Wednesday, April 10, 2013

THE CREATIVE CLASS OF THE CITY: A NEW STRATEGIC PARADIGM FOR LOCAL ECONOMIC DEVELOPMENT?

1.1 Introduction
In the past month or two, the issue of the creative class theory by Richard Florida resurfaced. The contention (See Kotkin, 2013) and the counter arguments (See Florida, 2013) rested on the relevance of the creative class theory in the current economic dilemmas of cities. The drive to promote economic development in cities has been raging and several studies have attempted to understand why some cities are declining while others are growing. From mega convention centers, professional sport facilities and Olympic cities, another perspective to promoting urban development emerged early on the 2000s and informed many economic strategies of some urban communities in United States, and even beyond. Richard Florida identifies a theory that suggests that the key to economic development in urban areas is dependent on what he calls the “creative class.” The thrust of this paper is to review this theory in the light of four main objectives: to explore the tenets of the theory; to assess the theory as a new perspective or basis for local economic development, examine the strengths and challenges of the theory, and draw implication for policy and research on urban poverty and local economic development. This is aimed at raising awareness of the theory to inform critical thinking for urban and economic development practice in the new decade.

1.2 The Creative Class or City Theory and Economic Development
1.2.1 Tenets of the Theory
The creative city or class theory espouses a broad set of understanding that sees individuals but not firms as a new paradigm to reducing urban poverty and promoting local economic development. Several studies have concluded that there exist a strong nexus among culture, people and place (Markusen and King, 2003; Florida, 2003; and Currid, 2010). The momentum of this understanding emerged as a result of Richard Florida’s book on the “Rise of the Creative Class” in 2002 which examined the role of a certain type of human capital that influences economic development of growing cities. Florida (2002; 2003a; and 2003b) argues that the “creative class” of a city is made up of professionals in innovative and artistic occupations and include those people employed in science and engineering, research and development, technology-based industries, arts, music, culture, design work, or knowledge-based professions. These professionals, Florida argues, are thus the main catalyst for continued development of modern cities (Edcutlip, 2005; Mok, 2009; and Minassians, 2010). In the arguments put forward, the concept of place and clusters continue to be relevant in urban and regional development contrary to emerging understand of the evolution of people and place thinking. From this perspective, Florida (2003a and 2003b) stipulates cities as places and clusters which must have the ability to draw talented people for economic development. In essence it is not the place or cluster per se but the creative class who live in these places. These clusters of this type of human capital thus “are the driving forces in regional economic growth” (Florida, 2003b). These individuals are what he terms the “Creative Capital” of cities. The theory is grounded on three main principles known as the 3Ts; Technology, Talent, and Tolerance. These three characteristics were associated to regions in the US with the fastest economic development (Florida, 2002; Florida, 2003b; and Minassians, 2010).

Apparently, the working class constitute one third of the US population and according to the author these groups of individuals influence innovation and the growth of cities. The dichotomy drawn between the “creative class” and the “non-creative class” is really the center of the controversies. As much as innovation drives production and economic growth, it is also important to realize that the other segment of society, non-creative class, also influences the economy in one way or the other. To what extent does the two-third of the population influence growth? How would the absence of the creative class affect economic growth in a city? Can the creative class do without the one-third in promoting economic development? And how do these segments interact within and between themselves to bring about economic growth? These are some of the immediate questions that come to fore when one begins to appreciate the theory. 

Indeed the growth of economies is linked to innovation. The transformation from agrarian to industry is predicated on innovation spurred by technological advancement. Within the agrarian sector, a move from peasant farming to mechanized farming and agribusiness is informed by innovation. The changing faces of business as seen in the Fordism period were as a result of innovation and technological advancements. Businesses that continue to remain a success have thrived on innovation. Apple and Samsung are typical examples. Innovation brings new products, that initiates new demand for goods and services for which supply must respond accordingly. The tourism (arts, culture, design, etc.) industry and their innovation are influenced to some extent by talents as people are always craving for new ways to be entertained. It therefore presupposes that for cities to remain economically vibrant there is some level of innovation that must spur demand and supply reactions. Indeed Detroit is a typical example in this case. The low presence of innovation in the form of reduction in the prosperity of the auto-industry saw a massive dip of the city’s prosperity. Indeed there are other factors that may have warranted this but the pull and push factors that are induced by innovation present strong arguments from the creative class theory. Whether the creative class of a city is the direct cause of the innovation seems to be the missing link and how their presence shapes the urban prosperity remains to be seen; and may have informed the current apprehension from its critics.

1.2.2 Creative Cities and Local Economic Development
Nonetheless, several studies have consolidated the findings by Florida, for instance, by reshaping and rethinking the art and culture industry as a potential for economic growth and development in cities (Markusen and King, 2003; Markusen, 2006; Currid, 2007). It may not be the panacea for solving the current challenges of cities yet it offers an alternative to stimulating growth as past inventions and their effectiveness in recent times have been moot. The creative theory assumes that the “nature of society and work is changing and traditional notions of economic development are out of date” (Moss, 2009). This is not entirely true as there are evidences to suggest that investments in professional sports facilities can still promote economic development (Cantor and Rosentraub, 2012). The important rhetoric however is that the arts and culture industry together with the notion of creative class and cities offer another perspective of the strategies to stimulate economic growth. For instance Currid (2007) concludes that the “nexus of people and place, art and culture have received increasing attention as important contributors to urban and regional economic development, the nature of society and work.” The new paradigm is therefore not to attract firms but “the attraction of creative people” and this “is the key to growth and economic development” (Squires, 2003).

According to Markusen (2003) “a vigorous arts sector benefited their companies by helping them attract and retain a larger pool of talented people to the area…thus enhancing regional economic growth.” The challenge however is the specific interventions and incentives to implement to influence the attraction of the creative class. Although this theory provides an understanding as to how these cities may be growing, the question that is not answered is how to attract these individuals. From the perspective of arts and culture Hamnet and Shoval (2003) appreciate Florida’s observation but enquire of the feasibility and realism of being able to translate these ideas into economic development policies, programs and strategies. 

The issue of tourism thus becomes evident in this context. Cities may therefore frame their strategies around the arts and culture within broader frameworks of promoting tourism (Gomez, 1998). As Hamnet and Shoval (2003) intimates, “culture is now a key element of urban competition, both in terms of civic pride and image and also in terms of its ability to attract both visitors and footloose national and multinational companies via the quality of urban life on offer to the large new class of educated professional and managerial workers.” Unfortunately the long term implications of adopting this as a strategy of economic growth have not been adequately tested. Though tourism is seen as the broader perspective in the light of linking the creative class to arts and culture the gestation period is not contiguous and needs frequent replenishment of ideas thus making this a daunting strategy for sustainable economic development. Again, there is a dilemma here as in stressed economies, money tend to chase necessities at the expense of leisure; which arts and culture are normally associated with. Thus, the needed springboard for economic development may not be found in the arts and culture.

1.2.3 Strengths and Challenges of the Theory
Several criticisms have been leveled against Florida’s theory together with whether culture and arts actually leads to urban and regional economic development. Despite these observations, it is important to appreciate the new perspective to strategy that the theory offers. Indeed, it provides understanding of the association between the creative class and economic development on the basis of strong and continuous innovations. Even though there seem to be an emphasis on attraction and retention of the creative class, it is the ramification of their existence that appeals to my appreciation of the theory. They contribute to new and innovative ideas that can be commoditized through productions and these are the basis for generating employment and income for cities. Whether this has worked so far is another question. Similarly, it offers a new way of validating the role of diversity in economic development. The theory puts forward some quantitative measures of the capital class of a city. The Bohemian Index, Melting Pot Index, Gay Index among others offers strong evidence of linkage between economic development and diversity. The theory thus remains, in recent times, “one of the major influences on urban redevelopment and, as such, deserves the attention of social scientists, politicians, and city planners” (Minassians, 2010).

The challenges that are associated with the theory mostly relate first to the methodology adopted for the studies and secondly, the practicality of the theory for urban development policy and planning interventions. Another perspective is the conclusion Florida (2002a and 2003b) draws on social capital and economic development.  

In the estimation of the relationship between economic development and the creative class Florida (2002 and 2003b) adopts measures of association and assumes that the creative class actually is a panacea of economic development. The question that arises is whether the creative class attracts economic development or economic development attracts the creative class (Bures, 2012). This has been challenged in several areas (Reese, 2012). For instance, Hoyman and Faricy (2009) identified that “the creative class is not related to growth, whereas human capital predicts economic growth and development and social capital predicts average wage but not job growth.”  Nonetheless, there are evidences that corroborate Florida’s arguments (Markusen and King, 2003; Markusen, 2006; Currid, 2007). Indiana has “gradually developed a regional brand as a livelier place to live and do business; in a state that is doing better economically than most;” by attracting new talents, “Indianapolis’s unemployment rate is 7.5 percent below the state and national jobless rates” (Schnieder, 2012). This understanding is currently informing new investments in the city. From this it is obvious that context matter and the nature and process of assessment may present varied results.

Another criticism is the emphasis on who the creative class are. They represent the upper class societies mostly classified as the urban elites. By emphasizing that priority be given to such individuals may seem to take resources away from the middle and the working classes; perpetuating economic segregation. In this regard, analysts are quick to point out that the theory poses a risk for deepening inequality and income segregation. “It is no surprise that Florida’s own numbers show that inequality is worst in regions with a high-level of creative development” (Minassians, 2010). Responding to these individuals and their needs may also imply increasing grand investments in hotels and recreation centers to attract them. This may form the basis of increased gentrification and displacements in urban areas (Peck, 2005; Pratt, 2008; Minassians, 2010).  

Moreover, the greatest challenge emerging when theories are proposed is how to translate them into interventions to respond to societal needs.  This is another significant flaw of the creative city or class theory. It offers no clear mechanism for programming and urban policy. As such the adoption of this perspective is characterized by challenges: “a misperception of culture and creativity as a product of individual genius rather than collective activity; and, two, a willingness to tolerate social dislocation in exchange for urban vitality or competitive advantage” (Stern and Seifert, 2007). The latter can be attributed on one part to the low emphasis that Florida (2002 and 2003b) places on the role of social capital in economic development. Apparently, the success of the arts and culture industry is strongly related to social capital in the form of social cohesion, trust, networking and social organization (Markusen, 2003; Lyord, 2006; and Currid, 2007).

Other questions also emerge in relation to the role of the creative class (including the art and culture) in economic development. Even though Florida (2002 and 2003b), Markusen (2003), Squires (2003), and Currid (2007) all provide an understanding of the role the creative sector plays in the economic development of different regions, the factors that induces their concentration (Mok, 2009), how they influence economic development, what conditions must prevail, what role globalization plays and the negative effects of their activities (behavior in the urban space) are not so obvious. When these questions are answered, this strategy would yield itself as a strong alternative for reducing urban poverty and promoting local economic development.

1.3 Summary of Key Findings, Implications and Conclusion
The discussion so far has presented the issues surrounding the theory of the creative class, the art and culture industry and how they influence economic development or otherwise. Despite the challenges and criticisms, the theory provides a new wave of understanding the factors associated with economic development. It also provides a framework to develop new and innovative ways for tackling urban poverty and local economic development.

The critical implication for urban planners would be to understand the factors that facilitate the retention and attraction of the creative class. The conditions that these talented people require to live and work would therefore become the main innovative strategies for local economic development. Most importantly this must be done without worsening the conditions of the other members of society. Gentrification and inequality that have been raised draw references to fairness and equity in urban development strategies. In this regard, meeting the needs of the creative class would imply the design and implementation of place-based strategies that are do not have negative equity and diversity implications. Markusen (2003) and Currid (2007) provide some specific strategies for the art and culture industry but a cross-cutting policy framework is appropriate. In addition to the strategies, urban and local economic development planners would need to provide the amenities, consumption opportunities, and quality of life and place that attract high-quality human capital of different industries (Clark, 2004).

The unanswered questions draw larger research implication on the subject matter. Florida (2003) concedes the complexities associated with his own theory and thus identifies several areas of study from organizational development, financial management through to anthropology and human behavior. In this respect, adopting and applying the theory without critical assessments of context and the assumptions that underpin the theory may result in inappropriate outcomes. Urban planners and policy analysts must appreciate these dynamics and complexities and work to reduce urban poverty and promote local economic development in an effective and sustainable manner.

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