Collective Action: Uniting for a Common Cause?
United Kingdom's Industrial Strategy to Foster Growth by Co-locating Creative Industries with Priority Sectors
By Dr Josh Siepel, Associate Professor at the University of Sussex Business School
The upcoming Industrial Strategy in the UK will identify eight priority sectors, including the creative industries, as key drivers of long-term growth. However, the question arises as to whether these targeted regions should focus on sector-specific strengths, or if broader linkages between the eight sectors should also be harnessed.
The co-location of different sectors is a complex and empirically challenging issue. To shed light on this relationship, this blog post will examine the co-location patterns of the creative industries with the other seven Industrial Strategy priority sectors in the UK.
One reason why sectors may co-locate is due to the nature of supply chains and innovation. Decades of research, including the work of Keith Pavitt, have illustrated that sources of innovation vary substantially between sectors and are significantly influenced by supply chains. Many creative industries sub-sectors, such as IT, software, advertising, architecture, and design, are embedded in the supply chains of other sectors. For instance, the Office for National Statistics' input-output tables reveal that 89% of the GVA from the sector grouping containing IT, software, and computer services is indirectly captured in supply chains rather than in final sales to customers.
The business-facing parts of the creative industries may potentially play a crucial role in supporting other sectors to innovate. This includes new products, processes, marketing strategies, and ways of organizing activities.
Several factors contribute to sectors choosing to co-locate, such as access to market, common skills, and opportunities for learning and innovation. It is likely that creative industries and other sectors would locate in areas with other businesses due to these reasons. Conversely, other sectors may also choose to co-locate with creative firms for all these factors, as well as because the presence of creative industries can make places more desirable for workers and innovators to live.
Research from 2009 by Nesta, now an innovation foundation, found that Creative Industries firms tended to co-locate with both Knowledge Intensive Business Services and High-Tech firms. An update on this analysis is long overdue.
Data for this analysis originates from the Interdepartmental Business Register (IDPR) and the 2023 Business Register Employment Survey (BRES), which were accessed via the UK's NOMIS labour market data platform. The study focused on Travel to Work Areas (TTWAs), comprising 228 regions in the UK. To identify concentration of sectors, location quotients (LQs) were employed.
The results show that the Creative Industries and most creative sub-sectors are statistically more likely to be concentrated in places with concentrations of other priority sector businesses. The exception among creative sub-sectors is Museums, Galleries, and Libraries, which are negatively associated with all Industrial Strategy sectors. This is likely due to cultural institutions having specific considerations for location beyond commercial factors.
The co-location patterns suggest that a joined-up approach to policy should consider maximizing supply chain linkages, knowledge spillovers, and labor flows between Industrial Strategy sectors in places. This approach ensures a more comprehensive and integrated industrial policy mix.
It's important to note that the data does not permit definitive conclusions about causality, and further research is necessary to identify the exact mechanisms behind co-location. Nevertheless, the evidence supports the notion that policymakers should not develop sectoral plans for each priority sector without also taking into account their linkages.
This guest blog post for the Creative PEC website highlights the co-location patterns between the UK's Creative Industries and other priority sectors. The analysis emphasizes the need for a joined-up approach to industrial policy, aiming to foster growth and optimize the benefits for the creative industries and other priority sectors.
Photo by Paul Marlow on Unsplash
Dr Josh Siepel is an Associate Professor in the Science Policy Research Unit at the University of Sussex Business School
This post is available online at: <https://creativepec.org.uk/[random string of characters]/the-co-location-of-the-creative-industries-with-other-industrial-strategy-priority-sectors/.*
- The upcoming Industrial Strategy in the UK will focus on eight priority sectors, including the creative industries, as key drivers of long-term growth.
- The co-location of the creative industries with other sectors can potentially play a crucial role in supporting innovation.
- Sectors may co-locate due to factors such as access to market, common skills, and opportunities for learning and innovation.
- Many creative industries sub-sectors, like IT, software, advertising, architecture, and design, are embedded in the supply chains of other sectors.
- The results of the analysis show that the Creative Industries and most creative sub-sectors are statistically more likely to be concentrated in places with concentrations of other priority sector businesses.
- The co-location patterns suggest that a joined-up approach to policy should consider maximizing supply chain linkages, knowledge spillovers, and labor flows between Industrial Strategy sectors in places.
- The analysis emphasizes the need for a joined-up approach to industrial policy, aiming to foster growth and optimize the benefits for the creative industries and other priority sectors.
- Further research is necessary to identify the exact mechanisms behind co-location to provide definitive conclusions about causality.
- The business-facing parts of the creative industries may potentially support other sectors to innovate through new products, processes, marketing strategies, and ways of organizing activities.
- Research from 2009 found that Creative Industries firms tended to co-locate with Knowledge Intensive Business Services and High-Tech firms, and an update on this analysis is long overdue.
