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Creative economies in Latin America: an opportunity for Taiwan

Creative economies in Latin America: an opportunity for Taiwan
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The deadly COVID-19 pandemic has, in addition to claiming over a million lives, markedly disrupted global growth, producing an economic shock considered three times worse than the financial crisis of 2008. Emerging economies have already been significantly impacted by losses in remittances and critical sectors such as trade, tourism, energy, agriculture, and manufacturing. As of October, the global economy is expected to contract by 4.4 percent in 2020.

Increasing overall resilience and ensuring recovery from the pandemic will require a worldwide effort and deliberate strategies emulating countries that effectively responded to COVID-19 and are now on an upbeat economic track to recovery, such as Taiwan.

Taiwan managed to contain COVID-19 and generate a quick economic recovery primarily by the rapid implementation of response measures, transparent communications and information sharing, effective control of health-related resources, and community engagement. 

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In August, Taiwan’s unemployment rate was at 4.4 percent — compared to the average 9.4 percent in other advanced economies.

Taiwan’s specific use of technology and its creative economy during the pandemic serves as a shining example of the importance of a developed creative industry as a source of economic stability, especially during crises. As a model nation in terms of COVID-19 response, Taiwan should export its success and leverage its expertise in crisis-resilient economies, significantly extending its diplomatic strategy in partnerships with Latin American countries.

Each country likes to define the creative economy slightly differently, typically based on their strongest industries and sectors. British author John Howkins defines it as “transactions of creative products which have an economic good or service derived from creativity with an economic value.” This, naturally, covers a whole range of products, including advertising, architecture, art, crafts, design, fashion, film, music, performing arts, publishing, leisure software, toys, TV and radio broadcasting, and video games.

As with most economic sectors, the pandemic has negatively affected countries’ creative economies, closing movie theaters and retail stores, pausing film production, and postponing entertainment events. However, compared to other sectors such as manufacturing, the creative industries have demonstrated a unique resilience and flexibility in the face of previous crises such as the 2008 Great Recession.

During COVID-19, creative industries have served as a central element for response efforts, supporting individual and community well-being. Although the broader industry has been negatively impacted, especially with health measures such as quarantine and movement restrictions, the creative sector has remained strong. The necessary shift to online platforms from both the demand and supply side of the creative industry is a natural one. For example, people have resorted to going online for entertainment such as streaming services and gaming. In March 2020, a new global record was set for mobile game downloads in a single month — up 51 percent from 2019. Overall, creative industries can adapt to digital platforms and effectively respond to transforming economic environments, crises, and global supply and demand trends. Moreover, they represent a crucial opportunity for soft power initiatives as a conduit for improved relationships and cultural connections between countries and regions.

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Pre-pandemic, Taiwan developed its creative economy by increasing intellectual property rights, promoting democracy and freedom of speech, and providing financial incentives to support local small- and medium-sized enterprises. In response to COVID-19, Taiwan has adjusted its creative industry to ease economic impacts. Efforts include moving its national film festival online and fostering the reach of local digital streaming platforms.

Taiwan’s creative economies also help influence global opinion, highlight Taiwanese values, attract audiences overseas, and provide a clear contrast with mainland China’s censorship model. A recent example of its soft power strategies includes Taiwan’s New Southbound Policy (NSP), which specifically aims to leverage Taiwan’s cultural, educational, technological, agricultural, and economic assets to enhance the government’s regional integration and promote the broader development of the Indo-Pacific region. This approach is also a way for Taiwan to diversify the region’s economic engagements and move them away from China.

Not since Tiananmen Square has global sentiment turned so sharply against Beijing, given its historical error in responding to COVID-19 in the early days of the outbreak and the series of incursions China has had with its neighbors in the past few months. This change in sentiment presents Taiwan a once-in-a-generation opportunity, to establish itself as a democratic, prosperous, and cooperation-focused alternative to China.

Taiwan’s leadership in Asia’s creative economies should be expanded to Latin America.

Taiwan ought to have a vested interest in increasing goodwill initiatives in Latin America to counter Chinese international pressures and growing investments in global infrastructure projects and maximize Taiwan’s strengths, foster bi-lateral relationships, and increase its international standing as a leader in goodwill efforts.

Unlike Taiwan, Latin American countries are in dire need of more resilient economic structures. The region has struggled immensely during the pandemic and is currently the most affected region globally. In many countries, poor leadership, massive inequalities, and weak state capacity has exacerbated the overall impact of COVID-19. This is especially true for countries with large informal sectors such as Peru, which cannot implement effective response measures despite rising infection rates. The sectors most impacted include wholesale and retail trade, tourism, and communications — and account for large portions of national and regional GDP. For example, 35.5 percent of Panama’s GDP includes these sectors. For this reason, Latin America should continue and improve efforts to diversify their economies and build more resilient sectors.

Various Latin American countries have identified creative economies as a place for potential economic development and strengthening. The Inter-American Development Bank approximated that in 2014, 14 percent of world creative exports originated from the Americas. In 1995, MERCOSUR Cultural was established to expand creative programming in Latin American countries, denoting the massive development prospects to amplify the already dominant industries in the region from Brazil, Colombia, Argentina, and Mexico. Development of creative economies can also provide additional benefits for  Latin America, such as enabling women and youth empowerment and increasing bilateral and multilateral relations.

Given the importance of creative economies, policymakers have a strong motivation to create the enabling conditions for their success. Taiwan can give countries a goodwill model alternative in lieu of the Chinese strategy that relies on military and brute economic strength.

Taiwan can help demonstrate the benefits of democratic and transparent governments, which result in economic resilience.

Latin American countries, in particular, will also greatly benefit from Taiwan’s expertise in enhancing creative development through strong government-industry relationships as they look to recover from COVID-19. If successful, Latin America can not only improve its archiving and authentication processes that protect intellectual property rights over creative content but also attract a steady stream of foreign and domestic investments into the creative economy sector. Moreover, economic cooperation with Taiwan in this sector will also help to galvanize the region’s efforts to increase economic and political freedoms while ushering in a new era of prosperity.

Prioritizing spending in the culture and the creative economy sector is one of the five critical areas where Taiwan can up its soft power and strengthen public diplomacy efforts. By integrating the success of its creative economy with diplomacy, Taiwan can become a key partner in securing a free, independent, and resilient Latin America.

Taiwan should first increase cultural, educational, and language exchange programs and partnerships with Latin American countries. This will facilitate multilateral initiatives, build bi-lateral partnerships, promote democratic values, increase cultural exports, create new markets for creative economies such as digital tourism, and strengthen Taiwanese and partner countries economies’ overall resilience. Second, Taiwan should help regional governments create conducive environments for the creative industry’s growth and help industry leaders embrace the ever-increasing opportunities within the digital market. Third, Taiwan should increase investment in public goods such as digital infrastructure and renewable energy systems to grow creative economy engagement. This includes enabling access to education, digital literacy, and creative skill programs. And finally, Taiwan should help establish protections in Latin American countries for regional brands, artists, and creative industry workers through policies such as strong legal frameworks and intellectual property laws.

Pursuing these efforts will help build Latin America’s creative economic reach and increase the region’s democratic values and economic prosperity. But more importantly, this will give Taiwan an opportunity to effectively leverage its economic strength and expand the scope of its soft power to become a global (and not just a regional) alternative to China.

Daniel F. Runde is a senior vice president and William A. Schreyer chair in Global Analysis at the Center for Strategic and International Studies. He previously worked for the U.S. Agency for International Development, the World Bank Group, and in investment banking, with experience in Africa, Asia, Europe, Latin America, and the Middle East.