Creativity, cultural investment and local development: a new theoretical framework for endogenous growth

In industrialised countries, an increasing number of goods and services incorporate an essential, intangible added value deriving from design, aesthetics, and symbolic and identity values: the key elements of today competition, when competition cannot take place through costs cutting. Recent literature which explicitly considers the role of culture and intangibles in fostering economic development, lacks however a deep analysis of the causal links between all the factors involved, which have generally been grouped together in a “black box”. The chapter argues that strategic complementarity between artistic production and firm production can explain the functioning of culture-led economic development through the emergence of new forms of horizontally-integrated clusters of economic activities. The creative value chain, starting from the pure cultural artistic dimension, drives economic systems in the field of applied research and creative production. According to this new approach, culture works as a systemic “activator of innovation” through its impact on people’s willingness to invest in the development of their cognitive competences, in a virtuous circle that endogenously sustains the supply of new creative products. Technology alone cannot lead to sustained innovation in the long run; ‘core’ cultural activities and cultural investment are needed.