Economic cross-fertilization: Do businesses outside the creative sphere gain from industries like art, music, and design?
In a groundbreaking report titled "Creative Spillovers: do the Creative Industries Benefit Firms in the Wider Economy?", researchers from the University of Manchester, University of Liverpool, and University of Sheffield have uncovered the significant positive impact of creative industries on the broader economy.
The study, authored by Rowena Crawford of Frontier Economics, investigates the spillover mechanisms that occur when creative industries connect with firms outside their sector. The findings suggest that these connections generate innovation benefits, enhancing productivity and growth in the broader economy.
One key finding is that firms with a higher proportion of hires from the creative industries are 9% more likely to produce product innovations. This trend is further supported by the fact that the creative industries in the UK are more likely to engage in innovation-generating activities compared to other service sectors.
Moreover, the report indicates that around half of this association is due to spillovers. These spillovers extend beyond simple job creation, as publicly funded culture and creative activities drive productivity gains and attract inward investment, benefiting firms outside the creative industries.
The report also highlights the importance of local creative industry activity. For instance, the festival economy of the Mahakumbh Mela, India, 2025, was worth a staggering GBP 280 Billion in trade. Such local creative activities serve as a form of cultural infrastructure, influencing high streets, health, education, and regeneration, indirectly supporting innovation and value creation in wider firms.
The study's findings have implications for policymakers. It suggests that they should consider ways to encourage connections between the creative industries and wider firms to foster cross-sectoral knowledge exchanges and creative inputs that stimulate firm-level innovation across the economy.
The UK Government read out from Creative PEC Bernard Hay and Emily Hopkins on June 11th, and the 2025 Spending Review has implications for the creative industries. The report also discusses the co-location of the Creative Industries with Other Industrial Strategy Priority Sectors, as well as the self-employed workforce in England and Wales.
Notably, journalism occupations are included on the DCMS's list of Creative Occupations, further underscoring the broad scope of the creative industries' impact on the economy.
In summary, the study highlights the multi-dimensional benefits of interconnections between creative industries and wider firms: increased employment, productivity growth, enhanced innovation capacity, and stronger economic linkages that contribute to the broader economy’s development and innovation ecosystem. The findings reinforce the importance of nurturing the creative sector to drive economic growth and innovation.
[1] Crawford, R. (2022). Creative Spillovers: do the Creative Industries Benefit Firms in the Wider Economy? Frontier Economics. [2] O'Brien, D., Campbell, P., Wang, R., Siepe, J., Hay, B., & Wilson, N. (2021). Various reports on class inequalities in film funding, Equity Gap in Britain's Creative Industries, and co-location of Creative Industries with Other Industrial Strategy Priority Sectors. University of Manchester, University of Liverpool, University of Sheffield, and Creative PEC.
- The researchers' groundbreaking report on creative industries' impact on the broader economy suggests that encouraging connections between them and wider firms can stimulate firm-level innovation.
- The study investigates spillover mechanisms, revealing that these connections generate innovation benefits in terms of productivity and economic growth.
- UK Government officials have taken note of these findings, with the 2025 Spending Review and Creative PEC discussions indicating a potential focus on the creative industries.
- One key finding of the report is that firms with a higher proportion of staff from the creative industries are more likely to produce product innovations.
- The report also highlights the significance of local creative industry activity, like the Mahakumbh Mela festival economy, which contributes to cultural infrastructure and wider economic development.
- The UK Government's DCMS list of Creative Occupations includes journalism, underscoring the extensive impact of the creative industries on various aspects of the economy.
- Engaging in innovation-generating activities, the creative industries are more likely to do so compared to other service sectors, according to the study.
- Additionally, the report provides evidence that around half of the association between creative industries and wider firms is due to spillovers extending beyond job creation.
- Beyond simply increasing employment, these spillovers lead to productivity gains, attract inward investment, and ultimately drive innovation and value creation in a comprehensive ecosystem for the broader economy's development.
