Arts and Culture in Economic Development Policy

Arts and Culture in Economic Development Policy

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June 29, 2023
Arts and Culture in Economic Development Policy
Arts and culture account for a significant portion of U.S.
Florida’s creative class potentially includes designers, the
economic activity. According to the Bureau of Economic
media, computer scientists, and engineers.
Analysis (BEA), which assesses the economic impact of
arts and culture through its Arts and Cultural Production
Economic Impacts
Satellite Account (ACPSA), arts and cultural economic
As noted, artistic and cultural activities contribute notable
activity accounted for 4.4% of U.S. gross domestic product
amounts to the U.S. economy. Research also indicates that
(GDP) in 2021, the most recent year for which data are
the arts and culture industry recovered relatively quickly
available, equating to about $1.02 trillion.
from recent economic dips. For example, according to the
ACPSA, the arts and culture industry’s economic activity
The federal government offers a variety of funding and
increased 13.7% in 2021 from the prior year. That
programs to support arts and culture activities, including
compared to a 5.9% increase in overall U.S. GDP in 2021.
some aimed primarily at bolstering economic development.
In addition, Congress acted in recent years to address the
Figure 1 shows the annual change in arts and culture
impact of the COVID-19 pandemic on the arts and culture
economic activity and U.S. GDP from 2017 to 2021.
industry, most notably through the Shuttered Venue
Operators Grant (SVOG) program authorized in P.L. 116-
Figure 1. Annual Change in Arts and Culture
260, the Economic Aid to Hard-Hit Small Businesses,
Economic Activity and U.S. GDP, 2017-2021
Nonprofits, and Venues Act (Division N, Title III of the
Consolidated Appropriations Act, 2021). The 117th
Congress also considered additional legislation aimed at
various aspects of arts and culture-based economic
development, including the CREATIVE Act of 2022 (H.R.
9175) and the PLACE Act (H.R. 6569 and S. 3560).
Defining “Arts and Culture”
There is no standard definition of “arts and culture” in
relation to economic development. A range of activities
could be considered to fall under the umbrella of arts and
culture-based economic development, including tourism
development, historic preservation, and efforts to attract
individuals working in “creative” occupations (such as

artists and writers) to a certain region.
Source: BEA, Arts and Cultural Production Satellite Account, U.S. and
States, at https://www.bea.gov/news/2023/arts-and-cultural-
The ACPSA notes that “arts and cultural production is
production-satel ite-account-us-and-states-2021, and Gross Domestic
defined narrowly to include creative artistic activity—the
Product, at https://www.bea.gov/data/gdp/gross-domestic-product.
goods and services produced by it, the goods and services

produced in support of it, and the construction of buildings
in which it takes place.” However, the ACPSA also
These trends align with research examining the effects of
includes the economic impact of certain industries
the Great Recession (December 2008 to June 2009). A 2021
supporting arts and culture, such as broadcasting and
paper from researchers at Indiana University found that, in
manufacturing. For all industries it measures, the ACPSA
the year following the end of the Great Recession, the
includes only the share of production related to the arts.
average gross state product per capita rose by 3%, while the
average state arts economy grew by 3.4%. This may be
Other definitions of “arts and culture” are more expansive.
attributed to the fact that, as the same study noted, the arts
For example, Richard Florida, a researcher who has
and culture industry tends to grow independently of other
examined the connections between arts and culture and
economic sectors, making it less dependent both on other
economic development, coined and popularized the term
industries and complex supply chains. Further, research by
“creative class.” Florida identified a range of occupations
the economist Ann Markusen found that, while participants
that could fit under that term. In a 2014 paper, he wrote that
in the arts and culture industry do not rely heavily on other
such occupations included “jobs in knowledge-intensive
industries to do their work, they do support “downstream”
industries that involve the production of new ideas and
economic activity in fields like publishing and printing,
products, or that engage in creative problem solving.” In
thereby benefitting those industries and helping to increase
addition to occupations such as musicians and actors,
regional economic diversification.
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Arts and Culture in Economic Development Policy
Federal Programs
pandemic. NEA used the funds to make grants to state,
Congress has authorized a number of programs that support
regional, and local arts organizations with the purpose of
arts and culture for economic development, or that have
supporting jobs in the arts sector. As of June 2023, NEA
economic or business development as a secondary goal.
awarded or recommended awarding approximately $130
SVOG, operated by the Small Business Administration
million to nearly 700 organizations.
(SBA), provided grants to performing arts venues and
similar businesses that experienced revenue losses as a
Congress also appropriated $75 million to NEA in the
result of COVID-19 pandemic-related shutdowns. As
Coronavirus Aid, Relief, and Economic Security (CARES)
mentioned, Congress authorized SVOG in P.L. 116-260,
Act (P.L. 116-136). NEA used the funds to make $44.5
which also appropriated $15 billion for the program.
million worth of grants to 855 nonprofit arts organizations
Congress appropriated an additional $1.25 billion for
to support staff salaries, fees for artists, and facilities costs.
SVOG in the American Rescue Plan Act of 2021 (ARPA,
P.L. 117-2). In total, SBA made over 13,000 SVOG awards
Members of the 117th Congress introduced several bills
totaling approximately $14.6 billion before the program
concerning arts and culture and economic development,
closed to new applications in August 2021.
none of which became law. Such bills included:
The National Endowment for the Arts (NEA) operates
• the CREATIVE Act of 2022 (H.R. 9175), which would
several grant programs to support arts and culture, some of
have authorized new grant programs at NEA for
which explicitly identify economic development as an
construction and acquisition of new arts facilities and
objective. Congress established NEA and authorized it to
for hiring and compensating artists and staff at existing
make grants in the National Foundation on the Arts and the
arts facilities, among other purposes;
Humanities Act of 1965 (P.L. 89-209, as amended). NEA’s
• the PLACE Act (H.R. 6569 and S. 3560), which would
grant programs include Our Town awards, which provide
have (1) established an interagency council for the
grants to nonprofit organizations, local governments, and
creative economy, (2) provided tailored access to
tribal communities for projects intended to strengthen local
services from the Export-Import Bank of the United
areas that have a specific role for arts, culture, and design.
States for creative economy businesses, and (3)
The projects are meant to “advance local economic,
encouraged the U.S. Foreign Commercial Service to
physical, or social outcomes.” Examples of eligible
stimulate the export of creative economy goods, among
activities include artist residencies, arts festivals, and artist
other purposes;
professional development assistance. In FY2022, NEA
• the Creative Economy Revitalization Act (H.R. 5019
awarded a total of $3.9 million in Our Town grants.
and S. 2858), which would have authorized a new grant
program to support the arts and creative workforces, to
Congress has also authorized various programs for historic
be operated by the Department of Labor (DOL) in
and cultural preservation. These include the Federal
coordination with NEA; and
Historic Preservation Tax Incentives program. The
program, jointly administered by the Internal Revenue
• the 21st Century Federal Writers’ Project Act (H.R.
Service and the National Park Service in partnership with
3054), which would have authorized DOL grants to hire
state historic preservation offices, encourages private
unemployed or underemployed people to document the
investment in historic preservation and rehabilitation
impact of COVID-19 in writing and in images.
initiatives by providing a 20% federal tax credit to property
owners who undertake substantial rehabilitation of certain
Issues for Congress
certified historic structures, while maintaining the historic
Congress may consider what the appropriate level of federal
character. Since the tax credit’s enactment in 1976, over
support for arts and culture-based economic development
48,000 projects have been completed using the tax credit,
is. Although the federal government provides funding and
leveraging approximately $130 billion in private investment
supports many programs for economic development, much
for the rehabilitation of historic properties.
of the economic development work in the United States is
done by state and local governments, and relatively few
Congress funds other historic preservation grants to states,
federal programs focus explicitly on arts and culture for
tribes, local governments, and nonprofit organizations
economic development. This may be relevant for arts and
through the Historic Preservation Fund (HPF). HPF grant
culture-based economic development, as state and local
programs include Save America’s Treasures, which
governments and regional organizations may be more
provides preservation and/or conservation assistance to
familiar with local arts communities than the federal
nationally significant collections and historic property.
government. A number of states, including Florida and
Congress appropriated $204.5 million to the HPF in
Louisiana, operate offices for arts and culture-based
FY2023.
economic development.
Recent Legislation
The COVID-19 pandemic accelerated increases in at-home
Congress has enacted or proposed several pieces of
streaming of movies. Media reports suggest that movie
legislation related to arts and culture-based economic
theaters and theatrical venues continue to struggle to match
development in recent years.
pre-pandemic revenues. As a result, Congress could assess
whether to continue supporting these types of venues (as it
As part of ARPA, Congress appropriated $135 million to
did with SVOG), whether any future support should take a
NEA to help arts organizations respond to the COVID-19
different form, or whether to provide future support at all.
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Arts and Culture in Economic Development Policy

IF12446
Adam G. Levin, Analyst in Economic Development Policy

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