Clustering has been successfully used by industrialists for centuries as a strategy to generate economic growth. Made popular by influential Harvard academic Michael Porter in 1990, and originally described by economist Alfred Marshall in 1890, industrial clusters are concentrations of interrelated organisations, firms, professionals and practitioners collaborating and competing in related industries.
Clustering is, as The Economist described it,
the phenomenon whereby firms from the same industry gather together in close proximity. It is particularly evident in industries like banking. Banking centres in cities such as London and New York have thrived for centuries.
Clustering has also been hugely successful in some cultural and creative industries. Examples of booming creative clusters are Hollywood in Los Angeles, or Broadway in New York and Leicester Square in London.
But in South Africa, where it could make a real difference for the arts, clustering has been less successfully applied. One of the reasons is that the creative and cultural industries (CCIs) fail to see themselves as a cohesive industry.
The opportunity to introduce clustering into arts policy is ripe. The Department of Arts & Culture is currently reviewing its arts, culture and heritage policy. While the new policy mentions supporting creative clustering in cities, it could be deepened to include practical interventions to support creative work and exports. This could include establishing specialised incentives for the CCIs, especially those exporting South African cultural products such as art, literature, music and film.
It can even draw on the country’s special economic zone initiatives. These are designed to support clustered industries to stimulate growth, revenue generation, job creation, attraction of foreign direct investment and international competitiveness; and are encouraged by a range of income tax, value-added tax (VAT) and customs-related incentives.
Pioneering economies
Clusters represent a promising approach for the growth and sustainability of the creative economy in South Africa which currently contributes between 2.5% and 3% to national GDP. This figure could be doubled with stronger policy and a higher cultural and creative industries profile.
One way to get clusters going is to take a leaf out of industry’s book. Industrial strategy, in some instances, has mastered how to generate growth and develop other beneficial attributes such as supply chain integration, social networks and cooperative competition.
South Africa has a number of examples. These include the aeronautic cluster in Johannesburg, and automotive clusters in Durban and Nelson Mandela Bay.
Aside from the film industry, cultural clustering in South Africa tends to be more organic and less supported by government incentives. Creative clusters are still relatively disparate, which minimises their impact.
Creative “zones” – through a combination of necessity and practicality – have driven intrinsic “clustering-lite”. Examples are Woodstock in Cape Town, a design and creative hub, much like the Braamfontein Neighbourhood or the Keyes Art Mile in Johannesburg. Randburg in Johannesburg is a sprawling film and television nexus with cluster potential.
Some small arty “creative” towns also make use of their size and creative capital to become town-clusters: Grahamstown, host of the National Arts Festival, for example, leverages it’s reputation as a festival town to attract tourism, international acts and various creatives selling their products or expertise. Similarly, Karoo towns such as Clarens and Prince Albert, and others, use their high concentration of creative traders and small size to make attractive getaway destinations. But none of these are formal clusters, have major export advantages or are supported by government, outside of big events.
Creative work
The development of creative clusters could offer greater opportunities for cooperation between creatives. This is because creative workers tend to be self-employed or connected to small firms. And creative work is also often project based.
Clustering increases productivity and efficiency by drawing on the benefits of economies of scale. It also stimulates innovation, kick starts new businesses, and fosters a cluster mindset, resulting in “coopetition”, the act of cooperation between competing companies.
Examples include The Go Down Arts Centre which sets up collaborations and encounters between artists from different disciplines and parts of the world in Nairobi, Kenya and The Trampery, an advanced co-working space for entrepreneurs and creatives, in London. Another good example is “Silicon Spa”. Based in the small British town of Leamington, it’s home to over 40 video gaming companies, which collectively employ over 1,000 people, and have strong global links.
Clusters, while not a panacea, help confront and counter de-industrialisation and facilitate an export-orientation, both critical for the creative industries of the future.
But why pursue a set collaborative approach in an industry that doesn’t like being boxed in? The answer is because there would be three major advantages.
Firstly, formal clusters can encourage cooperation between creative industry workers. This is Durkheim’s “social glue” or the social/ network ties that unite us. Social glue binds industries and makes them more effective at working toward reaching collective industry goals and meeting needs. Basically by working together an industry is better placed to attract support – political and financial. To date, the CCIs have not been very effective at this.
Secondly, actors in cultural and creative industries need business skills. Formal clusters could help plug this gap. And by improving business skills, clustering would help raise awareness around the commercial, market and export opportunities for the industries.
Finally, the full potential of creative industries is perennially constrained by access to finance. Clustering could help streamline funding applications. A collective of official creative clusters should also be able to develop more formal and viable relationships with private and public funders.
Best practice
International best practice – and a recent focus on developing new, agile clusters – suggests that a systemic industrial cluster approach could have a significant impact on the growth and success of South Africa’s creative economy. The UK, European Union, US and China are already applying strong industrial cluster models to develop their CCIs. This also often has the knock-on effect of urban regeneration and a boost for tourism.
A 2015 global mapping study found that creative hubs and clusters had mushroomed in the Asia-Pacific region and, backed by policy, contributed over R10 trillion (US$743bn) to the creative industry in 2013.
South Africa must follow suit or miss the opportunity to grow its creative economy.