Cultural Development in an Open Economy

Stuart McFadyen (University of Alberta)

In 1991 the Social Sciences and Humanities Research Council in co-operation with the Federal Department of Communications sponsored a competition to prepare a state-of-the-art review of cultural development in an open economy. The basic purpose of the initiative was to assess the strengths and weaknesses of existing research and research capacity in this area within universities, other post-secondary institutions, government, and the private sector and to determine where significant needs and opportunities exist. The state-of-the-art review is to serve as a first step toward possible further collaborative activity between the two sponsoring organizations, with a view to developing a stronger research capacity in the area. A condensed version of the report is under consideration for publication by the University of Toronto Press. This commentary contains short summaries of each of the papers and the conclusion and recommendations.

Stuart McFadyen, Colin Hoskins, and Adam Finn developed the proposal to conduct the review and invited Keith Acheson, Paul Audley, Richard Collins, Roger de la Garde, Rowland Lorimer, Chris Maule, and Gaëtan Tremblay to become part of the co-ordinating committee. Liss Jeffrey, Fil Fraser, and Nancy Duxbury later joined the group. All were contributors to the report as summarized below.

Questions of Canadian identity and culture have long been on the research agenda of Canadian scholars. Attention has been directed to the process by which culture has been articulated, produced, and disseminated. Considerable effort has been devoted to the development of policies designed to develop and protect Canadian cultural identify.

Culture, however, covers a lot of ground. To provide focus and manageable scope to this state-of-the-art review the team restricted its mandate to Canada's cultural industries defined to include feature films, television, radio, cable-television, books, magazines, and sound recording. As the Minister of Communication notes in the preface to Vital Links: Canadian Cultural Industries:

It is in the cultural industries that the financial prognosis is more clouded. These industries--film, book and magazine publishing, radio and television, and sound recording--face the particularly long odds inherent in an era of mass communications. Canadian producers not only have to confront high project costs and concomitantly high risks, but do so in an environment where imported cultural products are available at generally much lower unit costs. Growing global economic trends aggravate their competitive disadvantages, favoring an increasingly homogenized cultural product. We wish to find ways for our cultural industries to shorten the odds.

To emphasize industry commonalities rather than differences, the co-ordinating group chose to employ a thematic approach rather than examine each industry separately. The thematic papers ranged from conceptual foundation pieces to analysis of the business and policy research in the area. As well, a bibliography of over 10,000 items and a register of researchers in Canada working on the cultural industries or cultural development were developed.

Rowland Lorimer & Nancy Duxbury, in an orientation essay, review the areas of study central to an understanding of cultural development in an open economy. The essay opens with a set of definitions and a discussion of culture, symbolic culture, cultural development, the economy, and an open economic form. Four models of cultural development that are or have been operative in Canada are identified: the UNESCO cultural development model, the public service model, the community development model, and the market corrective model. The overlap and interrelationship of culture and the economy are noted as being founded on two different perspectives on the dynamics of social life. The importance of understanding the general nature and the specific attributes of Canada's open economy as defined by GATT, the FTA, and NAFTA, especially as it impacts on culture, is stressed. The need to have knowledge of other open economic systems such as the European Community is emphasized. The potential for the weakening of the national cultural fabric of the opening of Canada's economy is reviewed and the potential counteractive power of stimulating cultural production, and the state of knowledge into how that might be done, is discussed. The example of publishing is used as a case study. Two final elements of the paper are an examination of education for cultural activity and the status of the cultural worker.

Colin Hoskins, Stuart McFadyen, & Adam Finn argue that the performance and actions of companies in the cultural industries can only be understood in the context of the environment in which the industries operate. They examine the microeconomic environment, the regulatory environment, the technological environment, and the global competitive environment of the cultural industries. They also consider some of the implications of various features of the environment for public policy, and for the conduct of companies, such as the competitive strategies adopted. The approach adopted is to identify the major issues, provide a state-of-the-art review of the literature, and identify where additional research is needed. The authors attempt to demonstrate that economic analysis of the environment is essential to an understanding of the conduct of companies in cultural industries. It enables them to explain, for example, how companies are likely to respond to changes in the external environment, why products of the cultural industries are traded extensively, why the US dominates that trade, and why some particular business strategies are increasingly important. They argue that economic analysis is a prerequisite to sound public policy formulation because companies tend to respond according to their economic interests.

Richard Collins discusses the contradictory imperatives in respect of the state's role in cultural development (to compensate actively for market failure and to keep out of information markets to ensure freedom of information) and the vexed questions of "What is culture?" He argues that longstanding difficulties in cultural policy have been transformed by the increasing internationalization of cultural and information markets which challenge the congruence of policy and culture. Collins notes that the pace of internationalization has been changed by technological development but that internationalization is manifested unevenly. One principal factor in shaping the unevenness in internationalization of information markets is language, especially in relation to television markets delivered by satellites in Western Europe and in the world market for certain information commodities. In light of the factors discussed Collins proposes that opportunities exist for Canadian information producers in global markets and recommends topics for further research.

Keith Acheson & Christopher Maule begin their paper with a brief discussion of the linkages between culture and the cultural industries. They then turn to issues affecting international régimes for the film and television industries and assess related research. The régimes examined govern trade, international investment, labour movements, and copyright. Film and broadcasting involve a combination of trade in goods and exchange of services. Because trade régimes, such as GATT, have until recently dealt primarily with trade in goods rather than services, they have not provided an adequate framework for the growth and development of the cultural industries. In contrast, international copyright conventions have always been concerned with linking national legal régimes, but have evolved independently of trade and investment régimes. Important technological innovations--digitization, compression, encryption, high-definition television, fibre optics, and satellite transmission--are exerting pressure to adopt and integrate rules governing copyright and trade in goods and services. Among the important issues that the authors identify are: reconciling the different approaches to integrating trade, investment, and copyright rules in regional trade pacts such as the EC and the NAFTA; achieving openness while providing some internationally sanctioned scope for governments to finance and promote national productions; exploring the implications, regarding legal contracts, of extending moral rights to team activities (e.g., the creation of music and audio-visual works) and expanding the domain of neighbouring rights and compulsory licensing; and regulatory and copyright issues concerning the receipt of cross-border satellite signals.

Roger de la Garde & Gaëtan Trembly argue that Canada contains two markets for cultural industry-produced goods and services. The authors examine one of these markets, the market where the industry base, producers, artists, distributors, and, to a large extent, the consumers are located in Quebec. Research on Quebec's cultural industries from 1973 onwards is reviewed. Interviews were conducted for the study with researchers and cultural industry participants in Quebec. The results are presented and ranked in terms of both research priorities and challenges faced by the cultural industries in an open economy. A final section looks at the question of possible co-operation between university-based researchers and participants from cultural industries.

Fil Fraser notes that participation in the cultural industries by organizations based in Native and ethnocultural communities has grown dramatically over the past decade. The emergence of aboriginal broadcasting operations, mostly, but not limited to Northern Canada, has had a dramatic effect on the cultural life of those communities. Broadcasting undertakings organized by ethnocultural groups have succeeded in a number of Canadian cities, with cable community channels providing an effective outlet. There are multilingual radio stations in some cities and a multilingual television station in Toronto. There is a small but important presence in the publishing industry, mostly at the level of periodicals, by Native and ethnocultural groups. There is, however, a dearth of research into cultural industries in these sectors. Much of the work touches on aboriginal broadcasters, but looks at them in social or anthropological terms, not as cultural industries. Recommendations are made for a number of baseline studies focusing on the impact of Native and ethnocultural organizations as cultural industries that create employment, cash flows, and generally have an economic life. Hard information is required to help determine why some enterprises fail while others succeed.

Liss Jeffrey reviews the question of Canadian audiences for cultural industries within the context of international developments. The paper, first, locates two major models, a "public" or citizen model and a "market" or consumer model, that have animated audience research within the Canadian discourse on culture and communications, and traces recent shifts in this discourse. Second, it presents an overview of findings on international and Canadian broadcast audiences, and identifies key issues raised by this research. Third, in light of certain international and domestic trends, it suggests that a third "audience" model for research is required. The paper calls for integrative and innovative research strategies involving partnerships and networks. In this way theories and interpretations can be tested and understanding of "audiences" for cultural industries in a new media environment can be further refined.

Paul Audley examines the theme of facilitating cultural development in Canada in the context of market forces which work against that development. The premise of his paper is that the primary significance of cultural works is cultural, social, and political. Communities and nations whose past is not reflected in publications, broadcast programs, films, video, and audio products are as handicapped as individuals afflicted with amnesia. Societies whose current realities are not adequately explored, reflected, debated, and contested through works that are widely available, and that create a substantial body of shared knowledge, will increasingly become democratic in name only. Communities and nations in which talented individuals lack opportunities to create works of the imagination that grow out of their character and knowledge will atrophy. The author covers five points: first, the importance of examining the past as a foundation for successfully understanding the present and planning for the future; second, the connections between the conceptual framework chosen for policy analysis and the resulting public policy measures; third, the need for more precise and explicit public policy goals; fourth, areas in which--whatever the perspective of the researcher--the information required for reliable policy development, analysis, and evaluation is lacking; and finally, to suggest a more focused approach to further research.

Adam Finn, Stuart McFadyen, & Colin Hoskins argue that as the cultural industries come under increasing competitive pressure, industry organizations cannot afford to focus exclusively on creative and artistic concerns. They have to allocate their resources to projects for which there is a real market demand, and must conduct all aspects of their business affairs in a competent manner or fall by the wayside. Therefore the authors examine the business aspects of successfully competing in the cultural industries. They consider in turn marketing and distribution, new product development, general management and organizational analysis, human resource management, accounting and management information systems, finance, production management and operations management, legal and competitive strategy in a global environment. The authors argue that a competitive industry begins with a recognition that a country's cultural products are really only successful when they reach an audience that is prepared to pay at least a significant proportion of the real cost to experience them. Moreover, as creative and other input resources are always limited, improving the marketing, financial, and operational efficiency of a cultural industry organization is one way of increasing industry output and providing a richer cultural environment for Canadians.

Outline of Recommendations

The "Conclusions and Recommendations" chapter brings together and highlights some of the recommendations and selected topics for further research found in the thematic papers.

Perhaps the most apparent finding of this project was a tension between the market (economic) model and the cultural development model--with little literature that is helpful to policy-makers in resolving that tension. The lack of literature is in part a reflection of the low level of funding for university research and infrastructure in the area, the absence of an adequate information base, and poor access by university researchers to much of the information and data that has been gathered by government and industry.

Even given these problems, it is perhaps surprising that so little of the research undertaken is empirically based and of obvious policy relevance. There is a need for such research and the thematic papers identify many promising avenues of enquiry.

In order to increase the level of research activity and the relevance of the research outputs in the cultural development /cultural industries area the review team made three general recommendations. They are:

(1) Improve the information base for research. On a sector-by-sector basis there is a need to examine the statistical data gathered concerning the cultural industries, with particular attention given to the adequacy of statistical cultural indicators and other information appropriate to examining the performance of the cultural industries from the perspective of cultural policy as well as financial and economic performance.

(2) Improve access to information by researchers. A more satisfactory basis should be sought for providing researchers with access to the information (both government and industry held) required for rigorous analytical work. While legitimate concerns regarding confidentiality of information and the ownership and commercial value of relevant information must be respected, every effort should be made to improve research access to existing sources of secondary data which could be used to address research issues. At present the barriers to information include the proprietary nature of some important industry information, the rapidly rising costs associated with any special data runs based on Statistics Canada's surveys of the cultural industries, lack of awareness of some existing data sources, for example, the Music Industry Database, and the absence of any continuing arrangement for compiling bibliographic information concerning research in this field or reviewing such research. These restrictions to researchers are not as telling in other countries.

(3) The Government of Canada, through the Development of Communications and the SSHRCC, should make funds available to further promote cultural industries research. For example: Aid to research and publication devoted to the study of the cultural industries should continue to be made available by government departments over and above the aid available through SSHRCC. Innovative new ways of funding should be devised to get more value for money. To be successful in this regard, funding should be structured to induce academic researchers to do work of interest to managers of firms operating in the cultural industries and managers in the public sector concerned with public policy. Funding should be provided for projects for which there is a reasonable expectation that academic publications will result.

Research on culture and communications in an open economy should be established as a theme in the SSHRCC Strategic Grants Program. Research centres and networks should be encouraged and financially supported. At least one cultural industries research centre should be established in Canada.


Both the bibliography and the register of researchers are available from Cultural Development in Canada, 6903 Hardisty Drive, Edmonton, Alberta, T6A 3V2.

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We wish to acknowledge the financial support of the Social Sciences and Humanities Research Council for their financial support through theAid to Scholarly Journals Program.