International
Creative Capital
Index

The creative industries today are one of the most dynamic sectors of international trade. According to the United Nations Conference on Trade and Development, over the 10 years from 1995 to 2005 the average growth rate of the creative services market on a global scale was 8.8%. The global financial crisis of 2008 caused a general drop in demand and reduced world trade by 12%, but the creative economy continued to grow at an annual rate of 14%.

In accordance with the statistics presented by the UN in a special report, Creative Economy Report 2013, the volume of sales of creative goods and services reached a record value of $624 billion in 2011, which is more than twice the 2002 figure. The contribution of the creative industries to the gross domestic product of nations around the world averages 2–6% depending on the specific sector, and the average employment in these sectors is about 2–8% of the total number of employees.

Special attention should be paid to the experience of Western European countries, which were among the first to turn their attention to the potential of creativity. According to the UN report, the creative industries of Western European countries account for about 5–9% of the economy.

Underlining the importance of innovation to the economy has long been commonplace in the work of economists. Philippe Aghion and Peter Howitt (A Model of Growth Through Creative Destruction, 1992) were the first to create a model of long-term economic growth based on innovation. They showed that the development of the economy occurs first due to technological progress, which renders older companies and production methods obsolete, with the result that they are replaced by more profitable and efficient methods and businesses. Expenditures on technology worldwide exceeded $6.3 trillion in 2016, making it the "third largest economic force" in terms of GDP after the United States and China, according to a State of Global Technology report published in 2018.

Innovation, however, does not come about in and of itself. One of Aghion and Howitt's ideas states that for innovation you need to have a good business climate and a special environment for new ideas to be born. In his book, The City as an Entertainment Machine, Professor Terry Clark of Columbia University notes the relationship between a developed cultural scene and a concentration of entrepreneurial projects. Jesse Shapiro, named by The Economist magazine as one of the ten most influential economists on the planet traces, in Smart Cities, the direct relationship between the quality of city services and the influx of highly qualified specialists to these cities. Many others point out the importance of sociocultural diversity.

More importantly, innovations are, in most cases, not viable without the creative industries, as they need design, branding and promotion. Creative professionals have a huge impact on the final technological product. According to a study by McKinsey & Company (The Business Value of Design, 2018), companies that earned more points on a specially produced Design Index showed on average twice as much revenue and capital return as compared to companies that paid less attention to design.

The theoretical foundations are the works of the pioneers of the idea of the new economy. Economists such as Richard Florida (The Rise of Creative Class – revisited, 2010), John Howkins (The Creative Economy: how people make money from ideas, 2013) or Klaus Schwab (The Fourth Industrial Revolution, 2016) note the importance of cities that accumulate creative capital as cultural and innovative hubs. They inspire entrepreneurs to join projects and attract investment through competent urban policy and the creation of comfortable conditions for representatives of the creative class: developed infrastructure, incentives for individuality and opportunities for self-expression.

With his so-called '3T approach', Richard Florida devised an index based on three groupings – talent, technology and tolerance. Talent was intended to measure a city's human capital (the percentage of a city's population with higher education) and research talent (percentage of researchers and scientists). Technology was understood as an average of the innovation index and the researchers index. The first is calculated by measuring the number of patents issued per capita. The researchers index is the investment in R&D as a share of GDP. In Florida's model, the tolerance index combines a values index and a self-expression index. The values index is based on an assessment of the level of discord between traditional and modern societies, while the self-expression index measures tolerance of social minorities and migrants.

Florida's index has gained widespread popularity and served as a template for similar indices. Nevertheless, the index has been received with ambivalence by the research community. This is largely due to a nebulous understanding of the creative class and the professions which constitute it, and the limitations of the model in terms of the index's parameters, which for the most part assess science and innovation and underestimate the role of culture and creativity in and of itself. Subsequently many researchers, and in particular Landry (Creative Cities Index), Hagel and Brown (The big shift: Measuring the forces of change, 2009), have accepted the need to take the 'three Ts' into account in new models of the Global Creativity Index, but noted the absence of important elements, such as urban environment, government attitudes towards the creative sector, the involvement of local residents in the cultural and social life of a city, and opportunities for realising one's artistic potential, among others, all of which have a considerable impact on a city's attractiveness and its ability to fulfil the potential of its creative capital.

This criticism was taken into account by the developers of the Creative Capital Index, which led to the creation of a proprietary methodology. The authors of the Index not only take into account the importance of human resources, but also single out tangible and intangible assets as independent elements which can lead to the creation of new products and services when exploited effectively by creative specialists. Examples of such assets include urban infrastructure, unique traditions, brand attractiveness, cultural and historical monuments, developed theatrical, gastronomic and music scenes and much more.

Creative capital is understood by the authors of the Index to mean the aspects of the social climate, cultural and educational landscape, institutional infrastructure, and informational space which help to attract representatives of the creative professions and allow them to realise their potential, taking into account both global trends and regional specifics. The Index focuses on the creative industries, as well as their relation to the field of technological innovations, making it possible to speak about a single innovative and creative sector.

Therefore, creative capital is understood as the sum of the parts of existing capitals in the city, which impact the development of the city's creative economy. The following list comprises the various types of capital developed by modern economists, which the authors of the Index deem to be relevant in determining a city's creative economic potential:

• Human capital — the quality and quantity of social connections in the city and the sum of knowledge, skills and capabilities of people living in the city;
• Infrastructure capital — the quantity and quality of the city's ecological resources: forests, parks, water and air; buildings and infrastructure: residences, parks, commercial and industrial buildings; the city's intellectual resources in the form of its educational system, industry specialists and protected know-how;
• Institutional capital — the quality of institutional work in the city in terms of its efforts to reduce transaction costs for actors in the urban economy;
• Economic capital — the quantity and quality of the city's businesses, which mobilise other forms of capital and create new products and the accessibility and scale of financing in the form of credit, investments and residents' personal savings;
• Symbolic capital — resources available to the city on the basis of prestige and recognition.city on the basis of prestige and recognition.

The main data sources are national statistic agencies, individual ministries, municipal and regional authorities, statistical compilations and analytical reports from professional associations, consulting companies, and ratings prepared by Russian and foreign analytical agencies. The index is complemented by data from popular geotags, crowdfunding, and video and photo services, which has made it possible to measure creative activity that is not recorded by official statistics. The survey of creative specialists was conducted with the help of an online survey. Finding respondents was done using the snowball sampling method and online promotion. The total number of respondents was more than 900 with a minimum sample of at least 100 respondents from each city.

It should be noted that the survey also assumed the presence of 'quotas', that is to say that during the field study we interviewed an equal number of respondents representing several target groups to ensure balance in the final results. The representation of each group was at least 20% of the minimum sample. Representatives of the basic target groups included specialists whose activities relate to the following areas: fashion and design; IT and digital technologies; art and culture; media and communications; and science and education.

STANDARDISATION OF THE INDICATORS

To make it easier to compare the data, the selected indicators were adjusted according to population size or urban area and normalised using the maximum value among cities for each indicator. Thus all indicators, including survey data, were assigned a value between 0 and 1. A similar strategy was used when calculating general indicators at the level of subgroups and indicator blocks.

DISTRIBUTION OF WEIGHING

Quantitative and qualitative indicators provided an equal weighting of 50% in determining the final indicator of a particular subgroup or block. If a question in the questionnaire applied to a specific subgroup, then the total value was calculated as an arithmetic average of a group of quantitative and qualitative indicators. If a quality indicator applied to the block as a whole, then the total indicator was derived as an average of the indicators of the subgroups and the given quality indicator.

At the index level all 5 blocks (City, People, Business, Government, Brands) were weighted equally.

CCI works with the concept of creative capital for a more precise explanation of the reasons why certain cities are more likely to be at the forefront of social and economic development. Creative capital is determined by a variety of direct and indirect indicators, which makes it possible to overcome problems faced by all creative indices such as a lack of data and statistical heterogeneity.

The index takes into account both traditional statistical parameters, as well as social networking data, geo-services, recruiting resources, online platforms, and the results of specially conducted surveys of creative professionals. The statistical work on the index, the parameters associated with the development of modern
technologies, and the online space have taken off globally in recent years. These indicators show the level of integration of the creative community in the global information environment.

Exclusive tailored surveys of creative professionals, assessing the quality of economic and social policy of local policymakers, the degree of comfort in the environment, infrastructural development etc. adds to the index's valuable depth. Assembled by a group of independent experts, the index comprises qualitative data on the quality and competitiveness of creative brands, creative entrepreneurial projects, and initiatives from the perspective of current world trends.

Creating this index not only makes it possible to gain additional knowledge about global developmental trends in the creative economy, but also gives actionable insights for decision- makers in the regions' administrative and business communities, providing direction for the development of a better creative economy in their cities. The main benefits of the Index can be grouped into four key blocks.

GLOBAL RANKING OF CREATIVE CAPITALS
Creating a global ranking makes it possible to determine the leaders in the development of the creative economies, which can serve as examples to other cities. As well as identifying the leaders, the Index's methodology allows for an understanding of the basis for leadership in the global creative economy. This could lead to the creation of guidelines on devising development strategies for creative urban economies.

ANALYSIS OF CITIES' STRONG AND WEAK POINTST
The Index offers considerable detail on all aspects of a city's development in terms of creative capital. As a result, various strategies for capitalising on a city's achievements and countering its weaknesses can be devised on the basis of an aggregate assessment of its stronger and weaker points.

COMPARISON OF PERCEPTIONS OF CITIES WITH REALITIES
The Brands block of the Creative Capital Index measures perceptions of a city among creative specialists who don't live in the city in question.

The presence of this 'metablock' makes it possible, firstly, to test Florida's theory that cities with a developed creative economy are more attractive to creative specialists. Secondly, it help to identify any disconnect between the perception of a city among creative specialists and the actual state of affairs in the city's creative economy as shown in the main blocks of the Index. It can therefore serve as a signal to the city that it should concentrate on promoting its strengths or address the risk that the expectation of creative specialists about the city's competence in a given area will not be met.

ANALYSIS OF INTERRELATIONS AND CREATION OF A TYPOLOGY OF CREATIVE CITIES
Another method for identifying insights is finding relationships between different indicators in
the Index based on the examples of the creative economies in various cities.

In the Russian Index correlations were identified between:

• a city's creativeness and its openness and tolerance;
• a city's creativeness and its attractiveness;
• the expert assessment of a city's image and its final indicators in the Index;
• a city's level of social and entrepreneurial activity and both the business image and cultural environment of the city;
• the quality of a city's cultural life and the size of its creative economy;
• a city's level of education and both the quality of its creative brands and its cultural offer;
• a city's social activity and the development of its creative community;
• a city's entrepreneurial activity and the size of its creative economy.

The presence of these interrelations can be examined at the level of a global index. It will
be possible in future, based on relationships of this nature, to develop a typology of cities that will allow for the clustering of creative cities into various categories.