"A dollar of foreign exchange put into music and other recreation forms yields $6.18,[while] that same daollar put into communications yields [only] $1.49" Dr Vanus James, Senior Research Fellow and Adj. Distinguished Professor, Economics, University of Technology, Jamaica.
At a meeting hosted by the Jamaica Intellectual Property Office (JIPO) and EXIM Bank, Dr Vanus James, presented findings from a WIPO study that supported the premise that Jamaica’s Creative Industry may be Jamaica’s answer to real economic growth. The meeting, which was held on Tuesday, November 17, 2009, at the boardroom of the Ministry of Mining, was chaired by Philippa Davies, Manager, Copyright and Related Rights Directorate of JIPO and Attorney-at-law, and attracted participants from Scotiabank, First Global and UTECH.
In his opening remarks to the financial institutions present, Mr Sydney Bartley, Director of Culture from the Ministry of Education, Youth and Culture, set the stage by noting that Jamaican musicians have penetrated the world with their music; and as intellectual property, has the potential to earn significant foreign exchange for the country.
Key note presenter, Dr Vanus James, Senior Research Fellow and Adj. Distinguished Professor, Economics, UTECH, said the future for economic development in the Caribbean is in the IP intensive sectors, with IP as the domestic capital. He continued that although a sector of our society fails to recognise how creativity makes its contribution to the GDP, his study on the Creative Industry provides empirical evidence in the form of comparative productivity data to support his claim. In a country where foreign exchange is short, Dr James believe that the “key to good policy design is comparative foreign exchange productivity,” where “the rate of return to a dollar of capital expenditure” is measured. This is the “same as the capacity to save foreign exchange through the production system. Dr James’ findings indicate a higher rate of return for activities within the Creative Industry as compared to that of other sectors which traditionally attract high levels of investment, such as telecommunications, mining and transportation. For example, “A dollar of foreign exchange put into music and other recreation forms yields $6.18, [while] that same dollar put into communications yields [only] $1.49.”
Dr. James stated that Jamaica needs to invest in the creative industries as they contribute to country’s tax purse, directly as well as indirectly by way of spin off industry gains and increased employment. Although the spin off industry gains is difficult to measure, the indirect contribution to the economy is worthY of attention.
Furthermore, the copyright sector represents 4.8% of GDP, and 3.03% of employment. Dr James estimates that sport and copyright sectors together contribute 8% of GDP, which is bigger than agriculture. Jamaican reggae legend, Bob Marley, died in 1981 at age 36, yet his music lives on and his international fame continues while earnings from royalties continue to pour into the Marley estate. The spinoff industries have evolved into a gamut of consumables, from ring tones to even snowboards. According to Forbes magazine, Bob Marley’s heirs’ income in 2007 from legal sales was US$4 million. His continuing appeal generates an estimated US$600 million a year in sales of unlicensed wares. Toronto-based Hilco Consumer Capital CEO, Jamie Salter, believes Marley products could be a US$1 billion business in a few years.3 Bob Marley’s copyrights will contribute to his estate until 2031.
According to Dr James “a general lesson from the evidence is that the segments supported by government tend to do substantially better than those that are neglected”. Implying that with heightened attention the Creative Industry can be a significant contributor to GDP and employment. The return on investment (ROI) from the creative arts, music and sports Vanus James reiterated, is an important factor not to be overlooked, and called for a rapid change in government policy and approach. His challenge was that we should work smarter, not harder and encourage investment into areas with the highest yields: high quality art and crafts, music and recreation, fashion, etc. (Please see findings and recommendations by Dr. James in his attached PowerPoint presentation.)
Carol Simpson, Executive Director of JIPO, in her comments stated that JACAP acts as a collection agency for royalties and administers the public performances of artist’s music. (JACAP operates much like its US counterpart, ASCAP.) Jamaican artists registered with ASCAP are paid royalties in US currency and If artists are registered with JACAP, the royalties collected contribute to Jamaica’s GDP. It was noted by the Bankers present, that if royalties are now being successfully measured by JACAP, this may create new opportunities for artists to use this revenue stream as collateral for loan financing.
EXIM Bank has supported the Creative Industries as evidenced by loan financing provided to the Guild of Artists. Mrs Valerie Crawford explained that EXIM Bank, in working with the Jamaica Guild of Artists, reached a new frontier by accepting Intellectual property as collateral for loans. Although still in the exploratory stage, EXIM Bank recognizes the inherent value in the creativity of the Jamaican people, who in many instance have nothing else to offer when trying to access financing.
Vanus James, Ph.D., is a Senior Research Fellow and Adj. Distinguished Professor, Economics, Scotiabank Chair, University of Technology, Jamaica.
December 23, 2009