Creative Industries and Economic Evolution
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Creative Industries and Economic Evolution

Jason Potts

The creative industries are key drivers of modern economies. While economic analysis has traditionally advanced a market-failure model of arts and culture, this book argues for an evolutionary market dynamics or innovation-based approach. The book explores theoretical and conceptual aspects of an evolutionary economic approach to the study of the creative economy. Topics include creative businesses and labour markets, social networks, innovation processes and systems, institutions, and the role of creative industries in market dynamics and economic growth.
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Chapter 9: Creative Industries Over an Innovation Trajectory

Jason Potts


Prolegomena This chapter is an edited version of a 2009 paper in Economics of Innovation and New Technology (18(7): 663–73) that examines the role of creative industries services over the three phases of an innovation trajectory – origination, adoption and retention. It suggests an evolutionary model with creative industries as not just another growing sector per se, but as demand-side elements of an economy’s innovation system. 9.1 INTRODUCTION Economic evolution is a dynamic market process in which new ideas, technologies, business models or elements of knowledge enter the economic system, displacing and disrupting the extant structure of such ‘generic rules’ (Dopfer and Potts 2008). Schumpeter (1939, 1942) called this process of sequential and parallel waves of entrepreneur-driven innovation ‘creative destruction’. ‘Creative’ refers to the new ideas. ‘Destruction’ refers to their effect on existing ideas. The process of economic growth and development is not simply a process of expansion and accumulation, but crucially also involves re-coordination and re-configuration of existing activities and structures. This makes economic growth an evolutionary process. Since Schumpeter, analysis of economic evolution has mostly focused on the ‘supply-side’ of the origination and diffusion of new technologies. This tends toward an industrial analysis that for the most part has been predominantly concerned with epochal physical technologies and associated manufacturing sectors (steel, chemicals, microelectronics, biotechnology, and so on), as well as service sector components relating to finance, transport and communication.1 But something fundamental has long been missing from this account, namely analysis of the demand side of innovation....

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