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All Rights Reserved. Cancel Submit. The McCloskey school of thought, when combined with the policy scepticism noted by Peacock, means that cultural economics is prone to external and internal criticism. Rational choice theory is a particular target of condemnation and, as noted by Throsby , leads to the expectation that all behaviours can be fully accounted for in economic models, without regard to social, cultural or historical factors.

He also argues that neoclassical views of tastes the utility function accommodate taste for the arts, but that this may fail to account for the irrationality of demand for art. To summarise, scepticism and criticism of the neoclassical economic approach abounds and is particularly sharp in the creative industries and in cultural policy as a whole. While cultural policy has struggled to hold the attention of its intended audience, analysis of innovation has an eager audience.

In developed economies, politicians, policy makers and economists have a collective obsession with innovation in the hopes that it contributes to economic growth. These obsessions, and the associated economics of innovation, benefit from neoclassical, mainstream economic roots. While critics of the approach exist e.

The focus on this new knowledge-based paradigm has promoted further analysis of innovation, which has led innovation-focused economists to look at creativity. In the main, creativity … is about the origination of new ideas … while innovation is about the successful exploitation of new ideas. This innovation approach follows a path dependency from the neoclassical understanding of innovation, particularly from an industrial organisation or economic development foundation.

As cultural economics also begins to look further at innovation and creativity arguments, with a focus on the creative industries, analyses from both neoclassical and cultural perspectives are meeting. This section discusses these perspectives, and their reflection in IP debates. Economists link innovation to the creative industries — often done with the intent of proving the economic value of the creative industries — and implicitly discuss creativity.

For example, Bakhshi and McVittie detail how the creative industries enable other industries to be more innovative. Concepts of creativity, as detailed in Towse , became more popular within cultural economics with Frey Howkins devotes his entire book to the role of creativity and the concept of the creative economy. Previously, economics flirted with the concept of creativity by combining psychological research on creativity with economics. This approach often took the form of the examination of creativity in the marketplace in the form of entrepreneurship and management e.

Rubenson and Runco, , whose theories were taken up more by psychologists than economists. Recent years have seen, as discussed earlier, creativity to be associated more with innovation and the creative industries.

Creativity, Innovation and the Orange Economy 03

However, Garnham argues that the addition of creativity, rather than a critique or extension of the economics of innovation, is instead an attempt by cultural policy to capture the prestige of innovation. These tensions can be seen in intellectual property policy, as discussed in the next section. This relationship between creativity and innovation is an evolving one and highlights the challenges faced by cultural economics. The economics of innovation, particularly as related to economic growth and development, are well established and reflect a distinctly scientific focus. This focus on science, and the narrow definition of innovation, is sometimes construed as a bias and challenged by proponents of the creative or knowledge economy e.

Creative industries

Rushton and feminist critiques of innovation and measurements of economic growth. The interaction of creativity, the creative industries and innovation has become more obvious in recent years with the rise of interest in IP policy. This, along with changes in markets and technology, dominated by the advent of the Internet and the digital era, have challenged existing IP structures, in particular that of the right most relevant to the creative industries, copyright.

Towse makes the case for copyright as falling within the realm of cultural economics. The predominance of IP is not without its critics.

Potts is critical of this approach, as he argues that the outputs of the creative industries play an important role in innovation as a whole, rather than being defined by the production and consumption of end outputs. Feminist interpretations of IP provide a further critique of IP and neoclassical economics. Bawra and Rai , argue that IP denies the contribution of women to knowledge by taking a narrow approach to knowledge and assigning it to realms that have traditionally excluded women. Halbert notes the lack of IP protection for the outputs of female knowledge.

Halbert in particular relates this discussion to the creative industries by providing case studies on quilting and knitting, two creative practices dominated by women, as lying predominately outside the IP framework. As a result, discussions on creativity follow a path dependency into innovation and specific constructs of IP.

The next section highlights this by detailing the evolution of the economic analysis of trade marks, in contrast to the analysis of the relatively newer rights of Traditional Knowledge TK and related rights. Having established the relevance of IP policy to cultural economics, this section of the chapter uses examples of IP to further illustrate the challenges facing cultural economics as a critique of neoclassical economics.

IP policy and the laws that create it generally exist to solve the problem of intangibility. The intangible nature of creativity and innovation means that ideas can easily be appropriated, and, in contrast to physical property, this appropriation is difficult to control.


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IP policy seeks to create property rights over the intangible to bolster ownership and control of innovation and creativity. Justifications for why societies should have property rights over the intangible are dominated by two 5 main approaches.

These are, IP rights as intrinsic rights and IP as an incentive to innovate. Granstrand refers to these, respectively, as deontological approaches based on the intrinsic, moral rights and arguments that fall outside the economic perspective; and consquentialist approaches founded in the economic implications e. These two approaches are often incompatible, with the incentive-to-innovate theory gaining traction in recent decades.

Approaching IP rights as intrinsic comes from a Lockean perspective in which individuals own the fruit of their own labour Hettinger ; Granstrand IP rights allow individuals rights over their outputs. This approach is also known as labour-dessert theory and is an approach popular with lawyers and existing owners of IP rights. The focus rests on the benefits to the individual creator.

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In contrast, the traditional economic approach to IP is to construe it as an incentive to innovate Scotchmer ; Lemley In this model, often referred to as the social contract theory, the creator is rewarded with property rights in the form of IP. These rights allow the creator to appropriate the returns to their efforts and serve as an incentive to innovate. While society may incur higher costs and lower quantities because of the monopoly conditions generated by IP rights, society is rewarded with long-term innovation.

This approach, crucially, also requires the expiration of IP rights so that, on expiration, the knowledge contained falls into the public domain where it will spur further innovation. The incentive-to-innovate theory is focused ultimately on economic growth and the benefits to society, and assumes innovation leads to economic growth and development. The incentives-to-innovate theory of IP has served economics well in analysing the IP rights of patents and copyright.

Economics is largely comfortable with viewing patents and copyright as economic policies. The same cannot be said, however, for trade marks, traditional knowledge TK , and Geographical Indications GI , all three of which are relevant intellectual assets for the creative industries. These rights are heavily linked to the creative industries by way of branding, arts, textiles, design and advertising. Economics tends to be wholly uncomfortable with these rights as serving economic purposes as they do not fit the social contract.

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This tension between the neoclassical, incentive-to-innovate theory and these noncompliant rights highlights the challenges cultural economics continues to face. Recent decades have seen an expansion of economic analysis to copyright, trade marks and design rights. In the case of the former, because of the dramatic changes in technology and its market consequences, and in the case of the latter two, likely due to the trend in national IP offices publishing data in these areas. However, trade marks, along with TK and GI, do not easily fit the social contract theory and remain an awkward fit as an economic policy.