Economic development and the creative industries: a tale of causality

Abstract

Cultural and creative industries are thought to be a driver for economic growth. During the last decade, research has tried to link higher intensity of these industries with the region's welfare. However, this is a controversial relationship that still needs to be proved. In this article, we build a conceptual framework to help us test the possible causality between regional income generation and employment in the cultural and creative sectors. Using regional European data for 1999–2008, our results show that there is a significant feedback (bidirectional causality) between the per capita GDP and employment intensity in the cultural and creative industries, allowing us to conclude that there is a ‘virtuous circle’ fed by these industries.