Macroeconomic Impact Assessment Modelling System

Overview

This study is intended as an update to a previous study undertaken by Conningarth Economists for the Nelson Mandela University. The two studies, which are the 2017/18 Economic Mapping Study as well as this current (2020) study, have the same objective of determining the economic impacts of the cultural and creative industries on the South African economy. Both studies apply the same basic modelling structure for economic impact analysis of the Cultural and Creative Industries with the principal difference being updated data inputs. The previous study relied to some extend on information from other Department of Sports Arts and Culture (DSAC) mapping studies. However this current study is based mainly on new datasets sourced from StatsSA.

This Research Report 3 documents the results of the Macroeconomic Impact Assessment Modelling System and Macroeconomic Impact Analysis of the CCI. This specific report is the third in a series of five reports that are being produced in response to a specific request from the Nelson Mandela University that the scope of work and deliverables for this research study be presented in five separate reports. Table 1.1 in Section 1.1 below reflects the scope of work to be undertaken in this study, and the names of the five reports associated with each element of the scope of work. This Research Report 3 is considered as a technical report and is accompanied by a summary/abstract.

The compilation of a research report (mapping study) of the macroeconomic status of the Cultural and Creative Industries within South Africa, is a follow-up study to the 2017/18 mapping study. It is important to note that in the final phase (during the Project Close-Out Report), a comparative analysis of results of both the previous as well as the current Macroeconomic Impact Analysis of the Cultural and Creative Industries will be undertaken. Hence it is important that the reporting tables’ structure and layout of both the previous and the current studies be kept consistent. This current study represents an update of the previous study. The current Economic Mapping study results indicate that the macroeconomic impacts generated by the Creative and Cultural Industry would be greater than estimated in the previous study.

The study combined desk and primary research. Quantitative data has been drawn from primary and secondary data sources, and StatsSA and the South African Reserve Bank have been used to provide the basis for the update of the macroeconomic impact assessment of the ‘Arts And Culture Industry’ featured in Sections 3 and 4 of this report.

The analysis of the Cultural Satellite Account (CSA) and macroeconomic impacts of the Arts and Culture Industry draws upon official data provided by StatsSA. Economic indicators including revenues, costs of production and value‐added are provided for a number of disaggregated industries. These are broken down according to the Standard Industrial Classification (SIC) framework that provides the underlying data collection framework for much of the economic data produced by StatsSA in the 2018 Annual Financial Statistics (AFS) report (Statistical Release P0021).

By identifying the activities within the Standard Industrial Classification (SIC) framework that constitute arts and cultural activities, and using the corresponding figures for these activities from these datasets, the consultants have been able to measure the economic characteristics of the Arts and Culture Industry and its direct macroeconomic impacts upon the economy at a national level. This set of activities defines the scope of the study in terms of the economic activities to be included in the industry definition of arts and culture used in this study, which sets out to cover seven main cultural domains: Cultural & Natural Heritage, Performance and Celebration, Visual Arts and Crafts, Books & Press, Audio-Visual & Interactive Media, Design & Creative Services and Cultural Education.

The multiplier impacts of the Arts and Culture Industry have been estimated using an updated Social Accounting Matrix (CCI SAM) for the South African economy with a 2018 base year. This CCI SAM has been used in conjunction with the Cultural Satellite Account (CSA) to determine the sectors from which the Arts and Culture Industry purchases its inputs, thereby tracing the industry’s economic footprint through its supply chain relationships with other sectors; and generating output and employment data for these sectors, as well as increasing earnings and employee spending throughout the broader economy.

Making use of the CCI SAM, complimented by the CSA, is a process that is consistent with international best-practice in the application of SAMs/Input-Output Models to produce industry‐level multiplier estimates. The macroeconomic impact assessment undertaken in this study, which is based on the Arts and Culture Industry as it exists today, has also been benchmarked against similar international and local studies. In other words, this type of assessment takes the existing economic landscape as a given and measures the impacts of the industry under investigation, in this case, the Arts and Culture Industry on that basis. Within this context, the concept of ‘additionality’ relates to the additional impacts that result from the existence of the Arts and Culture Industry that would not have been generated elsewhere in the economy had this industry not existed.

It is important to note that data that can be used for quantifying the value of spill over impacts from the Arts and Culture Industry to the wider economy are not readily available in South Africa, with the result that the results and conclusions presented in later sections of this report are based on systematic modelling using national statistics and a mixture of the qualitative intelligence gleaned from secondary research, from the consultant’s own primary research, and from quantitative data that could be obtained from StatsSA.