and arts
management, local governments.