Over the past two decades, the potential of cultural activities to contribute to regional economic development has been increasingly recognised. This paper provides an analysis of the importance of the cultural sector for the economic prosperity of an urban region using the example of the city of Karlsruhe in Germany. It argues that the evaluation of the role of this sector involves the assessment of its direct contribution to regional performance and its impact on the competitiveness of other economic activities located there. The paper contains an empirical part where an effort is made to measure these effects. Finally, the role played by cultural initiatives in the regional development of the urban area of Karlsruhe is discussed.
The main aim of this paper is to provide a theoretical background and empirical evidence on the importance of the cultural sector for competitiveness and development of the regional economy. It is argued that the fall of barriers to trade and the movement of capital and labor in the European Single Market will result in a transformation of the forces shaping its spatial structure. Consequently, the theory of international trade looses its capacity to explain the volume and structure of exchange between regions, which are or belong to di¨erent states within the European Union. On the other hand, the theory of spatial distribution of economic activities becomes increasingly relevant for explaining movements of the factors of production and patterns of interregional specialisation.Based on a case study, the paper analyses the in¯uence of``soft'' location factors, in particular cultural activities, on the competitive position of producers located in di¨erent urban regions. The``cultural multiplier'' approach is used to measure direct income¯ows resulting from such activities while the concept of externalities is employed to analyse the indirect e¨ects.
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