Can we judge the success of a national film industry on the numbers brought in by studio productions through subsidies and incentives, asks Michael Gubbins

There was a time when terms like the 'creative economy' sounded wildly self-important to the general public - at least outside Los Angeles. Even the term 'industry', when used to refer to film, would raise a certain amount of sniggering among those in 'real business'.

Industry was supposed to be heavy and labour-intensive, the backbone of developed nations and the hope of emerging ones. In much of the world there has been a broad consensus that taxpayer support for coal and steel was a valid investment in infrastructure.

But spending taxpayers' money on film was either altruistic or extravagant, depending on one's viewpoint.

The world has been moving very rapidly away from such thinking. The so-called creative industries - film, television, new media etc - are now considerably bigger than the old manufacturing businesses in many countries. Coal mines and car plants have closed while film studios open.

Research released this week, for example, shows that 33,500 people in the UK work in film. Mining, in what was the cradle of industrialisation, now employs fewer than 6,000 people.

What's more, film is a classic global industry attracting inward investment. The industry now has a strong argument that it represents value for money.

The UK study from Oxford Economics, supported by the UK Film Council and Pinewood Shepperton, suggests the $247m (£120m) annual cost of the new film tax credit will bring in billions in revenue. The UK film industry generated an estimated $8.9bn (£4.3bn) last year. It never hurts to remind governments that film these days punches its weight.

But can we judge the success of a national film industry on the numbers brought in by studio productions through subsidies and incentives'

That rather depends on one's view of the trickle-down effect of winning Hollywood productions. The studios have a financial base that cannot remotely be matched elsewhere in the world. Their money brings jobs and allows for the creation of a strong infrastructure of facilities and skills that attracts yet more production.

But dependence on that money comes with a risk. Manufacturing has shown how ecumenical global industries are about location. The lure of, say, China in manufacturing and India in technology services has become irresistible even to brands that once boasted the closest ties to their mother countries.

The health of a film industry needs to be based on more than its current ability to win big shoots. Much of the justification for state incentives, for example, is based on 'culture'.

There's some realpolitik going on there, of course. Subsidising business is a no-no in today's globalised markets. Cultural diversity, on the other hand, is accepted by the vast majority of countries as the exception to the rule on incentives.

There is a danger, therefore, that governments pay lip service to diversity. Culture can sometimes mean whatever national cliche happens to play well to overseas audiences. A healthy film industry, though, is one that can nourish its roots, convincing people from a wide range of national experiences to use film to tell their stories, in their own languages.

The biggest question in that respect isn't production but distribution. Subsidy tends to concentrate on the making of films, largely because of the prohibitive costs of the technology. Now that costs are coming down with digital technology and new media distribution, matching talent to audiences ought to be a primary goal.

The economic potential for the creative industries is too dependent on the bottleneck of theatrical distribution. The result is that films cannot achieve their potential because they are placed in an artificial divide between commercial and arthouse, not based on some inherent cultural difference but on available screen space.

That should surely now be an obsession for national industries because the scarcest commodity in future won't be government funding but the age-old one of talent.

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