Keywords

1 Introduction

While modern societies are described as creative societies, creative industries are their driving force: exceptional growth in turnovers and job creation, resilience to economic crisis and ability to profit from individual creativity is what makes creative industries an attractive investment field on both private and governmental levels. Creativity, more than labor and capital, or even traditional technologies, is deeply embedded in every country’s cultural context thus it is not the privilege of rich countries. With effective nurturing, these sources of creativity can open up new opportunities for developing countries to increase their shares of world trade and to “leap-frog” into new areas of wealth creation (UNCTAD 2004).

As Western nations move away from the production of goods and services and concentrate instead on the production of ideas and knowledge, creative industries have become the subject of an increasing amount of research and theoretical development (Blair et al. 2001; Flew 2002; Jones et al. 2004; Matheson 2006; Thomassen 2007; Malem 2008; Sapsed et al. 2008; Huang et al. 2009; Ashton 2011; Hotho and Champion 2011; Tomczak and Stachowiak 2015). Even though creative industries are an often discussed topic in both academic and political discourses, the concept of it varies from country to country; there are many similar definitions, each focusing on a slightly different feature.

This situation creates a challenge to compare creative industries amongst different countries as well as to measure the role creative industries have in their economic development. Therefore, the objective of this paper is to define the impact of creative industries in economic development of Lithuania and Latvia. In order to measure its role, firstly we specify the definition of creative industries this paper builds on. Then we compare creative industries concepts in Lithuania and Latvia and extract the similarities they have. Finally, we identify and measure impact of each creative industries sub-sector on national economy in Lithuania and Latvia.

In order to evaluate the role of creative industries in economic development in Lithuania and Latvia, systematic, logical and comparative analyses of literature as well as analysis of empirical data methods are used.

2 Concept and Constitution of Creative Industries in Lithuania and Latvia

The scope of this research focuses on creative industries in Lithuania and Latvia, two historically, culturally and geo-politically similar countries. Selected countries are often called “sisters”, symbolizing their close interconnection. Similar in customs and language, Lithuania and Latvia share identical modern history: both countries were annexed and incorporated into the USSR for roughly 50 years and experienced culture- and religion-repressive treatment during that time. Both countries restored independence in 1991 and joined the EU in 2004. These historical and ideological milestones suggest the conditions for emergence and development of creative industries were identical in Lithuania and Latvia, making these countries an interesting case to research.

Though an extensively used term, creative industries still do not have one commonly accepted definition. Mainly basing it on national perception of what creative industries comprise of, authors suggest various definitions. While there have been numerous attempts to classify prerequisites for creative industries to emerge and develop as well as what sub-sectors constitute it, one of the most widely accepted definitions was one of the first ones chronologically, introduced in 1998 by the Labor Government in the United Kingdom. It focuses on describing creative industries as a set of economic bodies that employ personal creativity, skills and talents in order to create wealth and jobs (Gibbon 2011).

Since the definitions of creative industries in Lithuania and Latvia are based on the British definition, this research will not focus on definitions themselves. Lithuanian definition of creative industries almost identically corresponds to the British one: economic activities based on individual skill and talent, which aim to produce intellectual property and create wealth and jobs (Ministry of Culture of Republic of Lithuania 2007). It must be mentioned that the Latvian definition contains both creative and cultural industries, defining them as “activities, based on individual and collective creativity, skills and talents, which by way of generating and utilizing intellectual property, are able to increase welfare and create jobs. Creative industries generate, develop, produce, utilize, display, disseminate, and preserve products of economic, cultural and/or recreational value” (Ministry of Culture of Republic of Latvia 2015).

While it is not in the scope of this research, it must be mentioned that creative and cultural industries should not be used as interchangeable terms even though they stem from the same roots, mainly due to the fact that they set different goals: creative industries aim at financial profits, while cultural industries focus on social, cultural and other non-financial goals. However, the challenge to compare creative industries in the selected countries arises from the structure of the sector.

Cultural development and the formation of cultural environments is the most important condition for creative and innovative activity being able to create increased added value in the modern economy. Culture has become an essential and indispensable condition for the creation of economic creative activity models in the organization of global economies, while at the same time developing new economic sectors and supporting them by neoclassical economy theories (Levickaite 2015). Consequently, constitution of creative industries is often influenced by historical and cultural circumstances; therefore the list of creative industries sub-sectors is an obligatory part of the definition on national level as well as a source of measurements for creative industries in different countries. While UNCTAD define nine main sub-sectors of creative industries [Cultural sites, Traditional cultural expressions, Visual arts, Performing arts, Publishing and printed media, Audiovisuals, Design, Creative services and New media (UNCTAD 2008)], this number is not constant: the original definition by the British Labor Government included 13 main sub-sectors, many countries followed this example and adopted a similar definition and structure while some others added country-specific sub-sectors.

Today, almost 20 years later, creative industries vary in definitions from country to country and contain different sub-sectors, the Baltic States being no exception. See Table 1 for comparison creative industries structure in different countries around the world, including Lithuania and Latvia.

Table 1 Classification of creative industries structure on global scale
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While Table 1 presents a variety of creative industries sub-sector classifications, it offers an insight into differences and similarities between the concepts of creative industries in Lithuania and Latvia. It is obvious that both countries as well as the third Baltic State Estonia, share quite a similar constitution of creative industries. At the same time it is obvious that all three Baltic States took the lead of the creative industries-pioneering Great Britain: not only sub-sector division matches closely, but Lithuania and Latvia state the importance of Creative Industries Mapping Document in their respective documents defining creative industries and their importance.

We find that there are 10 sub-sectors present in both countries (marked in grey in Table 1): music, performing arts, visual arts, design, publishing, TV and radio, film, advertising, architecture, software and computer service. These ten creative industries sub-sectors that are common for both Lithuania and Latvia will be the axis of this research further on. Extracting the similarities and defining common sub-sectors in the selected countries sets the background for comparison internationally.

At the same time, one of the most common challenges faced by researchers is the fractured and non-comparable statistical data. In order to compare the role of creative industries in economic development of Lithuania and Latvia, common criteria must be defined.

First each of the defined ten sub-sectors is assigned to a corresponding Statistical Classification of Economic Activities in the European Community (NACE rev. 2) code (EUROSTAT and RAMON 2008). Then each defined class is checked for available statistical data at both Statistics Lithuania and Statistics Latvia. Groups of sub-sectors are defined according to statistical data availability, see Table 2 for creative industries sub-sector grouping.

Table 2 Grouping of common creative industries sub-sectors in Lithuania and Latvia according to NACE rev. 2 classification
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In order to compare fragmented and incomplete data describing creative industries in Lithuania and Latvia, some generalizations must be made. As seen in Table 2, available data limits statistical analysis to 3 groups, joining sub-sectors of creative industries. Though it does not grant an in-depth insight into each sub-sector and its impact on national economy, grouping provides foundation for general comparison of the selected countries in regard to creative industries.

The following research is based on available statistical data on the 3 classes of economic activity that comprise and represent creative industries in Lithuania and Latvia:

  1. 1.

    NACE rev. 2 class J. Information and communication;

  2. 2.

    NACE rev. 2 class M. Professional, scientific and technical activities;

  3. 3.

    NACE rev. 2 class R. Arts, entertainment and recreation.

As noted before, one of the most common challenges faced by researchers is the fractured and non-comparable statistical data. The reason for grouping smaller-scope sub-sectors into bigger-scope ones is incomplete data provided by Statistics Lithuania and Statistics Latvia on smaller-scope sub-sectors.

3 Measuring the Role of Creative Industries in Economic Development of Lithuania and Latvia

The creative industries are significant for economic growth and development not just in sense of adding jobs or expanding economic activity but also for their role in facilitating economic evolution by their contribution to behavioral, social and institutional evolution (Potts 2011). However, basic measuring can be carried out taking into account creative industries role in creating jobs, contributing to GDP and exports (Daubaraite and Startiene 2015).

This article focuses on evaluating each of the measures in Lithuania and Latvia. Restrictions to this comparison are caused by available statistical data: while data on employment and contribution to GDP is available and comparable, export volumes are not provided. Due to this, we will provide the comparison of creative industries impact on economic development of Lithuania and Latvia based on creative industries role in creating jobs and contributing to GDP.

3.1 Overview of Creative Industries Development in Lithuania and Latvia

Brief overview of creative industries in Lithuania and Latvia is necessary in order to describe both countries and the role of creative industries in them. Figure 1 offers an overview of total employment and employment in the creative industries in 2010–2014.

Fig. 1
figure 1

Employment dynamics in creative industries and overall economy in Lithuania and Latvia. Source: Compiled by authors according to Statistics Lithuania (2015) and Statistics Latvia (2015)

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As suggested by Fig. 1, employment in creative industries in absolute numbers remained higher in Lithuania; however, employment in absolute numbers is higher in Lithuania throughout the whole analyzed period of time. On the other hand, percentage of creative industries jobs in overall employment was higher in Latvia, except for 2013, when Latvian creative industries suffered a sudden downfall. However, it recovered and reached new peak in 2014, while employment in Lithuanian creative industries was constantly growing throughout 2010–2013 and took a slight fall in 2014. Obviously, creative industries add up a fair share of jobs to Lithuanian and Latvian economies.

Figure 2 offers an overview of GDP and gross value added (GVA) created in creative industries.

Fig. 2
figure 2

Dynamics of GDP and GVA of creative industries in Lithuania and Latvia. Source: Compiled by authors according to Statistics Lithuania (2015) and Statistics Latvia (2015)

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Contrary to employment trends (see Fig. 1), GVA by the Latvian creative industries proves to be higher than that of the Lithuanian creative industries throughout the whole analyzed period (see Fig. 2). Absolute numbers suggest that Lithuanian GDP remained higher than the Latvian, pointing out that Latvian economy is much more dependent on the GVA produced by enterprises operating in the creative industries field. While GVA by creative industries adds up roughly 2 times less to the Lithuanian GDP in comparison to Latvia, creative industries have significant importance on GDP in both countries.

While absolute numbers represent situation of creative industries in both analyzed countries and set the ground for comparison between different sectors, productivity represents how well the resources are used in order to add up to both employment and GDP. Table 3 provides the comparison for creative industries in Lithuania and Latvia on the basis of GVA per employee in creative industries. Confirming conclusions based on data Figs. 1 and 2, Table 3 suggests that creative industries in Latvia are more productive which allows it to achieve higher GVA numbers while employing less people in comparison to Lithuanian creative industries.

Table 3 Dynamics of gross value added per employee in creative industries in Lithuania and Latvia, 2010–2013
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Chronological data allows comparing and analyzing the dynamics in 2010–2013: while GVA per employee in Lithuania is quite stable and does not change throughout the analyzed period, the same indicator in Latvia is constantly growing; therefore the difference in productivity is increasing in favor of Latvia.

Given the same tendencies stay for the coming years, creative industries in Latvia will grow in productivity and will create even a bigger share of GDP, at the same time providing new jobs and gaining more importance in national economy.

While analyzed data suggests that creative industries in Lithuania provide new job places each year and maintain almost the same share of GDP, comparison in productivity shows that Lithuanian creative industries are losing against Latvian counterparts. In order to keep up with the neighboring country, Lithuania should apply support measures for creative industries on the governmental level while focusing on productivity at the same time.

3.2 Role of Creative Industries in Creating Jobs in Lithuania and Latvia

One of the most important features of the creative industries is high numbers of microenterprises and self-employed professionals, suggesting that starting a new business in the field of creative industries is relatively simple. Various authors (Pratt 2008; Cerneviciute et al. 2010; Lassur et al. 2010; Ernst and Young 2014; Oxford Economics 2014) point out that creative industries not only grow at higher tempos than the rest of economy, but they recover from economic crisis faster as well.

In order to define the impact of creative industries employment dynamics on national economy in regard to total employment dynamics, we have selected the first year of available data as starting point and measured the change (positive or negative) in comparison to employment in 2010 (see Table 4 for details). Comparable data for Lithuania and Latvia is available only from 2010, when both countries were already recovering from the financial crisis.

Table 4 Employment dynamics in creative industries in Lithuania and Latvia, 2011–2014
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As Table 4 suggests, growth in employment in both Lithuanian and Latvian creative industries was significantly faster than total growth in employment. In case of Lithuania, average growth in creative industries employment in 2011–2014 was 4.5 times higher than average total growth in employment; in case of Latvia, average growth in creative industries employment in the same time period was 3.2 times higher.

Even though average total employment in Latvia during analyzed period was slightly higher, average employment growth in creative industries in Lithuania was notably faster, reaching 21.64 % average employment growth in arts, entertainment and recreation (R). Despite decrease in employment in information and communications (J) in Latvia, average growth declining to −8.80 %, professional, scientific and technical activities (M) achieved exceptional average growth rate 32.50 % and compensated for lost jobs in information and communications.

Analysis of statistical data confirms that growth in employment in creative industries is faster than overall employment growth in both Lithuania (average total growth in creative industries 13.62 %, average total growth 3.01 %) and Latvia (average total growth in creative industries 10.67 %, average total growth 3.32 %).

3.3 Role of Creative Industries in Contributing to GDP in Lithuania and Latvia

Creative industries challenge traditional industries and exploit an opportunity to create added value without significant investments at the start of the new business: by employing individual creativity and talent, enterprises operating in creative industries in the EU reach the turnover of roughly 402.2 billion EUR, of which 38 % is accounted for added value (European Commission 2013). However, it is challenging to describe the impact of creative industries on GDP since this sector creates added value directly as well as through other sectors since innovation is a result of creative thinking (Daubaraite and Startiene 2015).

Table 5 offers an insight into the dynamics of gross value added in Lithuania and Latvia in 2010–2013. It is especially important to point out that 2010 was the first year for both countries to see recovering economics following the crisis in 2008–2009.

Table 5 Dynamics of GDP and GDP in creative industries in Lithuania and Latvia, 2011–2013
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In order to define the impact of creative industries part in GDP dynamics on national economy in regard to total GDP dynamics, we have selected the first year of available data as starting point and measured the change (positive or negative) in comparison to GDP in 2010.

While analysis of employment in the creative industries in 2010–2014 show strong positive impact on total employment numbers, analysis of creative industries part in GDP does not provide that unanimous result: while total GDP growth in Lithuania and Latvia in comparison to 2010 was strong, creative industries was not the leading economy sector to determine growth in GDP. Analysis shows that creative industries definitely acted as an important source of GDP growth, however total average creative industries growth in Lithuania was smaller than total GDP growth (15.01 % and 19.01 % respectively), while Latvia shows slightly different data with total average creative industries growth being faster than total GDP growth (22.00 % and 21.16 % respectively). While Latvian data technically shows optimistic results, the difference in gross value added dynamics is too small for an economic generalization.

4 Conclusions

Concept of creative industries in both Lithuania and Latvia is based on the British definition introduced in 1998 in Creative Industries Mapping Document, focusing mainly on employing personal talent and skill in order to create jobs and wealth. While Latvian constitution of creative industries include cultural industries as well, structure of creative industries in both analyzed countries are slightly different: Latvia includes the sub-sector of cultural facilities, Lithuania includes sub-sectors of crafts and other activities, but the core sub-sectors are the same in both countries: (1) music, (2) performing arts, (3) visual arts, (4) design, (5) publishing, (6) TV and radio, (7) film, (8) advertising, (9) architecture and (10) software and computer service.

Due to statistical data limitations comparison of creative industries role in economic development of Lithuania and Latvia is based on 3 classes of economic activity (Information and communication, Professional, scientific and technical activities and Arts, entertainment and recreation) and their impact on employment and GVA creation.

Analysis of retrospective statistical data in Lithuania and Latvia confirms that in 2010–2014 employment in the creative industries rose up and had significant impact on total employment growth, but the impact of creative industries added value in the national GDP in 2010–2013 was not the leading factor for GDP growth, even though creative industries’ product did have a strong impact on the positive tendency. The most important difference between the analyzed countries is higher productivity in creative industries in Latvia, which allows the country to achieve higher GVA values while employing less people. Analysis of statistical data confirms that growth in employment in creative industries is faster than overall employment growth in both analyzed countries (average total growth in creative industries 13.62 %, average total growth 3.01 %) and Latvia (average total growth in creative industries 10.67 %, average total growth 3.32 %). Analysis shows that creative industries definitely acted as an important source of GDP growth, however total average creative industries growth in Lithuania was smaller than total GDP growth (15.01 % and 19.01 % respectively), while Latvia shows slightly different data with total average creative industries growth being faster than total GDP growth (22.00 % and 21.16 % respectively). In order for Lithuania to keep up with Latvia, support measures should be applied on governmental level.