at retaining talent and expanding cultural production with new products and services
for the community and the world.The local creative sector inTartu is growing rapidly:
from 2,000 to 5,000 jobs between 2003 and 2008 and the turnover of the industry
moved from €600 million to €1.1 billion (KEA 2012). The city provides assistance
mainly through its Centre for Creative industries, giving incentive for creative people
to take the risk of entrepreneurship and for artists to deliver their visions rather than
projects.
Furthermore, investing in cultural and creative industries, public authorities expect
high return on investment which is allowed by good productivity rates in the sector
as well as a high percentage of profitability (9% on average at the European level
while 5-10% is the sign of a healthy level of profitability) (KEA 2006). As an example,
the initial investment in the Guggenheim museum in Bilbao has been covered 18
times in 8 years with a €1.3 billion profit (KEA 2006). Encouraging creativity in the
city through publicly funded initiatives can even help to attract new businesses in the
CCS as the example of CreArt shows: since the project started, three new art
galleries have opened in Valladolid, bringing their number from one to four within
three years.
On the other hand, a strong creative and cultural sector can trigger further cultural
development which will attract inbound investment. For example, the large number
of commercial galleries, shops and artist and craft studios in St Ives (UK) helped to
attract Tate St Ives, which contributes £12 million per annum to the local economy.
In Essen, real-estate investors are providing low-rent spaces for creative businesses
as they understand they will recoup this investment on the market value gained by
their other properties in the creative district. In Helsinki, artworks in public space
have been mostly funded by private investors through a flexible use of the artistic
percentage policy, where at least 2% of a real estate investment had to be used for
arts and culture in the field.
3.2.3 Develop sustainable cultural tourism
Culture-led urban regeneration has a close linkage with the touristic potential of
cities. Thanks to their positive externalities in terms of image and attractiveness,
cultural activities show the ability to stir tourism up, which has both direct and indirect
impacts from an economic perspective.
SMSC in Europe present thus a wealth of heritage sites and traditions that are
particularly well positioned to attract a growing number of visitors, promoting lesser-
known destinations as well as developing sustainable cultural tourism. According to
some studies, culture has indeed been increasingly instrumental in attracting tourists.
Cultural tourism is dynamically developing and shares 40% of all the European
tourism activity (Richards 2011).
Direct revenues and employment are generated through administrative and creative
staff, technicians, media services, insurance services etc. that come along with cultural
activities and expenditure in the local area. Cultural tourists’ spending in other sectors
such as hotels, restaurants, shops, transports also creates indirect revenues for the
local economy. For instance in the UK, the Cultural and Heritage Topic Profile from
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