Income generated by the creative industry to the economy

Revenues generated by the creative industry to the economy

Cultural goods and services represent 1.5% of the GDP.

For years and after the impulse of some laws due to the importance of the orange economy for the generation of income, the Dominican Republic has promoted activities so that ideas are transformed into cultural goods and services.

Some countries such as Argentina, Colombia and Mexico, or continents such as Europe, have been able to promote the orange side of the economy, fostering art, culture and social media as an expression of who they are, but also as a way to contribute income to the Gross Domestic Product (GDP).

According to a ProMéxico report, this country ranks 14th in the importance it gives to the creative industry, which represents 3.5% of the national GDP. In addition, the Mexican audiovisual sector currently generates 1.3 million jobs.

In the case of Colombia, so much importance has been given to the cultural and creative industry that a cluster was created for these issues. According to the Bogota Chamber of Commerce, the business reported by 256 orange companies to ProColombia in 2019, left as a result record Colombian exports of Orange Economy for US$238.9 million dollars.

The agency, on its web portal, relates that companies from 14 departments of the country established links with 639 buyers from 52 countries and the main products were mainly from the software and IT services sector, with US$163.4 million, and audiovisual and digital content, with sales abroad for US$75.2 million.

Argentina, for example, exported US$2,427 million in cultural and creative products and services in 2016 and in 2015, 2.8% of private salaried employment belonged to this industry.

An article published in Red 2030 under the title “What is the orange economy?”, cites the report “Rebuilding Europe: the cultural and creative economy before and after COVID-19”, by the European Grouping of Societies of Authors and Composers, prepared by EY, which highlights that in 2019, the creative and cultural industries represented 4.4% of the European Union’s GDP.

This, in terms of turnover, represented annual revenues of €643 billion and a total value added of €253 billion.

According to estimates by the United Nations Conference on Trade and Development (UNCTAD), exports of creative goods and services grew by 134% from 2002 to 2013. If they were part of the classification made by the International Trade Center (ITC), they would constitute the fifth most traded goods on the planet, according to a publication by the Dominican economic firm Analytica.

This economic intelligence and business strategy services company states that in 2015 this segment generated revenues of US$124 billion and created 1.9 million jobs in the Latin American and Caribbean region.

Analytica’s consultants believe that as public policies and measures in favor of the development of creative and cultural industries are implemented, there will be more creative leaders, who will not only generate jobs and wealth, but will also build societies that are less vulnerable to unpredictable adverse factors.

Dominican Republic

The “Cultural and Creative Industries” bulletin of the Ministry of Industry, Commerce and MSMEs (MICM), reveals that during 2010, spending on cultural goods and services in the Dominican Republic reached RD$30,655.4 million, representing 1.5% of that year’s GDP. For 2014, the amount amounted to RD$41,265.6, maintaining its share of GDP, which is evidence that during the 2010-2014 period, culture grew at a similar rate to GDP.

The MICM report cites the results yielded by the Culture Satellite Account (CSC), a system of economic information related to products, activities and practices that belong to the field of economic measurement of the cultural field, thanks to the efforts of the Ministry of Culture and the Central Bank.

This tool indicates that according to the origin of the expenditure, it is observed that for 2010 private cultural expenditure was RD$26,637.8 million, while public cultural expenditure was RD$4,017.5 million, representing 86.9% and 13.1% of total expenditure, respectively.

Meanwhile, for 2014, private spending on culture amounted to RD$36,434.9 million, while public spending was RD$4,830.8 million, representing a share in total spending of 88.3% and 11.7%, respectively. Total cultural spending experienced a 34.6% growth between 2010 and 2014.

Meanwhile, the Central Bank’s “National Survey of Cultural Consumption in the Dominican Republic 2014” (ENCC-RD 2014) reveals that cultural spending by Dominican households in 2014 was RD$11,469.2 million. Of this expenditure, 48.7% consisted of purchases of cultural products, 36.7% was for internet use, and the remaining 14.6% was for attendance at cultural venues and events.

Another result of the survey of 12,134 people was that of the 48.7% of purchases of cultural products, 43.5% corresponded to purchases in formal establishments and 5.2% to purchases in informal establishments.

Cultural consumption

Formal vs. informal establishments

The Central Bank survey shows that the main cultural products consumed by Dominicans in formal establishments are books (64%), followed by magazines and newspapers (19%), other products7 (9%), music (4%), and videos and video games (4%).

In terms of the amount spent in formal establishments, books are the main product (81%), followed by other products (10%), magazines and newspapers (5%), videos and video games (3%), and music (1%).

Regarding the purchase of cultural products in informal establishments, the largest number of purchases are magazines and newspapers (37%), books (30%) and music (20%). On the other hand, “book” is the product in which spending is the highest (67%), followed by magazines and newspapers (14%) and other products (12%).

With respect to participation in cultural shows, “some 63,453 people aged 15 and over, residents in urban areas of the country, said they had participated in the organization or development of some cultural event, generating income of RD$1,035.7 million,” adds the survey which has been the impetus for several local studies and publications on the orange economy and its importance.

In the document “Current panorama of the creative and cultural industries in the Dominican Republic”, the permanent delegate of the Dominican Republic to the United Nations Educational, Scientific and Cultural Organization (Unesco), José Antonio Rodríguez, argues that the creative and cultural industries sector in the country shows a growing development, with an important participation of this sector in the national economy.

However, he cites that despite the progress made in strengthening the creative and cultural industries, there are still challenges to be overcome, both in the promotion of creativity and cultural production, as well as in the consumption of certain cultural goods.

Rodríguez states that the Dominican Republic’s ample cultural capital must take advantage of and exploit the many market niches that are still untapped or inadequately exploited, as these represent a diversity of opportunities to promote culture and creativity as essential vectors of innovation processes, essential factors in achieving sustainable and inclusive development.

The Orange Economy Week

Desing Week is an event that was held in 2019 in the Dominican Republic, where an entire week was dedicated to design to promote talents and projects oriented to architecture, interior design, decoration, among others.

This week dedicated to the cultural industry is a concept that originates in major European cities such as London, Barcelona, Madrid, Paris, Milan and Sweden. In Latin America, countries such as Mexico and Colombia have had interesting results when implementing it.

This type of event serves as a platform to showcase creative products with exportable quality and opens new opportunities for insertion in international markets.

This 2021, the activity will be held from October 10 to 17 under the slogan “Design: a vital tool to promote change and economic development in the Dominican Republic”, where areas such as architecture, crafts, film, industrial design, interior design and gastronomy will be discussed.

Revenues from international filming

This year, the country has served as a backdrop for international productions filmed from here. Lantica Media, a media company that provides world-class production and studio services for the media, television and film industries, has had five major foreign productions in the Dominican Republic.

These shoots have resulted in local spending of US$116 million, the company, which currently has operating units such as Pinewood Dominican Republic Studios, told Listin Diario.

The expense in local transportation has exceeded US$4 million in a period of six months, and during the pandemic, these film productions represented a contribution to the hotels of 73,000 hotel nights (indicator used in tourism to determine the number of rooms used per occupied nights).

In addition, these international films generated around 944 direct jobs specialized in the film industry, ranging from producers and art directors to painters, builders and electricians.

The Dominican Republic has incentives to promote the film industry in Central America and the Caribbean. These are 25% through a Transferable Tax Credit and the exemption of 18% of the Value Added Tax (VAT) on applicable goods and services.

In the estimate of the 2021 Tax Expenditure of the Ministry of Finance, the film sector would have an exoneration of RD$3.1 million in ITBIS, in Income Tax of RD$827.5 million and in Patrimony of RD$4.1 million, for a total of RD$834.7 million.

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