2. Prepared by VANUS JAMES Senior Fellow, Scotiabank Chair; Adj. Distinguished Professor, University of Technology, JA Presentation Latin American Meeting of National Statistics Authorities - Creation and Economy in Latin America March 6 - 8, 2013. March 6 - 8, 2013. CREATIVE INDUSTRIES AND DEVELOPMENT POLICY DATA SOURCES, TECHNIQUES AND CHALLENGES IN MEASURING THE CREATIVE INDUSTRIES

3.  What we seek to measure  Output; Employment; Trade: Level and Structure within the Copyright Sectors  The Share of Each in the Total for the Economy  The challenges are extracted from how we try to measure  The Role of the NSOs in the Process  Data Sources, Techniques, and Challenges  The challenges posed by the classification codes  The Need for Proportionality Factors – and the Use of special Surveys  Informal Profile Surveys and the Proportionality Factors  Surveying Creative Activities that do not Fit WHAT IS COVERED

4.  Consistent with the standardized System of National Accounts, the basic measure of the output of the creative sector is value-added  Value Added is defined by  Value-added = Gross Output - Intermediate consumption of goods and service used up in production of gross output  Intermediate Consumption is defined as  Materials used + fuel and electricity+ services used + sub-contracted payments  Using Value-Added, the output (GDP) is measured as  Value-Added + Indirect Taxes - Subsidies HOW OUTPUT IS MEASURED

5.  Challenge - Alternatives are needed when  Data on value-added are not readily available  When it is necessary to check the accuracy of Value-added  When or the contribution of foreign savings  Challenge - Estimates must be reconciled with the total claims on the product defined above. This is the sum of:  Expenses in the form of wages, salaries and dividends (compensation of employees)  Savings defined as profits and depreciation (operating surplus + consumption of fixed capital)  Net indirect taxes (indirect taxes – subsidies) ALTERNATIVES

6.  In the process of development, it is important to gauge the contribution of foreign savings to the level of activity in the creative sector. Thus,  Sound measurement should also consider the contribution to aggregate demand, defined by:  Gross Value-added + indirect taxes – subsidies = consumption + investment + exports - imports + government expenditure  Embedded in the net exports are  the terms of trade  the competitiveness of exports  Import competitiveness  Each of the above is defined using the real exchange rate. ALTERNATIVES CONT’D

7.  To calculate the shares of the creative sector in any of the above aggregates, the National Statistical Organisations and Affiliated Institutions must be intimately involved in the computations.  In particular  As far as possible NSO and other official data sources are used as the basis for the estimates to ensure consistency and hence comparability between sectors.  One reason is that it is better to work with the raw data of the NSO; and if not with the Supply and Use Tables or the Input/Output Tables  A second key reason is that the “Creative Sector’ has to be treated as a “Satellite Account”  Produced in the context of national accounts  More flexible use of concepts, definitions, accounting rules and classifications to improve analysis and estimation.  This is usually where the first big challenges show up  Lack of spare resources at the NSO to devote to the collaboration  Lack of trained specialists at the NSO on the measurement of the creative sector  Lack of trained specialists in satellite accounting, which might involve significant amounts of model-based estimation ROLE OF THE NSO – A FIRST PASS

8.  National Accounts Surveys and National Accounts – NSOs and Central Banks  Annual Surveys of Establishments - NSOs  International Trade Statistics  Goods - NSOs  Services – Central Banks  NSOs appeal to an array of information, including data from special groups of large firms that are ‘oversampled’ to ensure completeness and accuracy.  The general data sources to which they appeal are :  The National Accounts / Establishment Surveys  Labour force surveys  Household surveys (or living standards surveys or poverty mapping projects)  Population census data.  Here is a Second Challenge  Many countries do not have a strong complement of data from these sources.  Many have only the National Accounts and the Censuses of Population RELEVANT DATA SOURCES

9.  The data from the NSOs and Central Banks are grouped using the International Standard Industrial Classification of Goods and Services, under one of the Revisions published by the United Nations Statistics Division (UNSD).  The ISIC is a general tool for classifying data according to kind of economic.  Classification is hierarchical. For example,  From the basic 1-digit – the broadest level of aggregation  To 4-digit – the highest level of detail.  Most countries in the Caribbean work with the 4-digit disaggregation.  Countries usually have to adapt the standards to local needs. CLASSIFICATION CODES

10.  Most countries in the Caribbean are now in transition  From Revision 3, linked to the SNA93,  To the Revision 4 that is linked to the SNA2008.  UNSD has developed Handbooks of National Accounting to provide methodological support in the implementation of the 2008 SNA to countries.Handbooks of National Accounting  However, there are many challenges here too. The problem is that  Old codes must be removed as no longer relevant – activities no longer existing  New codes be added to reflect emergence of new industries/activities  Some codes be split up to reflect fundamental changes in economic structure  In the Caribbean, for example,  No country has yet found the resources to revised their measurement methods in line with SNA2008.  It takes significant resources to do the update and many countries cannot afford to do them CODES CONT’D

11.  Time series used in the estimates have to be understood in this context of adjustment of classifications.  Challenge:  Many new creative activities tend to slip through unnoticed because the classification schemes cannot cover them properly  Mostly, they are hidden in all-inclusive codes and residual categories, such as:  “Other business activities not elsewhere classified”  “Other entertainment activities not elsewhere classified”  “Other recreational activities n. e. c.” CODES CONT’D

12.  Challenge - The levels of disaggregation are hardly ever sufficient to identify the activities defined as creative.  Scaling factors are needed and special surveys have to be done to isolate the shares accredited to the specific copyright-based activities in the creative sector.  Even at the most detailed level, however, the coding system does not provide detail for many creative industries:  Some codes are too small (numbers of cases).  Some creative industries also must be defined by combining with others to make up the category  Some industries are highly cultural in character and simply do not fit any of the market categories used in the ISIC CODES CONT’D

13.  Challenge - Creative industries are often highly informality and run by home-based firms (household-firms).  So, the standard establishment surveys cannot cover them  Sampling Frame target formal establishments  Sampling Frame identifies establishments with 9 or more employees  Helpful to rely on the visitation records of the Census of Population:  Provides preliminary population estimates of local dwelling units, households and non-institutionalized residents.  Records offer a unique opportunity to directly identify the owners of both formal and informal copyright-based enterprises, through the incremental filtering of selected responses. SPECIAL SURVEYS NEEDED

14.  Creative Sector Frame can be built by integrating the Census Visitation Records and the Standard Establishment Register  Two sets of questions can be asked :  What category of worker are you in your main job?  This yields a population count of all business owners – the self-employed with and without employees.  What are the identifying characteristics of the business owners?  Details can be sought to facilitate Scaling of the Creative Activities SPECIAL SURVEYS CONT’D

15.  Identifying characteristics of establishments / business owners  What kind of accounts do you keep for this activity/business? – a formality identifier under the SNA.  Are you registered anywhere as a self-employed person or an employer? – an ILO formality identifier  What kind of work were you doing during the past week? – allows identification of the occupation for the purpose of determining whether or not it is creative.  What kind of business is carried out at your workplace? – allows identification of whether or not the activity is creative.  Where is your place of work (main job)? – a formality identifier which also indicates whether or not the business is home-based. SPECIAL SURVEYS

16.  On employment, the main data sources yield headcounts and information on/or hours worked:  Census of Population & Inter-census surveys  Labour Force Surveys  Challenging issues also arise with the Occupation Classifications/Codes  The Department for Culture, Media, and Sport of the UK (DCMS) recommends a distinction between  workers in the creative industries whether they are themselves creative or not,  creative workers, whether or not they are employed in the creative industries. The broad question asked are: ON EMPLOYMENT AND THE ISOC

17.  The broad questions are  What kind of work were you doing during the past week?  allows identification of the occupation for the purpose of determining whether or not it is creative.  What kind of business is carried out at your workplace?  allows identification of whether or not the activity is creative. EMPLOYMENT CONT’D

18.  The International Standard Classification of Occupations of employed persons (ISCO-08) is now used to classify occupations of persons according to the type of work they do;  represents an upgrade from ISOC-88.  Here too – same issues  Old codes have been removed as no longer relevant – occupations now of minor significant – there are still persons who bathe horses  New codes be added to reflect emergence of new industries/activities, such as in ICT  Some codes be split up to reflect fundamental changes in economic and occupation structure EMPLOYMENT CONT’D

19.  Again  Many new creative activities and occupations tend to slip through unnoticed because the classification schemes cannot cover them properly, except under all-inclusive codes residual categories, such as :  “Services managers not elsewhere classified”,  “Creative and performing artists not elsewhere classified”  “Software and applications developers and analysts not elsewhere classified.”.  “Professional services managers, not elsewhere classified”  Challenge: Special surveys become necessary to address the scaling issues that arise in sorting creative from non-creative. What is creative? EMPLOYMENT CONT’D

20.  For scaling, we use the surveys to get :  Responses to questions seeking a subjective assessment of the importance of copyright to each industry.  How important is copyright to the operations of your organisation? [1] very important; [2] important; [3] not important”.  Responses to questions seeking an accounting estimate of the share of copyright in the sales of the industry. The question posed was:  “What percentage of turnover is attributable to copyright related activities in your company?  WIPO also encourages use of average estimates of copyright shares from comparable countries conducting similar studies using sample surveys under the WIPO project. ADDRESSING SCALING

21.  Challenges:  Funding for the surveys  Proper choice of comparable countries. Countries with surveys may not compare to countries without.  Regarding the qualitative assessment of the significance of copyright, Likert-type scaling arises. In the Brunei (2011) study, a preliminary numerical index was attached to the responses as follows:  [0.9] very important;  [0.42] important;  [0] not important.  The resulting index is very qualitative/subjective even SOME SCALING CHALLENGES

22.  SOME SCALING CHALLENGES CONTD

23.  There are many cases where traditional data sources are simply either not helpful or not adequate for estimation.  In the Caribbean, a classic example is “Steelbands”  which appear in the listing of activities but for which no data has ever been collected using relevant survey methods.  Another important example is the “Carnival Industry”, well-known in countries such as Brazil, Columbia, Cuba, and Trinidad and Tobago.  In such cases, other research has been used, including  Administrative data from supporting public institutions. A good example is the National Carnival Commission of Trinidad and Tobago.  Data sought directly from the organisations and operators, including some government agencies. CASES THAT DO NOT FIT

24.  Challenges: In such cases one finds that  The accounting standards of respondents do not usually approximate the quality of industrial business accounting and  the data might not be of the same quality as those of the National Accounts Surveys – and are certainly not subjected to the same quality checks as the NSO data.  Estimates may not be as reliable as the reference National Income Statistics. In some cases, industry groups differ sharply from anything in the NSO Accounts – for example  The “Carnival Industries”.  These must be defined by combining the several satellite activities defined in various segments of the accounts – music; masquerade; fashion; radio.  Survey work is needed on how to identify the right defining elements and ratios of the various components CASES THAT DO NOT FIT

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