Local economic impacts from cultural sector investments

A report to the Department for Culture, Media and Sport

ECORYS

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From the report's "Executive summary":

"This summary is based upon the findings of research undertaken by Ecorys on behalf of the Department for Culture, Media and Sport (DCMS) to review the approaches taken and conclusions drawn by existing research on the economic benefits of investment in culture. A total of 40 studies were identified as being within the scope of the study and were selected for full review. All placed a focus on the assessment of economic impacts, the earliest was dated 2004 and the most recent was published in 2014, and the majority were focused on venues or events located within the UK.

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The review of literature indicates a broadly similar approach has been taken to assessing the economic impact of a range of cultural venues, events and investment projects in recent years, which is focused on assessing the impact of expenditures related to the asset in question. This approach is centered on two strands: direct expenditures associated with the ongoing operation of the asset and indirect expenditures resulting from the spending of visitors to the site, in the wider local area.

The literature reviewed demonstrates a relatively consistent approach to the estimation of direct effects (based upon a review of the expenditure of the organisation(s) in question) and indirect effects (based upon visitor activity, profile and expenditure data obtained from venue records, bespoke survey findings and the import of findings from other research where available).

The literature shows some variation in the focus and scale of assessments, including the scale at which impacts are assessed (usually the local and/or regional level). There were also some differences in the amount of primary research which was undertaken by researchers and therefore the reliance on secondary evidence; this is to be expected given the likely variation in the resources made available for studies of this type and the extent to which relevant and useful data already exists.

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Based on the review of available literature, it is suggested that future studies of this type should seek to adopt a more systematic approach.

It is recommended that steps to assess (or evaluate) impact are built in from the outset of any significant investment in cultural assets/infrastructure, including ensuring that mechanisms are put in place to collect the required data.

The framework set out in Section 1.4 of this report provides a checklist to inform this planning and also to guide systematic consideration of the different aspects of additionality.

Exploration of and adjustment for additionality should be considered essential for each area of expenditure/impact.

It is recognised that bespoke estimation of additionality adjustments is not always possible (particularly multiplier effects). In this case, researchers should aim to source appropriate, evidence-based adjustments from existing literature based on consideration of the project context and area of analysis, with a preference for more recent sources which are more likely to reflect current methodological expectations and evidence.

The effect of cultural investment on agglomeration or clustering of activity is an area which would benefit from further research, particularly in the UK context, including testing Richard Florida’s theory that the ‘creative class’ will migrate to areas which provide a high quality and diverse cultural offer and, in doing so, stimulate growth in creative and high-tech business activity, and the resulting economic impacts for a local economy of this effect.

Similarly, there is scope to expand upon the recent interest in analysing media coverage to look at the consequences of any increase in the profile or change in the perceptions of an area on business or residential location decisions.

In general, including at least some recognition of wider social, cultural and economic outcomes is desirable and, thought should be given to how acknowledgment and analysis of these wider (noneconomic) effects may help to strengthen the economic case."