Trade in creative services: relatedness and regional specialization in the UK

ABSTRACT

Creative services have become an important, but understudied, part of global trade. This paper presents new evidence on the transformation, geography and industrial relatedness of creative service exports in the UK, using the Inquiry in International Trade in Services (ITIS) database. Creative services exports have grown over the past decade, but there are pronounced patterns of geographical specialization in the export of creative and non-creative services. We develop a measure of relatedness between exports of creative and non-creative services and of manufacturing goods. We argue that creative services are economically significant because of their interrelationship with other local sectors.

KEYWORDS:

• creative services
• trade
• exports
• services
• relatedness
• UK

JEL:

• F10
• R11
• R12

ACKNOWLEDGEMENTS

The authors are grateful for the comments received at the GEOINNO 2020 Conference in Stavanger.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1. In 2017, the world's top services exporter was the United States, representing 15% of global exports, while the UK, Germany and France jointly captured 17% of the world market. The top five developing economies were China, India, Singapore, Hong Kong and the Republic of Korea, which held a world market share of almost 15%, the same as all other developing economies combined (McKinsey Global Institute, 2019; UNCTAD, 2018b).

2. The ITIS dataset does not provide information about whether services sold to non-UK based entities are then used abroad or in the UK market, for instance, to support non-UK based entities in their activities in the UK.

3. We define regions using the NUTS-2 nomenclature. We use this level following previous studies on interregional trade (Thissen et al., 2019), relatedness and regional specialization (Balland et al., 2019; Drivas, 2022; Innocenti & Lazzeretti, 2019; Xiao et al., 2018), and to assure the representativeness of the data at the region and industry levels. Northern Ireland was excluded from the analysis due to lack of data.

4. Data for manufacturing industries are based on the ABS database reporting the turnover of exporting firms in each industry, while for services industries we use the ITIS database providing information on the value of exports of firms for each service category. These two sources of data are not directly comparable. However, they can be used in order to first identify the comparative advantages of regions in each of the categories, and to then use these to analyse co-occurrence patterns between manufacturing and services exports. As an alternative approach, we used data provided by HM Revenue & Customs (HMRC) on the value of manufacturing exports per region and broad product category. However, the product classification used by HMRC is of limited application in this analysis because it makes meticulous distinctions between products of marginal interest from a UK manufacturing perspective (e.g., crude materials, mineral fuels, lubricants, animal and vegetable oils), while aggregating together products at higher added value usually produced by UK manufactures (e.g., no distinction between machinery, transport equipment, computers and other electric equipment).

5. The use of different relatedness measures yields consistent results, which are available from the authors upon request.

6. We are grateful to an anonymous reviewer for this point.

Additional information

Funding

This study was supported by the Arts and Humanities Research Council (AHRC) Policy and Evidence Centre for the Creative Industries [grant number AH/S001298/1].