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In developed countries, stimulating the emergence of a creative economy is a wide-spread and tested policy strategy to spur regional economic growth. Today, developing countries also implement such a strategy. However, it is unclear whether it can operate in the same way and deliver the same outcomes as in developed countries. This research looks into the feasibility of promoting creative industries as an instrument for regional economic development in developing economies in general, and in Indonesia in particular. Policies on creative industries in Indonesia are strongly influenced by the prominence of traditional crafts businesses which constitute a large share of all jobs. Even though these businesses are involved in creative processes, the products tend to be ‘stagnant’ over time, as heritage values are highlighted as selling points. This contradicts the conceptual idea of creative industries, which emphasises innovation and new knowledge. ‘Real’ creative industries are still rare in Indonesia. The strongest concentrations of creative industries are found in fairly advanced urban regions, such as Java and Bali. However, even there, creative industries do not yet constitute a leading sector and are rather an indicator of regional development than a driver. Yet, given their relatively rapid growth, creative industries are likely to increasingly contribute to the regional economy. Promoting creative industries can thus be a feasible strategy for regional development in Indonesia, and potentially in other developing countries. Acknowledging the different manifestations of creative industries, however, is crucial in setting realistic policy goals that fit to the local contexts.

This study examines the role of social and professional networks in the productivity of creative firms in Indonesia. In so doing, mixed methods are employed, including multilevel modelling as well as qualitative analysis, which is also performed to elaborate further on the process in which networking affects productivity. The Indonesian government promotes traditional businesses as creative industries, but they actually have different characteristics and networks. Therefore, in this paper creative and traditional cultural industries are differentiated. The results of multilevel analysis show that social capital is associated differently with the productivity of both types of industries. Creative industries appear to benefit from friendship, which facilitates their networking and creative processes. Meanwhile, friendship is negatively associated with the productivity of traditional cultural industries. This conclusion is affirmed by the qualitative analysis, which demonstrates that the relationship between friendship and productivity is rather complex. On the one hand, friendship helps firms find and develop their networked consumers. On the other hand, such strong ties between firm owners often lead to social events and gathering and thus, eliminate competition. Further to this, enhancing the productivity of these industries is better done not by forming associations which may only strengthen their bonding ties. Rather, providing common spaces that can facilitate cross-fertilization of ideas in a serendipitous and inclusive climate would be more effective.

This study examines the degree to which creative industries fit regional economic settings in the developing world. In so doing, we examine the characteristics of regions where clusters of these industries are found, particularly in Indonesia. Our findings show that creative industries develop in particular regions in this country, but the characteristics of these industries and spatial settings are different from developed countries. In the literature, it is well-established that creative industries are most likely to concentrate in large urban regions, where innovation and cross-fertilization of ideas take place with the support of talent pooling and relatedness among niche producers. This argument is valid for explaining the clustering of ?innovative? creative industries in Indonesia. However, the same conclusion cannot be drawn for long-established ?traditional? cultural industries, which are promoted as creative industries by the government, although they rather focus on preserving heritage values. In this respect, we suggest that policy strategies for creative industries would be applicable to fairly advanced regions with sufficient human capital and economic diversification. Meanwhile, regions specialized in traditional cultural industries can apply a different strategy to optimize the impact of these industries.