Cultural Entrepreneurship in U.S. Cities (2018 UAA Best Conference Paper)

By Haifeng Qian

I have studied entrepreneurship in cities for about a decade. Although not a very risk-taking person myself, I always admire the courage of entrepreneurs to startup their own businesses in an increasingly fast-changing market. It is a risky career choice, as most startup companies cannot survive the first five years. As an urban economics scholar, I became fascinated with entrepreneurship because risk-taking entrepreneurs contribute to urban development through various mechanisms: they create jobs; their profit-seeking efforts drive the market towards greater efficiency; and they often introduce new products or new ways of production. Like many others who are impressed with the entrepreneurial, technology-based economy in Silicon Valley, I am mostly interested in the last mechanism here, that is, the innovative process led by entrepreneurs. In my earlier research, I have widely explored urban factors that contribute to high technology entrepreneurship, and typically found the importance of technological knowledge bases, human capital, agglomeration economies, and horizontal industry organization (i.e., with a large presence of small businesses).

Almost two years ago, Shiqin Liu, a graduate student at the University of Iowa’s Urban and Regional Planning program (where I have been teaching since 2014) who had just completed my economic development class and was considering applying for a Ph.D. program, told me she would like to do some research with me. She had an interest in the creative/cultural economy, a topic covered in my class. I said I have this nice dataset on business startups by industry and by geography from the Census Bureau, so why don’t we do a spatial analysis on cultural entrepreneurship in U.S. cities. That was how this research started. We presented our preliminary results at the 2017 UAA conference in Minneapolis. Following that, we completed the paper and submitted it to the Journal of Urban Affairs. We are certainly happy that this research eventually won the UAA Best Conference Paper Award and was accepted for publication in JUA. It is a nice achievement for my co-author Shiqin Liu, who is currently a first-year doctoral student at Northeastern University.

This research is unique in that, to our best knowledge, it is the first study that systematically examines urban factors associated with cultural entrepreneurship. Earlier related studies, including quite a few done by myself, focused commonly on regional variations in general or high technology entrepreneurship. Cultural entrepreneurship is an interesting topic, because both the cultural economy and entrepreneurship require lots of creativity, and therefore the combination of the two, i.e., cultural entrepreneurship, is expected to be the most creative component of the creative economy. Policy makers who want to adopt the creative economy strategy will benefit from such a study identifying urban environmental factors associated with the startup activity in the cultural/creative sector.

In our paper, we present the spatial variations of startup activity in the cultural industries (normalized by total metropolitan employment) during 2010-2012 across all metropolitan areas in the lower 48 states and D.C. The distribution pattern is actually similar to what was shown in my earlier studies on high technology entrepreneurship, implying the spillovers of entrepreneurial activity across sectors in the same region. The hotspots (i.e., clustering of cities with high-level of cultural entrepreneurship) are mostly found in Arizona, California, Colorado, Florida, New Mexico, and Utah, and the cold spots (i.e., clustering of cities with low-level of cultural entrepreneurship) are in the Midwest.

We also run multivariate regression analysis to identify regional factors associated with cultural entrepreneurship in metropolitan areas. A large portion of the findings are consistent with what I found in my earlier studies on high technology entrepreneurship. For instance, population density, clustering of cultural businesses, (design) knowledge, human capital, and urban amenities positively predict cultural entrepreneurship in U.S. cities. These results provide some rationale for considering the cultural economy as part of the broadly-defined knowledge economy. Interesting and different from earlier studies is the role of racial/ethnic diversity. We found a positive association between the share of Hispanic population and cultural entrepreneurship, and a negative association between the share of Asian population and cultural entrepreneurship. Existing literature we cited in our paper suggests opposite results in the context of high technology entrepreneurship.

We discuss policy recommendations based on the positive associations of clustering, human capital, and urban amenities with cultural entrepreneurship found in our regression results. We highlight local economic development practitioners’ roles in building social networks among different stakeholders in the cultural economy (so as to strengthen regional cultural clusters), addressing the needs by artists and other cultural talent, and improving urban amenities (while paying attention to inclusiveness and diversity). Overall, it makes sense to combine two economic development strategies: a cultural economy-based development strategy and a place-based, amenities-improving development strategy. After all, cultural products and services are not only part of the regional economic output but also represent one major component of urban amenities.

Haifeng Qian, Ph.D., is an Assistant Professor in the School of Urban and Regional Planning at the University of Iowa. The article, “Cultural entrepreneurship in U.S. cities,” is currently available online ahead of print.

 

Book Review Preview: Healing our Divided Society: Investing in America Fifty Years After the Kerner Report

By Gregory D. Squires

Book Review Preview: Healing our Divided Society: Investing in America Fifty Years After the Kerner Report, Fred Harris and Alan Curtis (eds) Philadelphia: Temple University Press, 2018

“Everybody does better when everybody does better” (p. vi) is the appropriate opening epigram, penned by Jim Hightower, for this retrospective on the 50th anniversary of the Report of the National Advisory Commission on Civil Disorders, better known as the Kerner Commission report, produced by Fred Harris, the last remaining member of the Kerner Commission, and Alan Curtis, President and CEO of the Eisenhower Foundation. This book addresses many issues including economic policy, education, criminal justice reform, the role of the media and more by leading activists and public intellectuals including Henry Cisneros, Gary Orfield, Marian Wright Edelman, Joseph Stiglitz, Elijah Anderson, Linda Darling-Hammond and many more.

Throughout the book cites programs that have made progress in closing some of the disparities documented by the Kerner Commission, frequently supported by randomized controlled trials and quasi experimental design evaluations providing optimism going forward.  One shortcoming, however, is the treatment of housing. There is little discussion in the book on the foreclosure crisis (with just 3 pages listed in the index under “foreclosure”) and its continuing effects. This is particularly problematic when HUD, the Consumer Financial Protection Bureau and other federal agencies are retreating in the face of continuing discriminatory housing and housing finance practices.

But this is a minor vent in an otherwise rich collection of empirical evidence, policy analysis, and recommendations for future actions. It is not a page-turner. It will be used more as a reference than as a book to be read from cover to cover.  But it is a valuable reference for those who pursue the unfinished agenda set by the Kerner Commission 50 years ago.

The full book review will appear in an upcoming issue of the Journal of Urban Affairs

Gregory D. Squires
Department of Sociology
George Washington University
squires@gwu.edu 

Social Impact Bonds: Are They Too Good to Be True?

By Mildred E. Warner and Allison E. Tse

Imagine a world in which multinational investment firms teamed up with city governments to provide the public goods that we need most—education for our children, housing for the homeless, or a new start for the formerly incarcerated. This is the dream of advocates for a new kind of public financing, social impact bonds (SIBs). While not a bond in the conventional sense, SIBs are a performance-based contract used to secure private investment for important social programs. If the programs deliver on pre-determined goals, then the public sector pays the investor a return.

Social Impact Bonds represent a promise and a risk. The promise is to attract new private investment for social programs that work, expanding services and saving society money in the long run.  The risk is that by monetizing welfare gains, they turn our most vulnerable (children, elderly, homeless, formerly incarcerated) into investment targets for private finance. Our recent article in the Journal of Urban Affairs, The Razor’s Edge: Social Impact Bonds and the Financialization of Early Childhood Services,” highlights the razor-thin margin of societal benefits that SIBs might produce. The requirements of short-term, financial returns to investors and quantifiable outcome metrics can make SIBs narrow, inflexible, and short-sighted. But our research also shows they can be designed to achieve broader impact, if attention is given to long-term, sustainable public funding.

As SIBs proliferate around the world, so too does evidence that questions their effectiveness. A new documentary, The Invisible Heart, attempts to untangle the complicated bundle of risks and rewards that SIBs encompass. The film examines SIBs from design to implementation, through the eyes of clients and service providers, as well as government leaders, venture capitalists, philanthropists, labor leaders, and academics, many of whom question the impact of profit incentives on the delivery of social services.

“As a filmmaker who has spent many years looking at difficult social issues, I am encouraged by the SIB model’s focus on prevention, and its ability to highlight not just the social but also the financial value of early intervention,” says award-winning Director/Producer Nadine Pequeneza. “But my optimism is tempered by the dangers of introducing a profit incentive driven by ‘success’ outcomes.”

Profit incentives may create new ways to pay for social welfare, but they also shift public values toward private ends.  Inviting powerful investors into public services for the most voiceless, vulnerable members of society may mean inviting a Trojan Horse through the front door—a Trojan Horse that only supports profitable social services and narrows our conceptions of what social welfare should mean. This danger should caution SIB designers.  Lessons from SIBs in the early childhood sector, however, demonstrate how strong state actors and coordinated networks of social advocates can work together to scale up policy change and secure broader public investment for the future, especially in politically conservative states.

SIBs must overcome their internal risks to achieve broader social impact. The details of context, contract negotiation, and program design determine on which side of the razor’s edge SIBs fall—whether they use the market to broaden investment or merely to extract resources from an already overburdened public sector. Both the article and the film offer critical insights for providers, policymakers and concerned citizens when considering whether to walk the razor’s edge of financializing social services through SIBs.

The article is available as open access at http://doi.org/10.1080/07352166.2018.1465347

The film is available for educational and community screenings. For more information, visit www.theinvisibleheart.ca

 

Barcelona’s Struggle with Tourism — Possibly Your Hometown’s Struggle Tomorrow?

By Antonio Paolo Russo

‘Overtourism’, ‘antitourism’, ‘tourismophobia’ are everywhere on the media these days and peep up in small talk at any friends and relatives’ gathering. Of course, in the academia we are quite familiar with the concept and evidence of tourism growth changing places and eventually affecting them. And we’ve been reading about residents’ perceptions and discontent with the tourismification of their habitats for ages. Now it gives a certain pleasure to observe that, eventually, even our neighbours, in-laws and political acquaintances got it.  And a certain anguish in the fact that despite all our efforts, presentations, and consultancy works, many communities are acknowledging tourism growth as a big issue when it’s probably too late, too complex, too expensive to do something about it.

Tourism’s negative impacts are not anymore analysed and made sense of only in small aboriginal communities, pristine coastal environment, or a handful of celebrated heritage towns. These were exceptional cases for scientific research, but hardly a matter for concern to laypersons across the (mostly western) world, who would still appreciate a 3% increase in tourism arrivals in their hometown announced by the local media without bothering too much about the associated inconveniences – noise at night in the most touristed areas, difficult parking at leak seasons and local shops closing down to make space for global franchises.

Yet today a far greater amount of places, and especially cities, are pointing the finger at tourism; and a far larger strata of the resident population is ready to voice its discomfort with a phenomenon that has invaded almost any aspect of their daily life. Not just the usual radical grumblers, it’s the white middle classes who discovered tourism as a problem – sometimes forgetting that they have voted for pro-tourism administrations for decades. So what happened?

Well, for one thing, tourists have not stopped growing in numbers and enjoying visiting even the most worn-off attraction sites. Tourism is so enmeshed in global flows of work and sociality that this is hardly surprising. The late John Urry and his followers have written extensively about ‘mobile lives’ and how this is shaking down established concepts of places as fixed entities and of citizenship as geographically bounded. I remember some seven years ago at a seminar, Urry anticipating much of the current debate (as usual in his career) and preparing the ground for next one: a future in which we won’t afford to travel so cheaply, and mobility will become the characterising dimension of social class.

Secondly, as again many authors warn about, tourists (and mobile populations in general) are not just increasingly interested in the everyday, in MacCannell’s backstage, but they actually dwell in it. Houses have become a tourist asset, and established notions of hotels as bubbles offering extraordinary comfort to travellers but also rationally separating and specialising space ‘for tourists’ from residents’ livelihoods have gone bust. The landing on cities of Airbnb and other ‘sharing economy’ platforms, after a first period of fascination around the fairy-tale of the ‘we help you get to the end of the month’, has crashed the housing rental markets for residents in any first- and second-league destination, and has become a fundamental tool for the speculative operations of real estate companies.

These factors explain why today so many people feel directly affected by tourism, and are ready to challenge the almost inevitable status of their city as ‘tourist place’.

Barcelona is one such cases, possibly the one where the conditions for a perfect storm have cooked up for decades: an impoverished middle class after the crisis of the 2000s, a weak society in the most central and ‘tourismified’ historical districts, a promotional model for tourism strongly in the hands of the private sector and a feeble position of the municipal administration as last-resort planner for further growth. In Barcelona, the object of our paper, the change in the public perception on tourism has – as we argue – fed an important shift in the discourse about tourism especially in policy circles, which we see as the key determinant of the political change that led Ada Colau to become Mayor in 2015.

I have lived most of my young life in Venice, one of those places about which books have been written and models have been created to make sense of place disruptions around tourism. And I have lived several years in Barcelona seeing the same beast rising, although no early warning could shake local politicians from the conviction that ‘Barcelona is different’. In our paper, Alessandro Scarnato and I tell the informed tale of Barcelona tourism becoming a place of contestation (of tourism). We take sides – we are both academics and activists – and we try to suggest that the peculiar events that led to a new political agenda on tourism, nuance a change in urban regime which might not remain a unique case. This type of research fights against the news all the time – for instance what we write about the enduring support to Colau’s government measures might not be so certain in the light of the recent political turmoil in Catalonia. Nevertheless, we hope that our analysis and reflections will help to feed further the research agenda on the fate of cities (and citizens) in the age of tourism mobilities.

Antonio Paolo Russo is tenured assistant professor with the Faculty of Tourism and Geography, Universitat Rovira i Virgili, Tarragona. Dr. Russo is author of more than 50 publications in academic journals and books on research topics that range from tourism studies to cultural and urban economics. He has been involved as member of research groups and as an independent advisor in various research projects with local and regional governments, and international institutions such as the EU, the Council of Europe, the BID and UNESCO. His JUA article, “Barcelona in common”: A new urban regime for the 21st-century tourist city?, appears in the current issue and is available with free access for a limited time.