02 November 2022
The UK is one of the world's leading service exporters, and creative services such as advertising, publishing, and design are an important part of global trade. Yet we know little about the scale, patterns, and growth of this sector. In this blog PEC Researcher Dr Neil Lee and colleagues explain how their research is addressing this gap in the evidence base.
Creative services such as advertising, publishing, and design are an important part of global trade. Their rise has been partly due to technology, which has made it easier to trade intangibles, but also because of increasing integration into the production of manufactured goods. In the decade before the pandemic, cross-border trade in services increased 60% faster than trade in goods.
In a new AHRC-funded Creative PEC project, published in Regional Studies, we are using data from the Inquiry in International Trade in Services (ITIS), in combination with the Annual Business Survey (ABS), to provide new evidence on the scale, trends, and geography of UK creative service exports. Second, we develop a measure of industrial relatedness between exports of creative, non-creative services and manufacturing goods to investigate the frequency with which they co-locate with other parts of the economy.
Creative services are a diverse group. The largest part of service exports come from Software, Telecoms, Advertising and Copyrights (copyrighted literary works, sound recordings, films, television programmes and databases). Together these account for around 15% of total UK service exports. As figure 1 shows, other services such as architecture, audio-visual and information also play a role.
There has been considerable change in the export propensity of these sectors over time. Exports of advertising services, copyrighted creative works, telecommunication services, and computer software have been particularly important, accounting for around 5% of total services exports each. There has been a rapid increase in the share of services in four of the sectors which form the top 10: copyrights, advertising, software and telecommunications, while a relative decline in the share of architectural and audio-visual services exports.
Creative service exports are highly geographically clustered, particularly in London and the South-East, Oxfordshire, Greater Manchester and Yorkshire. This partially reflects the geographical distribution of creative industries. The South-East and London account for around 40% of creative industry employees and a third of creative businesses, so it is hardly surprising that this is where most creative service exports come from
Where do these exports go?
The largest share of UK creative service exports go to the United States, with over a fifth heading there. Germany, France and other EU countries are also well represented – although there is also considerable trade with Switzerland and Norway. Our data only goes to 2017, so won’t have accounted for the impact of Brexit – but they do show a problem for UK policymakers with EU (and EU linked) destinations so important.
Future Creative Service Growth
We also show relatedness between creative services exports and the rest of local industrial structure in figure 4, above. This shows the type of environments which might be suitable for future creative service growth, and the type of industries with which they tend to co-locate (potentially giving information on local input-output links). Creative service exports are particularly well suited to urban areas (London, Manchester, Edinburgh, Leeds) and hubs of knowledge creation (East Anglia, Oxfordshire, Surrey, Sussex and Warwickshire). These are places where clusters of universities and knowledge intensive industries could play a key role in fostering the growth of creative services.
Existing comparative advantage in manufacturing and other services exports could allow regions to diversify away from mature industries and specialize in new creative services.
Creative services have become increasingly important part of international trade. Future developments in ICT and innovation in digital services are likely to make the sector even more important in the future. As a key strength of the British economy, laying the conditions for creative services to continue their export success will be an important part of any future UK growth strategy. If the UK is to succeed as a trading nation, creative service exports will need to play an important role.
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