May 9, 2008

Is Creativity an Effective Urban Development Tool?

APA Journal Analysis Finds Traditional Factors Yield Better Economic Outcomes

A new analysis from the University of North Carolina at Chapel Hill reports finding little evidence that a creative workforce drives regional economic growth and development as effectively as traditional factors. In fact, the analysis reinforces the idea that a focus on key traditional factors brings about better economic outcomes.

"Which Indicators Explain Metropolitan Economic Performance Best: Traditional or Creative Class?," published in the Spring 2008 issue of the Journal of the American Planning Association, explores the extent of the relationship between the presence of the creative class and regional economic performance, and contrasts measures of regional creative capacity with traditional competitiveness factors.

Author Richard Florida explains metropolitan competitiveness by lifestyle choices and ethnic and cultural diversity, rather than traditional production-related factors. The argument is whether the presence of creative people — specifically highly educated professionals, scientists, programmers, designers, and artists — is a key economic performance indicator. If so, improving the quality of life for young educated professionals will stimulate economic development

Florida's key concept is that the 3 Ts (talent, tolerance, and technology) are the new drivers for metropolitan growth and competitiveness. These are identified through a number of new indices: creative class, tech-pole, bohemian, melting pot, and gay. The assumption is that creative types seek outlets in all aspects of their lives and move to citites which actively support their lifestyles.

Florida argues that for cities to attract and retain creative types, they must cater to the needs and desires of this specific subset of the working population. His most provocative thesis is that after cities add creative workers, they will experience economic gain. This suggests that jobs follow people, as opposed to the traditional view that people migrate to follow jobs.

Urban planners and developers around the country have embraced this idea and many downtown and inner city areas have seen revitalisation focused around music and performance venues, stylish eateries, shops and culturally diverse entertainment districts. While Florida made clear that variables such as education reform are critical to his model, some planners have seen his work as an opportunity to abandon traditional economic development ideas.

Research has certainly shown that the arts have been found to support local quality of life, build social capital, and encourage tourism (although the relative impact of arts funding versus other forms of economic develoment have not been quantified). The "new economic geography" has emphasized the importance of human capital in explaining differential growth and productivity across cities and regions. The current consensus in planning theory is that causation is bi-directional between human capital and regional economic development — therefore the issue becomes one of interpreting what we mean by human capital.

In order to understand the extent to which Florida's creative class factors can be seen to drive development, JAPA article authors Donegan et al., examined how far Florida's measures correlate with each other and with common indicators of economic performance. At the same time they estimated multivariate regression models to compare the influence of his measures against more traditional measures, on metropolitan job growth, income growth and job instability. If the presence of the creative class is a necessary prerequisite for economic development, then there should be a strong correlation between the five creative class measures and these three economic outcome measures.

The research shows that while Florida's creative variables show an impact (and strongly correlate with one another) their impact is weaker than the impact of industry mix and educational attainment. Correlations between creativity variables and economic performance indicators were generally weak, although they were stronger for the larger metropolitan areas. Industry mix, and especially the importance of manufacturing, was significant and usually more important than education.

The authors argue that the potential richness of Florida's argument as an effective policy tool is undermined by a lack of understanding of the variation across creative class attributes and occupations. Florida's variables as they stand, feature key crossovers with traditional variables such as education, investment in knowledge infrastructure, and industrial diversity.

What this research shows is that while Florida's model may contribute an important facet of urban development in large metropolitan areas, there is little question that traditional urban development tools remain key for promoting effective economic growth, including education, business creation, and industrial diversity.

Notes to Editors

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