Reports available on the "Creative Industries in Estonia, Latvia and Lithuania" for 2010 and 2011.
4.2.3 Cultural/creative industries: policies and programmes
In 2004 – 2005, the Ministry of Culture took a more active position on the development of the culture and creative industries (http://www.km.gov.lv/en/cross_sector/creative.html). In 2005, the Ministry of Culture, in the process of developing the guidelines for cultural policy, recognised that the concept of a creative industry is important for Latvia as well as for the work of the Ministry of Culture. However, the economic crisis has slowed down the developments in public policy concerning the cultural industries.
The definition of the creative industries in Latvia was entered into the Guidelines for the State Cultural Policy of Latvia for 2006 – 2015, for the first time. The definition is also included in the National Development Plan for Latvia for the period 2007 – 2013 and in the study "On Creative Industries of Latvia" (BICEPS, 2007).
The definition of creative industries is as follows: "Activities based on individual and collective creativity, skills and talents, which by way of generating and utilising intellectual property, are able to increase welfare and create jobs. Creative industries generate, develop, produce, utilize, display, disseminate, and preserve products of economic, cultural and / or recreational value". The Creative Industry encompasses the following sectors: Architecture, Design, Cinematography, Performing arts, Visual arts, Music, Publishing, Television, Radio and Interactive Media, Advertising, Computer games and Interactive Software, Cultural Heritage, Cultural Education, Recreation, Entertainment and other cultural activities.
After introducing creative industry issues in the national cultural policy guidelines, the Ministry of Culture encouraged the inclusion of creative industry matters in all key policy planning documents in Latvia, such as the National Development Plan 2007–2013, the National Lisbon Programme 2005–2008 and the National Strategic Reference Framework document 2007–2013.
Cultural policy documents prioritise the following commercial entrepreneurship sectors to be supported: design, the audiovisual sector and multimedia. Public policy addresses the following questions:
On the level of regional cooperation among three Baltic States, collaboration in the field of cultural industries is outlined in several working documents (Programme of Cultural Cooperation between the Ministry of Culture of the Republic of Latvia, the Ministry of Culture of the Republic of Lithuania and the Ministry of Culture of the Republic of Estonia for the years 2009-2011; the Declaration of the Conference of the Culture Ministers of Baltic Sea Countries, 2008).
The current minister of culture is Å½aneta Jaunzeme-Grende who, among her priorities, has highlighted the importance of the creative industries, as well as the economic role of culture.
Studies and trends
There are several significant research papers concerning the culture and creative industries in Latvia: The Economic Contributions of Copyright-based Industries in Latvia (WIPO, Robert G. Picard and Timo E. Toivonen, 2005); Design for Latvia (by Mollerup Designlab A/S, Denmark, 2004); and Creative Industries in Latvia (by the research institute BICEPS of the Economic School of Riga, 2007); Demand and Potential for institutionalising interdisciplinary design, higher education programme in Latvia (Stockholm School of Economics, 2007); Creative Industry Research. Update of Statistics (BICEPS, 2008).
Economically the most successful sectors are the publishing (literature and media) / polygraph industry (37% of the total turnover of all creative industries in 2006) and advertising (27%). However, the priority fields of the Ministry of Culture are design and audiovisual media / multimedia because of their export potential.
The study Creative Industry Research, Update of Statistics (2008) shows the number of employees in the creative industries is constantly growing (59 918 persons in 2005; 63 511 in 2006), as well as the annual turnover of the industries (LVL 548 158 in 2005; LVL 705 907 in 2006).
The number of employees in the cultural industries in 2006 reached 63 511, of whom two thirds work in the capital Riga (Source: Creative Industry Research. Update of Statistics, 2008). Another study, the "Socio-economical Development Tendencies of Latvian Cities" (Laboratory of Analytic and Strategic Studies, 2008), comprising 38 cities in Latvia and analysing potential growth of the cities, their competitiveness and polycentric development possibilities, estimate the index of creativity and concentration of the creative sector. Riga is the largest development centre in the country, with the highest index of creativity. It is a creative metropolis, measured by taking into account the concentration of talent and technology. Findings show that Riga hosts 83% of scientific institutions, 83% of high-tech enterprises, and 70% of the TOP 500 enterprises calculated from the total number of enterprises in 38 cities. Besides, 58% of the creative sector resides in Riga.
However, there is no recent data that would indicate the changes in cultural industries during the years of recession. For information on the latest developments in the field see the reports "Creative Industries in Estonia, Latvia and Lithuania" in 2010 and 2011 (Pdf in English).
For information on the audiovisual media in the Baltic States see the study "Business Models and Value Chains in Audiovisual Media". See also the publications "Facts&Figures" about the film industry in Baltic countries.
Support for culture and creative industries and main actors
The Ministry of Culture cooperates with the Ministry of the Economy, the Ministry of Science and Education and the Ministry of Finance in providing support to the creative industries. The consultative Design Board, originally established at the Ministry of Culture (2006), is now under the authority of the Ministry of the Economy (2008). Since 2011, a Consultative Council of Creative Industries at the Ministry of Culture has been established.
There are certain indirect measures for support of the culture and creative industries. A reduced VAT rate (of 12%, while the regular VAT rate is 22%) is applied to the press and publishing of books. VAT is not imposed on theatre and circus performances, concerts and events organised by cultural institutions and other cultural events (see chapter 5.1.5).
As to the direct incentives, financial support is available from several sources: The Ministry of Culture allocates subsidies mainly for public art institutions (e.g., theatres and orchestras). The Cultural Capital Foundation (see also chapter 2.1) regularly supports the culture industries such as film, media publishing, book publishing, and music recordings in its project competitions and special target programmes. In 2010 it established a branch for design and architecture.
In 2006, the Latvian Investment and Development Agency started important state support initiatives in the field of industrial design. It grants support to the sectors of design and audiovisual media, and provides assistance in exporting.
The EU Structural Funds are a significant player in supporting the cultural industries. One example of this support is the creative industries businesses incubator in Riga from 2009 to 2014 (LVL 1.67 million or about EUR 2.4 million; the incubator is going to be part of the HUB network), as well as the notable modernisation support for all higher education establishments in the arts and culture allocated in 2010 (more than LVL 3.5 million or about EUR 5 million) and many other activities.
Creative industry issues are also being dealt with at policy level in cities and towns. One example is Riga City Council and Swedbank, which have jointly organised the grant programme "AtspÄ“riens" (website in Latvian) since 2009, established with a view to promoting entrepreneurial activity and supporting young entrepreneurs with business marketing ideas. Riga also actively participates in the international Project "Creative Metropoles", while the city of RÄ“zekne plans to build up the restoration and creative industries services and workshops centre "Carandache" in 2012. Creative industry enterprises, such as "Magnus" in CÄ“sis, are also supported in traditional business incubators in Latvian regions.
The Latvian Centre for Contemporary Art in collaboration with other partners have launched (2010) an innovative support programme "Brigade" granting administrative and financial support to creative and financially sustainable proposals for the development of local communities (see chapter 4.3 about the initiative Duka).
Led by private initiatives, with a little state or municipal support, creative quarters are being developed; information can be found at Kalnciema iela, SpÄ«Ä·eri, SpÄ«Ä·eri VEF (see article information in Another Travel Guide and Riga Creative Quarters 2011-2012 in Latvian).
Main challenges for SMEs
Cultural industries are still a rather new concept that is not fully conceived either by the public sector or the commercial sector. Therefore, some cultural industry companies (even if not profit oriented) fail to receive public support earmarked for culture, while others do not match up to the criteria required by the Latvian Investment and Development Agency or the EU Structural Funds. Small and medium sized enterprises operating in the cultural industry sector, and cultural NGOs, face problems in applying to the EU Structural Funds for various reasons: legal status, requested minimum funding level is too high, and limited possibilities to get pre-funding and co-funding.
At the end of 2009, the Parliament endorsed a national macro-economic stabilisation plan proposing an increase in VAT from 18% to 21%; in 2011 VAT was increased to 22%. The reduced VAT rate has been increased from 5% to 10% in 2009 and from 10% to 12% in 2011. Initially, books, the press, cinema tickets and the tourism industry could benefit from the reduced VAT rate; however in 2011 the reduced VAT applies only to the press, certain categories of books and accommodation services at tourist lodgings.
The press, literature and polygraph industries are the largest cultural industries. Data on the year 2006 shows that the turnover of these industries reached 37% of all the cultural industries. However, tourism constitutes a significant share of national exports (18.1% from the total export of services in Latvia in 2007).
The recession and the decision to increase VAT for books in 2009 was followed by a dramatic fall in book sales. The sales results of the 12 biggest book stores show that book sales in January 2009 decreased by 29% in comparison to January 2008. Several publishing houses went bankrupt; in 2009 there by 22% less new books published than in 2008 and the number of copies printed decreased by 33%. The average price of books decreased from LVL 7 (EUR 10) in 2008 to LVL 5 (EUR 7.1) in 2009 (source: Latvian Booksellers Guild, 2009). The number of published original literature decreased from 1 963 titles in 2008 to 1 418 titles in 2009.
Figure 1: Number of book publishers, 2000-2010
Source: The Institute of Bibliography, The Ministry of Culture.
In 2009 the number of tourists staying in hotels decreased by 28% compared to 2008 (source: the Central Statistical Bureau). The situation in 2010 improved slightly.
Initially, a reduced rate of VAT of 5% applied to cinema tickets; since 2009 the full rate is applied. This, along with the difficult economic situation, influenced the number of visitors to the cinema (2009 showed a decrease of 17.4% compared to 2008). See chapter 8.2.1.
The state agency the Centre for Intangible Heritage and Culture Education is responsible for education in the culture industries. The Ministry of Culture supports cultural education institutions (see chapter 8.3). Other institutions providing education programmes for culture industry professionals are: the Baltic Film and Media School at Tallinn University; (see chapter 3.4.4) design and media programmes in LiepÄja University; BA School of Business and Finance in collaboration with the Art Academy of Latvia and the Latvian Academy of Culture is implementing a Master's Studies programme (in English) "Creative Industries Management".
Three higher education institutions – the Stockholm School of Economics in Riga, the Baltic Film and Media School in Tallinn, and Aalto University School of Art and Design (TAIK) in Helsinki have joined forces in developing a creative industries' Master's Degree curriculum to bridge the concepts of creativity and entrepreneurial thinking. The aim of the joint MA programme is to introduce students to creative industries as a sector that offers entrepreneurial opportunities, promotes innovation and technological spillovers and fosters economic growth. The programme is going to be implemented by the Baltic Film and Media School in collaboration with the above mentioned institutions as partners.
See also chapter 8.3.