Felipe Buitrago and Iván Duque, authors of The Orange Economy, examine the potential of the creative economy in Latin America 

Releasing Latin America’s creative potential

Since the advent of the term “white-collars” in the early 20^th Century in reference to the clean shirts of office workers, as opposed to the soiled attire of their manufacturing and mining peers, the trend to label professions according to a collar hue has become ever more frequent.

First, manual laborers were labeled as “blue-collars” mostly due to the characteristic color of the Levi Strauss’ denim they adorned. By the 1970s, women working in the service industries were dully designated as “pink-collars”, while those linked to the environmentalist movement were promptly identified as “green-collars”.

In the 1980s, the rapidly growing class of financial yuppies was briefly designated as “gold-collars”, and as the baby boom generation approached retirement, the “grey-collars” entered into lexicon.

Today, as we attempt to cope with the challenges of the digital revolution, a new breed of worker is arising.

Richard Florida, an acclaimed American urbanist recently recognized as one of the world’s most influential thinkers, has famously made the case for the rise of a creative class: A class of talented people that lives and reproduces its talent wherever tolerance and technology is adequate.

In a similar vein, two accomplished British authors, Charles Landry and John Howkins, introduced, respectively, the concepts of the “creative city” -a place to live, work and play- and of the “creative economy” –a set of activities based on the production and exploitation of intellectual property; a business sector worth about 6.1 percent of global GDP in 2005.

According to a recent publication by the Inter-American Development Bank, Howkins’ estimate is equivalent to well over US$4.3 trillion a year today, 120 percent Germany’s GDP or two and a half times the entire military expenditures in the world.

Naturally, this creative class is drawn to the creative cities, and develops a creative economy that deserves a collar color, right?

Wrong.

These creative workers have been correctly labeled “no-collars”, in reflection of their tendency to wear informal and stylish attires. Alternatively, one can ignore the collarless nature of the creatives style, and buy into the color argument made in The Orange Economy: An Infinite Opportunity, and simply call them: “orange-collars.”

But how does all of this collar-talk relate to Latin America & the Caribbean’s (LAC) future?

Traditionally a source of raw materials, LAC now faces the challenge of “commoditizing” its most valuable raw material yet: the infinite talent of its people.

Let’s be clear. Speaking about commoditizing the talent of LAC’s people is not to say that you can exploit the richness of their cultural heritage or the innovation potential of their youngest and brightest, as if the region’s raw talent were unrefined iron ore to be sent away for processing by the kiloton to wherever is cheapest.

No.

Commoditizing LAC’s creative talent means patiently nurturing the skills of its people, and consistently harnessing the values – both symbolic and economic – that their creativity can add to society.

The Orange Economy highlights that today some 10 million people are employed in creative activities such as arts and heritage (theater, visual arts, crafts and museums), cultural industries (television, music and publishing), and functional creations (advertising, design and fashion).

These orange-collars are generating US$175 billion a year, roughly the size of the Peruvian economy, and are at the core of more than $18 billion dollars in exports per year. Of these exports, one third is traded between the LAC region, and most of the remaining two thirds are directed the US and the EU markets.

However, the creative trade balance is negative, at a deficit of almost US$10 billion, and when considering net payments on informatics services and on intellectual property receipts,LAC creative balance of payments is negative by almost $17 billion dollars, the equivalent of the economy of Honduras every year.

This is due in part to LAC’s low share in the world’s high tech exports, which according to the World Bank reach a meager 2.8 percent of the total. Considering that residents in the region accrue less than 0.5 percent of the patents in the world, it is clear that most of those exports are due to outsourced production, rather than stemming from regional intellectual property.

This is consistent with the fact that the region’s receipts for royalties and licenses are about the same 0.5 percent of the world’s total –around US$1.2 billion a year, compared with payments five and a half times larger, or US$6.6 billion.

The creative economy’s room for growth in LAC is enormous –but so is the challenge of changing the mindset of economic development from manufactures to “mindfactures”.

The orange economy has great room for growth

How to nurture the region’s people-skills and how to harness the value that this can add, demands a lot more space that what these lines allow.

Fortunately, dozens of people in LAC –from Nestor García-Canclini in México, to Germán Rey in Colombia, down to Octavio Getino in Argentina- have been up to the challenge.

Initiatives like the Satellite Account of Culture in Colombia, are becoming common place across the region’s national statistics offices, and today Argentina, Chile, Costa Rica, México and Uruguay have established their own.

One would be tempted to assume that such sophisticated exercises are yet another best practice transferred from the ‘north’ to the ‘south’. But in this case, the opposite seems to be true, as just recently the National Endowment of the Arts and the Census Bureau of the United States has started to catch up with an Arts and Cultural Production Satellite Account (ACPSA) of their own.

Could this become the first ever institutional best practice for ‘south-north’ cooperation?

In terms of hands-on development, the Metropolitan Center of Design in Buenos Aires, and Creative Santiago in Chile, are but a small sample of the practical work being done by a handful of committed “Quixotes” to develop a sustainable creative economy across LAC.

However, all of these ideas and hard work have yet to receive the rightful recognition from society at large. And notwithstanding the sustained support of some national and local governments, a pressing need to scale them up remains.

Its a process

LAC has already missed the Industrial Revolution. The detrimental consequences of this can still be felt today. But the region is right on-time to jump on to the train of the digital revolution that so defines our times. And that jump can only be done hand in hand with our own orange-collars.

LAC is home to 107 million people between 14 and 24 years old and currently enjoying a demographic bonus. For the last couple of decades, families have invested time and money in developing their offspring’s skills; from piano and singing lessons, to programing courses, to access to the latest in videogames and the Internet. Roughly, 10 million of those ‘kids’ are joining the workforce every year.

Some argue that in order to cash-in the demographic bonus LAC should follow the model of accelerated urbanization and manufacturing expansion of the Asian tigers. They are missing the point that LAC is, arguably, the most urbanized region in the world already, and is relatively industrialized as well. LAC would have to be more creative to take advantage of its demographic bonus.

The Orange Economy is a call to do so by fully embracing the opportunities of in an era of disruptive technological changes, thus becoming a force in the global knowledge economy.

Let’s give our youth the recognition they deserve, and a proper chance to lead us to the future.

The Creative Economy: Worth More Than You Think

Felipe Buitrago is currently an economic adviser to the Cultural Center of the Inter American Development Bank, and the author of the recently published book The Orange Economy (La Economía Naranja).  The views expressed in this editorial are his alone, and do not reflect those of the IADB.

Iván Duque is currently Senator-elect to the Colombian Congress and former Chief of the Division of Culture, Solidarity and Creativity at the IDB

Check out the Orange Economy (English version) book here
Check out the La Economía Naranja (Spanish version) book here

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