Smart endogenous growth: cultural capital and the creative use of skills

Purpose – Despite the growing literature aimed at explaining how cultural and artistic production feeds economic growth, the causal relationships and interplays are not investigated in depth. In the attempt of filling this gap, the purpose of this paper is to examine arts, culture, and education within the framework of the New Growth Theory.
Design/methodology/approach – Starting from the analysis of how culture may be at the root of a specific engine of economic growth, the paper presents a theoretical endogenous growth model driven by the combination of the investments in human and cultural capital.
Findings – The paper shows that cultural investment has a positive impact on economic growth and on the level of income provided that the economy is sufficiently “culture-intensive”, and that this effect is further magnified the more total factor productivity (TFP) is sensitive to the stock of cultural capital.
Research limitations/implications – The paper figures out the possibility of a cultural poverty trap as the cause of poor growth performance of some economies in the current post-industrial scenario. Culturally poor economies tend to grow slowly because of the lack of cultural exposure, which makes TFP poor since human capita is weakly inclined to be used in innovative, flexible ways.
Originality/value – The paper presents a new endogenous growth model. The paper argues that the available endogenous growth models fail to take into account the full set of relevant factors that make endogenous growth possible, and that the missing entry is cultural capital.

Article by Alberto Bucci, Pier Luigi Sacco, Giovanna Segre
Published in

From the Conclusions (excerpt)
(…) When applied to developing countries, another explanation of the results of our model arises. If there are options of substitution with other production factors, until a certain threshold the profitability of the substitution would lead to concentrate the investment on other factors more productive than culture. For developing countries, the existence of basic endowments and infrastructures, such as roads, hospitals, and schools, are necessary conditions for economic growth. Before this necessary conditions are meet, economic growth can not be driven by cultural investment, that are competing with other fundamental public expenditures.
The model also suggests that the divide between culturally intensive and culturally poor economies could widen up through time, as the result of different growth performances, and that, on the contrary, a sudden accumulation of cultural capital due to external factors – e.g., a non market mediated accumulation due to the concurrence of exceptional historical and environmental factors, such as an exceptional episode of “cultural renaissance” due to an high concentration of innate creative talent and/or to the sudden availability of a large inherited stock of cultural assets, as it happened for instance in the Italian Renaissance with the re-discovery of the Greek-Roman classics made possible by the patient work of preservation and copying carried out by the Medieval monks – could be conducive to sudden, explosive growth.(…).

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