Numéro 22 | PAGE 16

Lana El Tabch, Center for Economic Research- CCIA-BML

In a conference on investing in the creative economy in Lebanon, a Lebanese film producer on the panel caught the audience’ s attention and sympathy as he recounted the tribulations he met along the thorny path to the release of his latest production, a success in the realm of Lebanese cinema, but a flop in terms of financial rewards.

As any rational person would have done, our movie-maker presumed that he needed to prepare some form of a business plan if he were to interest potential financiers in the venture of making a film that would, he was certain, be nothing less than a hit. Having hatched his idea for the movie more than a decade prior to embarking on the actual task of giving it shape and substance, he was understandably eager to start shooting. Yet, he took time to ponder over the dreary( in his description) chore of producing a document credible enough to convince moneyed entrepreneurs that his was indeed as rewarding an enterprise as can be found in town.

The rest of the story is guessable. Fast-forward: reticent financing; borrowing against personal assets; cinematographic success; heyday for the piracy industry; paltry bottom-line; investment in the venture not fully recouped; frustration; talent rhyming with lament.

His was surely a plain tale of talent thwarted by a double whammy: unreliable regulatory protection of intellectual property and no firm basis for financing in the absence of a business enterprise.

Perhaps more than any other subjective account, the movie-maker’ s anecdote laid bare the three defining pre-conditions for investing in the creative economy in Lebanon. These are: 1) enforcing the statutory protection of intellectual property, 2) the necessity of channeling creativity into a structured form of business, and 3) securing adequate financing, through bank credit, but also – and perhaps mainly – through credit and guarantee

funds. The first two pre-conditions go a long way in facilitating the third.

The founding postulate that lays at the basis of laws on intellectual property is that products of the intellect and the creative mind, be they tangible or not, are assets. As such, their ownership by individuals or businesses warrants protection by the law and so do the benefits deriving from that ownership. By safeguarding the lucrative motive, the protection of intellectual property encourages the build-up of distinctive assets that eventually confer to an economy a competitive edge.

To the extent that reasonably inclusive laws were enacted that are designed to safeguard prevalent forms of intellectual property, Lebanon may be deemed to have covered minimal ground in developing its creative economy. Enforcement of existing IP laws remains problematic, however. Yet, it is only the enforcement of these laws that would transform innovations, inventions and creative work in general into business assets.

It is a disquieting fact that creativity and business acumen do not necessarily go hand in hand. Anecdotal evidence is abundant that indeed, the creative mind more often has little interest – or little knowledge, or both – in developing a business approach to reaping full benefit from innovation. In a number of workshops and conferences on the topic, one often has to contend with arguments put forth by artists and innovators that they do not grasp the necessity of having to establish business enterprises to benefit from their creations.

While big corporations can more or less seamlessly get around this dilemma by dichotomizing their structures into R & D and innovation on one side and business operations on the other, small enterprises can hardly afford that costly comfort.

To a small business or a start-up, transforming innovation into a sustainable stream of income remains a major challenge that involves subjecting the innovators themselves to the two-pronged rigor of an efficient business process and a sound financial discipline.

On the financing scene, an innovator will not go far when armed with an ad hoc business plan and rudimentary financial projections. To be sure, only the business enterprise whose asset-side of the balance sheet is laden with income-generating potential captures the interest of financiers. And it is only through that enterprise that evidence-based financials ought to be submitted when financing is sought. Valuable as they may be, innovations that are not anchored in the financials of a business enterprise simply do not register on the financiers’ radar screen.

According to the 2010 UNCTAD Creative Economy report, Lebanon’ s creative economy contributes to around 4.75 percent to the Gross Domestic Product. This proportion is remarkable both on regional and international counts: for instance in

Canada, a developed economy, the creative sector’ s share in GDP is 4.5 percent; Singapore’ s creative economy, with its booming software production, contributes 5.7 percent to GDP.

The benchmark goes to show the potential of Lebanon’ s creative clusters and the ability of the country to attract and generate talents conducive to creativity and innovation.

More than ten percent of established business enterprises in Lebanon are in the creative industry. The bulk of these enterprises operate in advertisement and marketing; engineering, architecture, and design; software; and audiovisual for the media, entertainment, and education.

Exports of Lebanon’ s creative products are estimated at around $ 278 million, according to the UNCTAD report and imports of these products amount to $ 389 million.

Exports and Imports of Creative Goods

in million $

Exports of creative goods

Imports of creative goods

Balance

Lebanon 278 389-111 US 35,000 89,971-54,971

Source: UNCTAD Creative Economy Report 20110

Lebanon still has some ground to cover in the modernization of its legal and regulatory framework governing intellectual property in order to remain abreast with the fast-changing digital world, in the enforcement of existing IP laws, and in designing adequate policy and institutional support to the creative economy.

At the enterprise level, creative startups enfold weighty potential for job creation and the building of the economy’ s competitive edge. These mostly budding businesses, however, need to ponder over a range of issues that have a direct bearing on their growth prospects.