Working Paper Series Volume 5, Issue 1, 2020 Editorial Board Members:

Dr. Nnamdi O. Madichie (Series Editor)

Dr. Knowledge Mpofu

Dr. Achila Amarasinghe

Arif Zaman

Krystle Lewis

Dr. Nisreen Ameen (Royal Holloway, University of London, UK)

Dr. Paul Agu Igwe (University of Lincoln, UK)

Dr. Fred Yamoah (Birkbeck, University of London, UK)

Dr. Surendranath Jory (University of Southampton, UK)

Professor Robert Hinson (University of Ghana)

Professor Sonny Nwankwo (University of East London, UK)

Disclaimer

The views expressed in the papers are those of the authors alone and do not necessarily reflect the views of the Bloomsbury Institute London. These Working Papers have not been subject to formal editorial review. They are distributed in order to reflect the current research outputs available at Bloomsbury Institute London, which are shared with a wider academic audience with a view to encouraging further debate, discussions and suggestions on the topical issues explored in the areas covered in the Working Papers.

2 | Working Paper Series: Volume 5, Issue 1, 2020 3 Contents

Brexit, Commonwealth and UK Creative Industries: An introduction Nnamdi O. Madichie & Arif Zaman 6

The Commonwealth Challenges in the post-Brexit Era Zsoltne Farkas 20

Key trends in trade of services and goods between the Commonwealth countries Adam Martin 38

UK Creative Industries, Brexit and the Commonwealth Claudia Mourescu 48

Brexit and the UK Creative Industries Valerie Small 60

Post-Brexit Creative industries in a changing Global Trade Landscape Patrick Eworetshabor 68

The Commonwealth in Post-Brexit Lily Bruneau 78

Possible challenges and opportunities for Alexander McQueen’s after Brexit Diana Barska 88

Commonwealth Trade and Post Brexit Situation for Creative Industry in UK Bethel Abraha 96

4 | Working Paper Series: Volume 5, Issue 1, 2020 5 Brexit, Commonwealth The Commonwealth in a changing landscape Profound changes are taking place in the global trade The Commonwealth is not a formal trading bloc, yet landscape, including the technologies and governance the 54 Commonwealth members, which together frameworks that underpin and support contemporary account for 20% of world trade, enjoy a formidable and UK Creative Industries: trade in goods, services and the digital economy. trade advantage without any formal collaboration. This dynamic environment presents challenges, and Historical ties, familiar administrative and legal enormous opportunities to expand and deepen trade, systems, the use of largely one language, English, as An introduction investment and innovation among the 54 member the means of communicating with foreign partners, countries of a growing Commonwealth community and large and dynamic Diasporas have contributed of nations. to strong trade relationships among its members. In response to a question asked by Heads of As this publication went to press, Patricia Scotland, Government when they met in 2013 in Sri Lanka about Commonwealth Secretary-General highlighted quantifying a Commonwealth economic advantage, Nnamdi O. Madichie implications for the Commonwealth from a (post) the 2015 Commonwealth Trade Review found that COVID-19 world: 'Rapid population and per capita Commonwealth countries, on average, tend to trade & Arif Zaman income growth (especially in Asia) are part of the around 20 per cent more and generate 10 per cent driving forces behind the Commonwealth’s buoyancy. more investment with each other than with non- We are pleased to share the latest and first issue These initiatives are in a recent realisation that With 2.4 billion people, 60 per cent of whom are member countries. of the Bloomsbury Institute Working Paper Series, creative industries are a motor of growth in local under the age of 30, these drivers are unlikely to slow which comes amid very turbulent times – COVID-19, economies across the UK, and not just in London anytime soon – with or without coronavirus. While not There has never been a time of faster technological self-isolation, stay at home and save the UK National and the South East of England. Three main themes a formal trading bloc, the ‘Commonwealth Advantage’ innovation than today, unleashing new opportunities Health Service (NHS), which has brought a richer are worth stating in this introductory article. First, enables member states to trade up to 20 per cent for trade, investment and innovation among the meaning and magnitude to the VUCA (volatility, the creative industries concentrate in a small number more with each other than with non-members, at a 53 Commonwealth members. Equally, there has uncertainty, complexity, ambiguity) world we live. of locations. About 53 per cent of employment and 21 per cent lower cost, on average. Our research also never been a time potentially more disruptive to 44 percent of businesses are found in the top five shows that these countries invest up to 27 per cent international trade. Technological transformation is This issue features interesting contributions revolving locations (the equivalent percentages in other sectors more within the Commonwealth than outside of already helping improve prospects for sustainable around what may be better described as a “special are 32 percent and 30 percent respectively). Second, it - almost tripling investment levels five years ago, development across many Commonwealth member issue on Brexit, the Commonwealth and the UK regional rivals should work together to grow their which stood at 10 per cent. Investment flows to countries. It is also altering their competitive Creative Industry.” The discussions draw upon a creative industries. Regional creative growth appears sectors such as e-commerce, digital technologies, advantage by eroding limitations owing to geographic myriad of sources including the National Endowment not to be a zero-sum game, particularly when it comes cybersecurity, healthcare and biotechnologies could remoteness and distance, lack of connectivity and for Science, Technology and the Arts (NESTA), an to business numbers. Third, creative communities shore up, as business migrates online, and countries other constraints on their economic performance, innovation foundation established in 1998 with an are interconnected and the diversity of connections race to find a vaccine and other medical treatments.' output, growth and employment. Digitisation endowment from the UK National Lottery prior to increases over time. We have identified 1,700 creative especially is enabling transformation and change in Trade and investment flows among Commonwealth becoming an independent charity in 2012; report and meetups in the UK with participation of over 180,000 all economic sectors, including finance – from mobile countries are strong and continue to grow. Despite policy papers from the Commonwealth Secretariat; unique individuals. These communities interact locally money systems to advanced financial technology – the unexpected contraction in world trade since UK Creative Industries website, British Fashion and with those around them forming hubs of activity energy, agriculture, the oceans economy and tourism, the 2015 Commonwealth Trade Review, intra- Council (BFC), House of Commons Digital, Culture, in Advertising and Marketing in the West Midlands, among many others. Commonwealth trade in goods and services, and Media and Sport (DCMS) Committee, the UK Fashion Crafts in the North West, and Design across the productive ‘greenfield’ investment, is growing At the same time, harnessing and sustaining and Textile Association, the Royal Institute of British South West and Wales. In general, terms creative fast and projected to exceed US$1 Trillion by 2020. new economic opportunities arising from a more Architects, Design Council and the Advertising communities in different sub-sectors are becoming Increasing use of new digital technologies, including connected Commonwealth requires strengthening Association, and McKinsey & Company reports; and more interconnected something that bodes well for greater digitisation, is already transforming trade-led the domestic institutions, rules and frameworks that initiatives like the Arts and Humanities Research unexpected ‘crossover’ innovations. Council (AHRC) Creative Clusters Programme. sustainable development prospects for many of our govern trade: from goods and services to investment poorest members. When combined with the impact and intellectual property. There is an enormous of many shared inheritances, including the Common historical fabric of institutional and governance Law that provides the basis for international law, there ties that influence intra-Commonwealth commerce, is a Commonwealth effect and advantage that yields trade and investment. Leveraging these linkages multiple tangible commercial benefits for traders and bonds offers an immense comparative advantage and investors. and opportunity for Commonwealth members to further drive down intra-Commonwealth trade costs and to expand intra-Commonwealth trade and investment. Commonwealth members already enjoy an advantage when it comes to efficient

6 | Working Paper Series: Volume 5, Issue 1, 2020 7 contract enforcement, for instance, and strengthened 5. Supply Side Connectivity, encouraging the A landmark study published by Commonwealth history, aging could mean that the planet’s regional integration and improvements in trade participation of all members in global value Secretariat in 2020 entitled “The State of the Digital population will plateau in most of the world; facilitation are likely to yield disproportionately high chains, fostering global value chains (GVC) Economy in the Commonwealth,” focused specifically and that the world is much more connected through gains for Commonwealth members. linkages and sharing knowledge among members on digitalisation in the Commonwealth and fills an trade and through movements in capital, people, and harnessing them for economic growth, as important gap by providing new knowledge on the and information (data and communication)—what it When Heads of Commonwealth Governments well as the creation of export diversification state of the digital economy in the Commonwealth, refers to as “flows.” Given that we are accelerating met in London in April 2018 at one of the largest opportunities for micro, small and medium the challenges posed by digitalisation, and the into a future shaped less by countries than by such gatherings in the UK’s history, they adopted enterprises, and exploring possibilities to opportunities available for Commonwealth connectivity, what opportunities from developments a Declaration on the Commonwealth Connectivity collaborate on national trade portals, and members to harness the benefits of digitalisation in what Parag Khanna calls ‘connectography‘ does Agenda for Trade and Investment with the goal for development and to boost intra-Commonwealth this hold for a Commonwealth community that of expanding investment and boosting intra- 6. In engaging in these areas, member countries trade. This found that the contribution of ICT services includes countries from all continents with English Commonwealth trade to US$2 Trillion by 2030. will mainstream inclusive and sustainable trade to the Commonwealth’s total services trade and GDP (law, language) providing a powerful mechanism In pursuing the Agenda, member countries will as a cross-cutting issue. The Commonwealth has been gradually increasing since 2012 and that for enhanced business? structure dialogue around the following clusters: will deepen collaboration with other if all Commonwealth countries achieve a minimum Moreover, what will be the impact of digital organisations in identifying issues affecting level of broadband penetration of 50 per cent (the 1. Physical Connectivity, engaging on trade globalization especially given that 32 of the the sustainability of economies. We affirm our world average), then Commonwealth GDP is expected facilitation, identifying and facilitating Commonwealth's 54 countries are Small States (e.g. commitment to making trade and investment to rise by between US$74 billion and US$263 billion implementation issues, infrastructure Jamaica, Botswana, Fiji and Malta) and that digitization truly inclusive by encouraging the participation (Commonwealth Secretariat 2018). development including multi-sectoral of women and youth in business activities, has opened the door for emerging economies, small connectivity and the sharing of trade information, by taking a gender responsive approach to In terms of information communications technology businesses, and individuals to participate directly in in order to reduce the physical barriers to trade; the development of trade policy, increasing (ICT) skills for communication and collaboration, globalization? Indeed small businesses worldwide are becoming “micro-multinationals.” In this context, 2. Digital Connectivity, assisting member countries opportunities for women to trade internationally, the Commonwealth average (21.4%) exceeds the Emerging Africa now home to the Africa Continental in expanding ICT capabilities, identifying areas and breaking down gender barriers in all sectors. global average (17%) in terms of using the internet Free Trade Area (AfCFTA), which will be the world’s for developing their national digital economies, We undertake to invest in programmes to tackle for finding/applying for a job. However, in both basic largest free trade area by number of countries once it improving their regulatory framework and youth unemployment and give young people and intermediate digital infrastructure indicators, the is fully up and running – probably after the uncertainty building digital infrastructure, inter alia through access to meaningful opportunities. Commonwealth performance is weaker than non- Commonwealth countries. of the current COVID-19 pandemic becomes clearer. capacity building and promoting investments, This momentum was sustained, supported and to enable all members to take advantage of the strengthened by a key meeting of Trade Ministers Furthermore, there is a significant digital divide within Against this it is possible that we now in a period/ opportunities presented by digital trade; in London in October 2019, the first such meeting in the Commonwealth. The report went on to identify phase of marked de-globalisation with several challenges to globalization, especially economic 3. Regulatory Connectivity, improving over 40 years, which endorsed the Commonwealth possible policy initiatives for the Commonwealth warfare, the geopoliticisation of trade talks, understanding of various regulatory regimes, Connectivity Agenda Action Plan and affirmed to foster the digital economy, with a focus on intra- competition for gated markets, not natural resources increasing the ease of doing business, promoting the centrality of the private sector, particularly Commonwealth efforts. These include facilitating and China’s infrastructure-driven alliances. Brexit and good regulatory practice including regulatory MSMEs (micro, small and medium-zed enterprises), best practices on internet and broadband digital Trump have highlighted the role of global business in cooperation among member countries to reduce to job creation and national development and the infrastructure; promoting e-commerce and a less globalized world. Indeed as this Issue went to non-tariff barriers, improving services data importance of a supportive policy and regulatory investments in a data-driven economy to take press with the impetus and impacts of COVID-19 collection, and mutual recognition, in order to ecosystem for MSMEs. advantage of the next wave of manufacturing and dramatically seen and felt everywhere, the IMF said reduce regulatory barriers, address the capacity services; sharing experience on e-governance and At a meeting with private sector in London in that it had reassessed the prospect for growth for deficit and improve the regulatory environment smart cities; and promoting digital skills development February 2020, it was recognised that for businesses 2020 and 2021, declaring that we have entered a for business, especially micro, small and medium within the Commonwealth. of all sectors, sizes and geographies several areas recession - as bad as or worse than in 2009. enterprises and consumers; should be built on to improve Commonwealth There has been much debate as to whether new The WTO has warned that international trade has 4. Business-to-Business Connectivity, supporting competitiveness, strengthen private sector challenges mean an end to the era of globalisation. dried up because of COVID-19 and could be on course dialogue between the public and private sectors engagement, improving access to market and reduce McKinsey have set out the primacy of four global for a collapse as severe as that of the 1930s Great and between businesses, assisting member the cost of trade. These include strengthening private forces breaking all the trends: the shifting of the locus Depression. Even the most optimistic scenario for countries to attract investment through capacity sector engagement through regular consultation of economic activity and dynamism to emerging 2020 was that trade would shrink by 13%, a bigger building, facilitating the needs of the micro, and use of regulatory impact assessments so that all markets like China and to cities within those markets; drop than in the 2008-09 recession caused by the small and medium enterprises to access finance, stakeholders are informed, understand the impact of, the acceleration in the scope, scale, and economic banking crisis - but there was the risk of a much and reflecting on how domestic regimes could and can adequately adjust to, regulations before they impact of technology; that the human population gloomier outcome under which trade would shrivel by facilitate business-to-business connectivity, are put in place; improving access to basic information is getting older and that for the first time in human 32%. particularly with the aim of enhancing the by taking practical steps to help MSME trade by private sector’s role in promoting the blue promoting the top 10 trade opportunities in each and green economy; Commonwealth market; and improving digital skills, particularly for women-owned businesses, through Commonwealth mechanisms.

8 | Working Paper Series: Volume 5, Issue 1, 2020 9 Universal Music Group already operates two agriculture) and produces about 50 movies per week Brexit, Trade and Investment within successful live music companies within Africa, both with an average of 130 people employed per movie. of which will also have divisions within Universal The Nollywood model of rapid production and home the UK creative industries Music Nigeria. Launched in 2017 in Johannesburg, consumption is now being exported across the UMG Live Africa has quickly become one of the African continent so that Ghana, Kenya, Cameroon The Government defines the Creative Industries as In July 2018, it announced a significant expansion of leading talent booking agencies within the continent. and other countries are adopting this model rather ‘those industries which have their origin in individual live music activity throughout Africa on partnership It has successfully helped redefine the role of a than the American and European models evidenced creativity, skill and talent and which have the potential with Vivendi & Canal Olympia, the leading network booking agency within Africa, with a broad roster in South Africa and North African countries. for wealth and job creation through the generation of cinema and live performance venues in Africa. of artists made up of both UMG talent and non-UMG However, for Africa to stake its place in the global and exploitation of intellectual property.’ The Creative This involves a major expansion in French-speaking signed artists making more than 600 performances arena of ideas and aesthetics, and to increase its Industries sector comprises nine sub-sectors: Africa, with the launch of a new strategic division throughout 2017. ULive Africa was founded in 2016 market share in the world’s creative economy, there Advertising and marketing; Architecture; Crafts; within French-speaking Africa markets with a focus and is engaged in staging, producing, programming will need to be greater vision and political will on the Design: product, graphic and fashion design; Film, on discovering and supporting local music talent and hosting large-scale live concerts and events part of both government and the private sector to TV, video, radio and photography; IT, software and in-order to maximize the commercial opportunities for throughout Africa including Runway Jazz, the invest in all aspects of the value chain: education, computer services; museums, galleries and libraries; artists and labels throughout French-speaking Africa inaugural African Comedy Awards, Lekki Sunsplash creation, production, distribution and consumption. Music, performing and visual arts; and Publishing. to reach audiences globally. The division will work in (30th Anniversary Edition), The Music Industry Awards partnership with existing UMG operations including in Nigeria, Afrochella and Baskets & Wine in Ghana, Copyright can foster the development of creative The Creative Industries account for 9.4% of the value North African territories and alongside key markets and Cocktails in the Wild in Uganda and Nigeria, with industries in developing countries. Drawing on case of all UK services exports. Furthermore, more of these across English-speaking Africa that will offer artists several other exciting projects in the pipeline. studies from Nigeria, India, and China, Pager (2017) services exports go to the EU (42.5% in 2014, 45% comprehensive opportunities throughout the region argues that copyright offers distinct advantages over in 2015) than the average for UK services exports. The Universal Music Nigeria is currently developing plans and provide pan-African talent a critical possible alternative models. Moreover, copyright law need not value of services exported by the Creative Industries to open a recording studio in Lagos in order to further launch pad for wider international success. function as a monolithic force. Copyright norms can in 2015 was £21.2bn. This is a 44.3% increase on 2010. advance the recording facilities available to local govern some aspects of industry operations, while For comparison, total UK services exports grew by The same month it also announced a significant African talent. It will become UMG’s second fully remaining largely absent in other domains. However, 29.5% from 2010 to 2015. The Creative Industries expansion of operations within Western Africa, with purposed studio within Africa, alongside the existing as industries develop, the benefits of copyright exported £14.7bn worth of goods in 2015, 38.6% more the launch of Universal Music Nigeria. Operating from facility in Johannesburg, South Africa. Through these become more salient and the logic of copyright than in 2010, and this represented 5.2% of total UK a new office in Lagos, this will support artists from strategic investments, initiatives and executive formalization exerts a gravitational pull. goods exports. The highest export sub-sectors were Nigeria, Ghana, and Gambia throughout the continent appointments, UMG is accelerating the company’s “Music, performing and visual arts”, “Crafts”; and, and beyond, utilizing Universal Music Group’s global focus on growing the entire African music ecosystem Fashion also provides a powerful example of “Publishing”. Research from NESTA, in partnership networks for wider discovery, marketing, promotion including recorded music, music publishing, the potential of the creative industries in the with the Creative Industries Council (2018), has shown and distribution. The label has signed a host of production, live events, brand partnerships and Commonwealth. A vibrant fashion scene is emerging that the creative industries across the UK are driving Nigerian-born artists including WurlD, Odunsi (the merchandising efforts. in Africa, spearheaded by a new generation of young local and national economic growth, identifying that Engine), Tay Iwar, and Ghanaian-born artists Cina Soul fashion entrepreneurs. As highlighted in a multi-sited Jobs in the creative and cultural economy have local economies have grown their creative industries and Stonebwoy. In addition, the label has recently study of Ghanaian, Ugandan and Zambian female proved resilient to the economic shocks that employment by an average of 11 per cent, twice as signed marquee deals with acclaimed Banku singer designers, Langevang (2017) points to the emerging consistently hurt core sectors in many African fast as other sectors. and songwriter Mr Eazi for pan-African releases, fashion industry as a site for entrepreneuring where economies. In 2016, the Nigerian economy fell into co-signed Nigerian artist Tekno in conjunction people’s aspirations to bring about personal, cultural In evaluating the possible challenges and recession, but while the oil sector struggled, the with Island Records UK and Tanzanian singer and and socio-economic development converge. creative industries saw impressive growth. The music opportunities of a multinational enterprise (MNE) songwriter Vanessa Mdee in conjunction with industry alone is expected to double present-day in London in the post-Brexit creative industries AfroForce1 Records/Universal Music Central Europe/ Fashion designers envision their endeavours as revenue by 2020 to approximately US$86million. sector, within the context of a changing global Universal Music South Africa. pathways for pursuing their passion, for changing trade landscape, potent example comes from the associations ascribed to ‘Africanness’, and for In Nigeria, for example, Nollywood film production Universal Music Group (UMG), a subsidiary of a the These two signings mark the first time UMG labels revitalising failing clothing industries in Africa. generated between US$500million and US$800million French-owned Vivendi company, a world leader from the two continents have combined to sign While the emerging character of the industry creates annually. The industry directly employs 300,000 in music-based entertainment, with a broad array and release African artists globally, with other uncertainty and many obstacles for running viable people and indirectly more than a million. of businesses engaged in recorded music, music artist partnerships in the pipeline with UMG labels businesses, fashion designers remain enthused by The success of Nollywood demonstrates how the publishing, merchandising and audiovisual content from around the world. This has been driven by a narratives about the industry’s future prospects. creative economy can trigger a value chain between in more than 60 countries and which has the most recognition that in recent years there has been an The impact of COVID-19 cannot be ignored: in April artists, entrepreneurs, distributors and support comprehensive catalogue of recordings and songs increase in visibility of Nigerian and Ghanaian music 2020 McKinsey cautioned that revenues for the global services to boost jobs and contribute to GDP growth. across every musical genre. and its influence on contemporary music around the fashion industry (apparel and footwear sectors) would Nollywood, as it is referred to, is the second-largest world. Opening an office within the region by the contract by 27 to 30 percent in 2020 year-on-year, movie industry in the world – after India – in terms world’s largest music company is a huge statement although the industry could regain positive growth of the number of films produced annually. It is also of belief in local music talent. of 2 to 4 percent in 2021. the second-largest provider of work in Nigeria (after

10 | Working Paper Series: Volume 5, Issue 1, 2020 11 Against the backdrop outlined above, the diaspora The diaspora can also help by bridging markets and remains significant for a Commonwealth community circulating knowledge and information on technology Addressing the UK’s productivity problems with huge Diasporas in global urban centres. Diaspora and business practices. Diaspora networks reduce entrepreneurs can play important roles in facilitating informational asymmetries and operate as co-creators Although creative businesses are more productive by extension, the contributions to cultural trade trade and investments between their countries of and institutional influencers. The progression of than comparably sized businesses, they will not and development policy.” One of the key research origin and countries of residence. Globalization was members of second- and third-generation diaspora materially contribute to addressing the UK’s questions that emerged in that study was “how do once driven almost exclusively by governments, the communities in diverse UK sectors can provide productivity problems unless they significantly creative conurbations in the UK retain their economic world’s large multinational corporations and major bridges to understanding, market insight and scale-up. When we control for size, creative edge in a post-Brexit environment?” (See Madichie financial institutions (Zaman, 2019). Now - thanks access to their countries of origin. At the same time, businesses tend to be more productive than and Zaman, 2017). to digital platforms with global reach - artisans, markets in Asia, Africa and the Caribbean have seen companies in other sectors in almost all parts of the As is the case with the articles in this special issue, entrepreneurs, app developers, freelancers, small much faster economic growth, expansion of the country. For example, creative businesses with fewer Madichie and Zaman (2017) relied “upon a range of businesses and small states can participate directly middle class, younger populations, urbanization than ten employees have a Gross Value Added (GVA) documentary evidence (including policy documents in the global marketplace and collaborate more easily. and economic reforms, which have made trade and per worker of £46,000, which is about 20 percent and a review of the literature).” The report “The investment more attractive to business diaspora. higher than similarly sized businesses in other Geography of Creativity in the UK: Creative clusters, The idea of a firm ‘born global’ – one that sectors. Ninety-four percent of companies in the creative people and creative networks,” (Mateos- internationalizes quickly after start-up – can today These links are further enhanced by low-cost internet sector are, however, micro-businesses (10 percent Garcia and Bakhshi, 2016), featured prominently in a move from theory in international business to reality telephony, travel and satellite TV. The potential more than in other sectors), which limits the sector’s bid to highlight the competitiveness of the UK creative in hours, not years. Increasing opportunities are of changing demographics and business diaspora ability to lift regional productivity. Growth in the economy in a post-Brexit era. available for diaspora entrepreneurs who can play progression coupled with increasing opportunities in sector will have the biggest economic impact if it is important roles in facilitating trade and investments higher-growth markets in their countries of origin is accompanied by an increase in the number of scale-up Madichie and Zaman (2017) developed a theoretical between their countries of origin and countries seldom recognized, let alone linked to trade strategy. businesses with higher productivity growth. framework and proposed for extrapolation to of residence given the role of trust in business This should be part of a new imperative for trade in other contexts especially among members of the facilitation, especially in a post-Brexit world. 2020 despite and perhaps especially from the fallout However, not all creative clusters grow in the same Commonwealth. These authors proposed the use of COVID-19. way. Creative business growth is not just about of the CPN (i.e. clusters, people and networks) as a The Commonwealth has a strong diasporic high-growth firms, and creative cluster development scoping tool for the sector, highlighting official on the community, which is already playing an important follows a variety of models. New firms, it turns out, Gross Value Added (GVA) contribution of the sector at role in driving trade and investment between member are more important for net job creation in the creative £81.4 billion or 5.2 percent of the whole economy. countries, but much potential remains untapped. The industries than in other sectors. Diaspora often demand what are known as ethnic, According to them, the creative industries are an nostalgic and identity goods, thereby providing an UK universities connect with creative industries undeniably high growth sector, whose GVA grew by important bridge into new markets. They may present locally and nationally. Research collaborations 8.9 percent between 2013 and 2014, almost twice a hidden strategic resource to promote trade and between universities and creative industries as fast as the UK as a whole – with indicators that development and to catalyse innovation, investment supported by Research Councils UK and Innovate UK include the local supply of talent, the volume of and the development of new markets. are growing over time, with funding levels more than industry-relevant research and the extent of creative doubling between 2006 and 2017. Universities are networking activity, but less widely appreciated in collaborating with creative industries in their locality, academic discourse. in neighbouring areas and in other parts of the UK, suggesting that UK universities have a role not only in The NESTA map confirms that creative clusters have helping develop creative clusters around them, but in a dominant presence in London and the Southeast also linking up others farther apart. of England (which together comprise around a third of clusters identified). However just over one-fifth Not long ago one study (Madichie and Zaman, 2017) of clusters are found in the North of England, and sought to inform, and advance the debate on cultural Scotland, Wales and Northern Ireland. Historically, trade for development from the UK context in a pro- we know London’s creative, economic success owes Brexit era. It argued, “Considering that culture is not much to the strength of its arts, theatres, heritage restricted to just monetary gains, a Cultural Exchange and museums; but many other towns, and cities, from Index (CEI) could also be leveraged to complement the Margate to Liverpool understand the benefits of a Cultural Trade Index (see Kabanda, 2016).” According strong cultural offer (see The Culture White Paper, to the authors of that study, “The CEI ranking p. 30). It is clear that not all creative clusters follow the recognises the participation of countries based upon ‘creative cities’ model. their international cultural exchange initiatives, and

12 | Working Paper Series: Volume 5, Issue 1, 2020 13 Selected Policy Papers drawn from 2016 and 2017 include (Madichie and Zaman 2017): The Selected Contributions

Impact of the UK’s post-Brexit trade policy on Contributors were required to explore and critically (BFC), House of Commons Digital, Culture, Media and development, Overseas Development Institute, analyse contemporary critical business management Sport (DCMS) Committee, the UK Fashion and Textile September 2016. issues and to fulfil the following learning objectives: Association, the Royal Institute of British Architects, apply understanding of critical issues within differing Design Council and the Advertising Association, and Emerging Issues Briefing Paper: Brexit – organisational contexts; evaluate and critically analyse McKinsey & Company reports among others. Opportunities for India, Commonwealth the impact of critical issues on business sustainability; Secretariat, September 2016. As for the third research question, critically evaluate develop appropriate responses to the challenges, the possible challenges and opportunities of a Brexit: Its Implications and Potential for the which the issues present; and demonstrate evidence multinational in London in the post-Brexit creative Commonwealth, Paper for Commonwealth of critical and diagnostic thinking. industries sector, within the context of a changing Finance Ministers, Commonwealth Secretariat Overall, the contributions all seek to address three global trade landscape. Some relevant insights can September 2016. main research questions: be drawn from the McKinsey & Company “The State Brexit in its Worldwide Aspect: An Opportunity to of Fashion” Reports [1]. 1. What are the key trends in trade of goods and be Grasped, Peter Marshall, November 2016. services between Commonwealth countries? The papers in the issue were selected from student As Others See Us – Perceptions of the UK from reports in the 2018/2019 academic year hence no 2. What is the impact of Brexit on trade and young people across G20 countries, British reference to the current disruption to the global investment within the creative industries sector Council, December 2016. economic environment. The selected paper featured in the UK? in the issue have been graded and updated in order Reconnecting with the Commonwealth: the UK’s 3. Critically evaluate the possible challenges and to provide samples for future students. free trade opportunities, James Cleverly MP and opportunities of a multinational enterprise (MNE) Tim Hewish, Free Enterprise Group, January 2017. As you will notice, each article starts with an in London in the post-Brexit creative industries overview of the key trends in trade of goods and It was only recently in January 2017 that the British sector, within the context of a changing global services between Commonwealth countries before Government’s new industrial strategy highlighted the trade landscape? moving on the assess the impact of Brexit on trade need to help small businesses get better access to In addressing the first research question, a range and investment within the creative industries funding, build clusters of industry across the country of resources was explored drawing upon a range of sector in the UK. Attempts have also been made to and move key institutions to those clusters. It calls for publications from the Commonwealth Secretariat highlight possible challenges and opportunities from ‘driving growth across the whole country’ to ‘create based in London. One of such resources is the the perspective of a London-based multinational a framework to build on the particular strengths of 2018 London Declaration on the Commonwealth enterprise in the creative industries sector different places and address factors that hold places Connectivity Agenda for Trade and Investment, (see Table 1), within the context of a changing global back.’ In this regard, the creative industries – which emerged from the Commonwealth Heads trade landscape post-Brexit. a diverse group of businesses spanning content like of Government Meeting (or CHOGM), Chair’s film, music, design, publishing and advertising (as Zsoltne Farkas in the first paper uses the case Summary Statement Commonwealth Trade Ministers’ NESTA’s research) – are the ones that will thrive in an illustration of Pearson Publishers. Adam Martin, in the Roundtable, and other Commonwealth Policy Briefing automated future where creativity and imagination second paper uses a case illustration of Framestore, documents including the Commonwealth Secretariat are more highly prized, projected and permanent. the Oscar winning creative studio in London that (2016) brief on Brexit and Commonwealth Trade. works across the different aspects of the creative In a major report, from UNESCO (2018), four goals On the second research question, which seeks to industries such as medium, music videos, feature film, were investigated and reported. Goal 1 is “Support assess the impact of Brexit on trade and investment feature animation, commercials and digital pictures. sustainable systems of governance for culture.” within the creative industries sector in the UK, a Goal 2, “Achieve a balanced flow of cultural goods range of sources were interrogated including the UK and services and increase the mobility of Artists Creative Industries website, British Fashion Council and cultural professionals.” Goal 3, “Integrate culture in sustainable development frameworks.” Goal 4, “Promote Human Rights and fundamental freedoms.”

Although these four themes are equally expedient, this special issue resonates more with Goal 2, and especially chapters 5 and 6, which talk to “surviving the paradoxes of mobility,” (El Bennaoui, 2018), and “persisting imbalances in the flow of cultural goods and services” (Guevremont, 2018) respectively.

14 | Working Paper Series: Volume 5, Issue 1, 2020 15 Conclusions and Implications

This introduction to the special issue sought to Overall, there are both positive and negative sides signpost three key research questions driving the of the globalisation debate. Given that we are collection. It also set the scope by interrogating a accelerating into a future shaped less by countries policy report “Context: The Commonwealth in a than by connectivity, what opportunities from changing trade landscape and the opportunities developments in connectography does this hold for creative industries in a post Brexit world”, with for a Commonwealth community that includes preliminary remarks on how these relates to impacts countries from all continents with English (law, from the current COVID-19 pandemic and the language) providing a powerful mechanism for attendant global lockdowns. enhanced business? What will be the impact of digital globalization (McKinsey), especially given From the foregoing analysis, there are a number that 32 of the Commonwealth’s 54 countries are of questions revolving around global consumer Small States (e.g. Jamaica, Kenya, Fiji and Malta) and culture, international business, urbanisation and the that digitization has opened the door for emerging Table 1. UK Firms and Creative sub-sectors creative economy. These questions range from: how economies, small businesses, and individuals might trade trends be influenced and impacted by to participate directly in globalisation? How are international business in the modern era and changes small businesses worldwide becoming “micro- Author/ Manuscript No. London Multinational Sector in the triad, especially given the growth of emerging multinationals”? What challenges to trade growth can economies? What about the international activities Zsoltne Farkas Pearson Publishers Publishing be posed by challenges to globalisation (especially of SMEs and their impact of trade. For example, Creative studio (medium, music e.g. economic warfare, the geopoliticisation of trade Adam Martin Framestore videos, feature film, feature animation, how has digitisation opened the door for emerging talks, competition for gated markets, not natural commercials and digital pictures) economies, small businesses and individuals to resources and China’s infrastructure-driven alliances)? Claudia Nourescu Abbott Mead Vickers BBDO (AMV BBDO) Advertising participate directly in globalisation? Where do Brexit and Trump have highlighted the role of global Universal Music Group Music Commonwealth countries rank on the World Doing business in a less globalised World and arguments Valerie Small Sotheby’s Auction Business report and what does this highlight about about the end of globalisation but what impact socio-political developments? What Commonwealth Patrick Eworetshabor Universal Music Group Music might this have? Are we now in a period/phase of cities have the potential to be globally fluent Lily Bruneau Hawkins/Brown Architects LLP Architecture de-globalisation if we have seen the rise and fall of an metropolitan areas? How might key urbanisation Diana Barska Alexander McQueen Fashion idea that swept the world? trends help or hinder trade/ investment? What do we Bethel Abraha Pinewood Studios TV and film studio established in 1936 know about the competitiveness of cities that might While the articles in this special issue might not have impact trade trends? fully addressed these questions, they have at least, In the third paper Claudia Nourescu, uses the case Patrick Eworetshabor in the fifth paper focuses brought them to the fore and provided a platform for illustration of Abbott Mead Vickers BBDO or AMV on the Universal Music Group, a global MNE who is future research directions. BBDO, the most creative advertising agency in 2018 leading in music-based entertainment with diverse and the “biggest agency in the UK”, as part of BBDO business engagement in over 60 countries affecting network “which has 289 offices across 81 countries”, what London generate from creative industries. within the Brexit and changing global trade landscape Lily Bruneau in the sixth paper explores the exploits discussed above, there are rising several challenges of Hawkins/Brown Architects LLP, a multinational but also opportunities too. The firm works within the enterprise with offices in London, Manchester Design and Advertising sector and therefore at AMV Edinburgh and Los Angeles. This firm specializes in BBDO. Valerie Small in the fourth paper cites the the delivery of services such as architecture, interior cases of the Universal Music Group and Sotheby’s, the design, urban design, master planning and collaborate famous London Auctioneers. with artists. In the seventh paper, Diana Barska, explores possible challenges and opportunities for the fashion brand, Alexander McQueen’s after Brexit. Notes: Alexander McQueen is a British luxury fashion house [1] Jim O’Neill asks if new challenges mean an end to the era of globalisation. As Chairman of Goldman Sachs Asset founded in 1992. Bethel Abraha in the eighth paper Management, Lord O’Neill was seen as one of the high priests of globalisation - coining the term BRICs to describe the focuses on Pinewood Studios, a UK-based TV and film economic rise of Brazil, Russia, India and China. Now, many see the UK's vote to leave the EU, alongside the election of studio established in 1936. This studio is regarded Donald Trump as indications that the world is turning away from globalisation. A stalling in the increase in global trade as the home of Carry On and James Bond film is seen as another significant indicator. Lord O'Neill believes that globalisation can be a positive force, lifting hundreds of franchises and is known to have produced various millions of people out of poverty. However, can this economic engine take care of those left behind by rapid, wrenching big-budget films, commercials, TV shows, and change? See “Fixing Globalisation” on the BBC. https://www.bbc.co.uk/programmes/b086s822 different music promos. See also: https://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion-2020-navigating-uncertainty

16 | Working Paper Series: Volume 5, Issue 1, 2020 17 References Further Reading Amed, I., Balchandani, A., Beltrami, M., Berg, A., Madichie, N. 2020. Practice makes perfect: merging Hedrich, S., & Rölkens, F. 2018. The State of academia and commerce for business growth Fashion 2019: A year of awakening (November). in Africa, The Catalyst Magazine, pp. 32-33. Report. McKinsey & Company. Chartered Institute of Marketing. Kosfeld, R., & Titze, M. 2017. Benchmark Value-added Commonwealth Secretariat 2020. The State of the Madichie, N., & Zaman, A. 2017. Mapping out the Chains and Regional Clusters in R&D-intensive Digital Economy in the Commonwealth. London: Regional landscape of the British Creative Industries. International Regional Science Review, United Kingdom. ISBN: 978-1-84929-190-3 Industry: A CPN Model Development. LSBM 40(5), pp. 530-558. https://books.thecommonwealth.org/state- Working Paper Series, 2(2/3), pp. 12-19, https:// digital-economy-commonwealth-paperback www.bil.ac.uk/wp-content/uploads/2019/02/ Madichie, N. 2017. Ties that un-bind: Nigerian Artistes LSBM-WPS-Vol-2-Issue-2-3-2017.pdf Making music under resource-constrained Cleverly, J., and Hewish, T. 2017. Reconnecting conditions. Paper presented at the 40th Institute with the Commonwealth: the UK’s free trade Marshall, P. 2016. Brexit in its Worldwide Aspect: An for Small Business and Entrepreneurship (ISBE) opportunities. Free Enterprise Group. London: Opportunity to be Grasped. The Round Table, Conference, Belfast 7-9 November. http://isbe. Institute of Economic Affairs. 105(5), pp. 451–461. doi:10.1080/00358533.2016.1 org.uk/afterisbe17-creative/ 233757 Cumming, D.J. and Zahra, S.A. 2016. International Madichie, C. 2016. Diaspora contribution to achieving business and entrepreneurship implications of Mateos-Garcia, J., & Bakhshi, H. 2016. The Geography the SDGs. GREAT Insights Magazine, 5(5). Brexit. British Journal of Management, 27(4), pp. of Creativity in the UK. Creative England. October/November, pp. 23-24. 687-692. Available online at: http://applications. creativeengland.co.uk/assets/public/ Madichie, N. 2010. The Nigerian movie industry Craggs, R. 2011. The Commonwealth Institute and resource/302.pdf “Nollywood”–a nearly perfect marketing case the Commonwealth Arts Festival: Architecture, study. Marketing Intelligence & Planning, 28(5), Performance and Multiculturalism in Late- Mateos-Garcia, J., and Bakhshi, H. 2016. The pp. 625-649. Imperial London, The London Journal, 36(3), pp. Geography of Creativity in the UK: Creative 247-268, DOI: 10.1179/174963211X13127325480352 clusters, creative people and creative networks, Marshall, P. 2016. Brexit in its Worldwide National Endowment for Science, Technology and Aspect: An Opportunity to be Grasped, El Bennaoui, K. (2018) “Surviving the paradoxes of the Arts (NESTA). The Round Table, 105(5), pp. 451-461, DOI: mobility.” In: UNESCO. (2018). Reshaping cultural 10.1080/00358533.2016.1233757 policies: Advancing creativity for development Mateos Garcia, J., Klinger, J., & Stathoulopoulos, (pp. 107-123). K. 2018. Creative Nation: How the creative Nathan, M. and Lee, N. 2013. Cultural diversity, industries are powering the UK’s nations and innovation, and entrepreneurship: firm-level Guevremont, L. (2018) “Persisting imbalances in the regions. evidence from London, Economic Geography, flow of cultural goods and services”. In: UNESCO. 89(4), pp. 367-394. (2018). Reshaping cultural policies: Advancing NESTA (8 February 2018) Creative Economy & Culture. creativity for development (pp. 125-141). The National Endowment for Science, Technology OECD. 2015. Connecting with Emigrants: A Global and the Arts. Retrieved from: https://www.nesta. Profile of Diasporas 2015, 3 November. The Hall, D. 2020. Brexit and Tourism: Process, Impacts org.uk/report/creative-nation/ [accessed 2 April Organisation for Economic Co-operation and and Non-Policy. Channel View Publications. 2020]. Development (OECD). Retrieved from: http:// Hutchinson, K. (The Guardian, 3 February 2020) What www.oecd.org/publications/connecting-with- UNESCO. (2018). Reshaping cultural policies: the Womad visa fiasco tells us about live music emigrants-9789264239845-en.htm Advancing creativity for development. http:// in Brexit Britain. Retrieved from: https://www. uis.unesco.org/sites/default/files/documents/ Overseas Development Institute, impact of the theguardian.com/global/2018/aug/02/womad- reshaping-cultural-policies-2018-en.pdf. UK’s post-Brexit trade policy on development, visa-fiasco-brexit-britain-live-music-festival December 31, 2018. September 2016 Kabanda, P. 2016. The Cultural Trade Index: An Zaman, A. 2019. Diaspora holds huge potential to Sik, A. 2016. Creativity in cross-domain collaborations: Introduction. Policy Research Working Paper, facilitate trade and investment, 18 June. United searching factors to increase efficiency, No. WPS 7871. Washington, DC: The World Bank Nations Conference on Trade and Development Management Research Review, 39(2), pp.144-166. Group. http://documents.worldbank.org/curated/ (UNCTAD). https://unctad.org/en/pages/ en/593131477313199422/The-cultural-trade- newsdetails.aspx?OriginalVersionID=2125 index-an-introduction

18 | Working Paper Series: Volume 5, Issue 1, 2020 19 The Commonwealth Challenges in the post-Brexit Era

Zsoltne Farkas Introduction

This report analyses key trends in goods and services between the Commonwealth countries, assesses the impact of Brexit on the creative industries sector with a comprehensive analysis focussing on four or more sub-sectors, set out clearly and compellingly the changing global trade landscape and outlines the possible challenges for a Pearson Plc, in the creative industries sector on post Brexit. Living in the world where a series of unexpected, unpredictable events occur from all directions, where frequency of changes and their speed is unprecedented. An American acronym of a theory is very well characterized in this world, which was originally invented by the military for navigation in a chaotic situation.

In times of Volatility, Uncertainty, Complexity and Ambiguity (VUCA), growing changes, a less predictable vision, a multitude of choices and a multitude of incomplete or non-existent good solutions characterize the environment (Giles, 2018). In such a complex system, navigating and managing things is only possible through clear and understandable communication. One of the most important factors in the VUCA world is the third Super cycle that is still in progress today and characterized by industrialization and urbanization. The fast variables are formed by five factors: Low-carbon economy, rapid advances in technology, globalisation, changes in demography, and changes in work-life (CNBC, 2011)

20 | Working Paper Series: Volume 5, Issue 1, 2020 21 The role of the middle class is very important in The middle class drives to urbanisation, and education Key trends in trade of goods and services between the innovation, the increasing income will drive to of girls (Statista, 2018). The emerging market is increasing and changing domestic demand, tourism, rapidly growing (Figure 2). Emphasis on the success of Commonwealth countries education and health care. The changes shift and developed countries now lies in creativity. The current increase the demand for smart money savings so it innovation and creativity are generated in today's According to McKinsey, in our changing environment The countries around the world who are strong in is necessary to develop financial services. The middle- rich western world, but in the future, the emerging around the world the mix of four important factor some industry or service, like Germany in engineering class market is growing 0.5% yearly in Europe, US, world will also play a role. Today the computers, the determine the events and developments: the design, UK in financial services, Italy and French in and Japan but in Asia and India this is more than 6% Internet, and networks create not only economic urbanisation, the technological changes, the aging fashion design and US in entertainment and media, per year. benefits, but also increase productivity and profit. In population, and the level of global connections. need to pay attention on global economic shifts (COR, today's world, the Internet plays an equally important The general skills are questionable, the focus is on 2017). In the next few decades it will be changed role as the appearance of cars, trains and aircraft in connectivity, network and collaboration, and the the demography situation, firstly the aging world the industrial revolution. focus should be more on trade-offs, production and population and because of the rising middle class. quality of experiences (McKinsey, 2018). Production Now the biggest middle class is in the Europe, the jobs shifted to lower-cost environments, the role of second is Asia and North America, follow by the South Figure 2: Forecast of Emerging market economies in 2019 advanced countries changed: In the West there is a America, the Middle East and North Africa and the need for development in service industries, because Sub-Saharan Africa (Figure 1). Until 2030 population manufacturing is being relocated at a rapid space to distribution will change, the forecast shows that the Asia (Chapman, 2018). biggest middle class will be in Asia (Statista, 2018).

Figure 1: Forecast of the global middle-class population 2015 to 2030, by region (in millions)

3.5 Poland 4,000 3.6 Romania Czech Republic 3.0

Greece 2.0 6.3 China 3.5 Turkey India

3,000 2.8 Korea Morocco 3.7 3.2 UAE Egypt 5.1 7.5 2.4 Taiwan 2.2 Mexico 2.8 Qatar

Thailand 3.8 3.1 Colombia 6.6 Philippines 2,000 2.9 Nigeria Malaysia 4.9

Peru 3.8 1.3 Brazil 5.3 Indonesia 2.3 Angola

Population in millions in Population 1,000 2.0 South Africa Latin America 3.5 Chile

1.9 Argentina Eastern Europe

0 Asia-Pacific Europe North America Central and South Middle-East Sub-Saharan Africa Sub-Saharan Africa America and North Africa 2019 GDP Growth Forecasts Annual variation in % Geographical region Asia (ex-Japan)

Middle East and 2015 2020* 2025* 2030* North Africa

Source: Statista (2018) Source: Focus Economics (2018) 1.3 7.5

22 | Working Paper Series: Volume 5, Issue 1, 2020 23 The most important prerequisites for sustainable financial situation of the middle class, there Figure 4: Internet users by world region since 1990 developments are the innovations, developments is a growing demand for entertainment, learning, and inventions. Innovations and inventions are internet use, knowledge acquisition and the Internet users by world region since 1990 based on knowledge, abundance of up-to-dated possession of technical tools. Multinational Global total information, supported by current technology and companies have a tremendous opportunity in this 3.5 3.408 billion Sub-Saharan Africa the Internet. Considering all of these factors, it can be situation, as the internet, various resources and 206 million in 2016 South Asia concluded that the high-quality education combined technical tools are available for them, and they may 3 465 million in 2016 with a strong middle class is the basis for growing take advantages of these to meet these growing innovation, productivity and profit. Due to the demands. (Focus Economics, 2018). 2.5 Global total East Asia & Pacific 1.992 billion 1217 million in 2016

2 Figure 3: Spending depend on income level Middle East & North Africa 210 million in 2016 Billion 1.5 Global total Latin America & Caribbean 1.026 billion Cashflow 362 million in 2016 1 Poor Middle Class Rich Global total Europe & Central Asia 412.6 million 669 million in 2016 0.5 Global total Global total 44.4 million North America 2.6 million 279 million in 2016 0 1990 1995 2000 2005 2010 2016 Income Income Income Data source: Based on data from the World Bank and data from the International Telecommunications Union. Internet users are people with access to the worldwide network. The interactive data visualisation is available at OurWorldinData.org. There you will find the raw data and more visualisations on this topic. Licensed under CC-BY-SA by the author Max Roser.

Source: Our World in Data (2016) Assets Expenses Assets Expenses Assets Expenses

UK background

Fix deposit UK’s total exports (goods and services) was £616 Figure 5: UK’s export between 1999 and 2017 Retirement billion in 2017 of which 44% (£ 274 billion, which is with EU and non-EU savings Fuel 13.4% of the value of British economy) went to the Rent Maintenance Investments EU. At the same time, 53% of total imports came UK exports: EU versus non-EU

from the EU in 2017. UK has a mass trade deficit with UK share of exports of goods and services to other EU countries EU since 1999 and a continuously trade surplus with and to countries outside the EU, rolling annual figures Source: Sadiq (2018) non-EU since 2012, according the data of House of 100% Commons in 2018. 55% of total UK export with EU in 2006 fell down to 44% in 2017 and 58% of total 75% Non-EU countries The basic needs of the poor people with minimum Transformations must be in line with social, UK import with EU in 2002 fell down to 54% in 2016. 50% wage are to create secure standard of living in their economic and environmental goals. 3D printing has According the data of House of Commons, the UK’s Other EU countries everyday life. Higher earnings are already targeting revolutionized the whole area of healthcare. It is export of goods to EU decreased with 16% between 25% certain devices. In case of a higher level of revenue, particularly successful in the field of dentistry, organ 1999 and 2017 while the UK’s exports of services there is a demand for entertainment, advanced transplantation, limb prostheses and hearing aids. remained 40% in the same period. To examine UK’s 0% 2011 2013 2017 2015 1999 2001 2003 2007 2005 healthcare and education. The top layer of the Social media is the greatest invention with various import data, it can realise that UK’s goods import 2009 middle class (Figure 3) already thinks on savings after applications areas, on a global scale, however, it from EU remained similar between 1999 and 2017, creating their financial security and here is the role should be noted that thanks to the hackers, social but the service import decreased from 57% in 1999 to Source: House of Commons (2018) of various investments and banking products that media has not only advantages, but also serious 49% in 2017 (House of Commons, 2018). Interestingly, meet this need (Sadiq, 2018). The growing revenues dangers. The free Wi-Fi is now more demanding than in the same period, UK’s exports to non-EU countries Looking at the situation from an EU perspective, deliver wider usage of the internet and technological privilege (Ayers, 2013). have increased (Figure 5). 8% of total EU export go to UK. According the data, equipment worldwide. Between 1990 and 2016, UK’s largest trading partner is the European Union Internet usage has increased incredibly fast pace and UK is the EU’s second largest export market for (Figure 4). goods (House of Commons, 2018).

24 | Working Paper Series: Volume 5, Issue 1, 2020 25 Post Brexit situation Commonwealth Countries It can't sure to say anything for the future, but UK is a member of Commonwealth countries, negotiations between the EU and the UK are under their export and import to the Commonwealth way, and or a new agreement is born, or after countries increased in the last few years. unsuccessful negotiations, the WTO’s (World Trade The Commonwealth countries have 53 members Organisation) regulation will prevail. This means, that (Figure 7), their Secretariat supports the long- UK will pay tariffs as the other countries out of EU. term relationships with the developed countries. Most of the transport routes run through Europe, like (The Commonwealth Review, 2015) the port of Rotterdam. The world tariffs in Figure 6 covers the period of 2017. Figure 7: Commonwealth Countries, 2018 Figure 6: World Tariffs in 2017

Average EU tariff by product type (%)

Animal products 15.7 Minerals and metals 2.0 Dairy products 35.4 Petroleum 2.5 Fruit, vegetables and plants 10.5 Chemicals 4.5 Coffee, tea 6.1 Wood, paper etc 0.9 Cereals and preparations 12.8 Textiles 6.5 Oilseeds, fats and oils 5.6 Clothing 11.5 Sugars and confectionery 23.6 Leather, footwear etc 4.1 Beverages and tobacco 19.6 Non-electrical machinery 1.9 Cotton 0.0 Electrical machinery 2.8 Other agricultural products 3.6 Transport equipment 4.3 Fish and fish products 12.0 Other manufactures 2.6

Source: WTO World Tariff Profiles 2017, p82 Commonwealth countries

Source: The Commonwealth (2018)

26 | Working Paper Series: Volume 5, Issue 1, 2020 27 Commonwealth countries’ exports of goods and According to the Commonwealth Review (2015), 29% services were US$3.4Trillion 2013, that is 15% of of export of developed members of Commonwealth The role of China world’s total export, and half of their export comes go to developing members, which was just 16% 10 from developed countries. After the world’s financial years ago. Since 2000’ exports almost doubled to China is one of the largest economies in Asia and in This project includes land and sea trade routes to crisis, the growth slow down (Figure 8). developing members. Trade between Commonwealth the world and is rapidly growing. Their increasing make the global trade with China easier. China has and China growing rapidly. Between 2000 and 2013, middle class is very strong, their needs is fast a growing construction industry and invests trillions the export to China increased from US$19 billion changing. China has started a huge infrastructure of dollars in the project (Figure 10). Figure 8: Growing trade of Commonwealth to US$268 billion (almost 14-hold) and the import project called the Belt and Road Initiative (BRI), countries 2000-2015 from China increased from US$46 billion to US$359 through Europe, Asia, and Africa and it will provide billion (The Commonwealth Review, 2015) (Figure 9). broader international trade to and from China. According to reviews, the one of the vital drives of success is that the Commonwealth countries use one language, and the communication is improved, clear Figure 10. The Belt and Road Initiative Project

$16 trillion and understandable, and increased the trade flows between the members. Several routes are proposed for the 'new Silk Road.' 2008 According their data, the South-South trade expanded Trade ($) Trade rapidly from US$1 Trillion in 2002 to US$5.5 Trillion in Russia 2013. (The Commonwealth Review, 2015). Between Poland 1980 and 2015, the small states’ share of trade Ukraine decreased from 0.7% to 0.46% and the government Belgium Kazakhstan 0 of Commonwealth Countries holds their outstanding France 2000 2003 2006 2009 2012 2015 Uzbekistan task to be promoting the small States in the trade Italy

(The Commonwealth Review, 2015). Turkey Kyrgyzstan Source: The Commonwealth Review (2015) China Greece The international trade is changing and the Iran Commonwealth Countries are adapting to this Pakistan Figure 9: Trade with China increased situation continuously, their trade with South is increasing, that means challenges for developed Vietnam countries to live with the opportunities, increase their capacity, expand their exports, especially to Malaysia China and other developing countries, broader Sri Lanka trade and investment with them and develop their Kenya service industry. The Commonwealth countries have Indonesia developed a strategy to maintain their commercial CHINA growth, as well as strengthen their regional cooperation and connectivity, the relationship between the traders and investors, their goal is the effective use of international trade, support the gender policy and small states.

Exports Imports Silk Road Economic Belt 21st Century Maritime Silk Road

Source: McKinsey (2016)

Not only the participating countries can enjoy the advantages from the investment, but China also meets the needs of their growing construction industry.

Source: The Commonwealth Review, 2015

28 | Working Paper Series: Volume 5, Issue 1, 2020 29 In 2016 exported services worth £2.32 billion and The impact of Brexit on UK Business predictability – it is a vital question exported goods worth £2.57 billion. Publishing creative industries what type of trade relationship is made between sector’s revenue in 2016 was £5.1 billion from books the EU and UK after Brexit. UK need to pay and journals. In 2014, there were 172 academic Creative industry is characterized by the production, attention on the status of EU nationals living in publishing organisation and in 2016, there were utilisation and consumption of knowledge and the UK, and of UK citizens in EU. These things 2.255 publishing enterprises in the UK (The Creative information. In the UK, these sectors are the arts (film, make business planning difficult and may result Industries, 2018). music, fashion, design, arts, crafts), TV and radio, a decline in sales. advertising, architecture, publishing, R&D, software The UK’s publishing sector supports and increases Higher costs of doing business – the weaker and toys and games. The UK has a highly diverse the success of other creative sectors through provides pound make export more competitive. 35% of the and successful creative industry, one of the most sources for television, films, music and theatre. asked said that the biggest challenge of Brexit is successful sectors in the UK. The creative relationship The UK’s Publishing sector has a varied, highly the higher costs of doing businesses. between the UK and the EU is very good. In the UK, successful and productive foreign market. The total the number of EU creative talents is decisive, in visual publishing export income in 2017 was £3.4 billion Reduced UK voice - after Brexit the UK falls effects of movies are 30%, in video games are 20- (this means an 8% increase). The UK is the largest out of control of the regulations and copyright 30%, and in architecture are 25%. Many of them leave exporter of physical books around the world (17% of framework. UK’s role is decreasing in Open Access after Brexit (Youngs, 2017). total export of world). The UK is leader in academic debates in EU (Publishing Association, 2018). publishing as well, they have 10% of all academic In 2017, the foreign-owned studios spent +1.7 billion publishing and 16% most-cited journal articles. The UK The Publishing Association shared the vital priorities in UK. The English TV and film industry is booming, has a large magazine publishing market and customer for five different challenges. The first is the Access to not only Hollywood (Star Wars) but also Bollywood is publishing industry is the most developed (around the European market. Because of the EU is the UK’s investing more and more in local filming. Since 2014, £1billion each year) (The Creative Industry, 2018). biggest market for physical book export, it required to UK film production has increased by 72% (ONS), UK continue access to the EU market. Publishing Sector has become a target for many global film producers In the history of the UK’s Publishing Sector there counts on two important changes, tariffs will reduce (Youngs, 2017). are a several important milestone and factor that the competitiveness and licensing costs will increase makes the sector very sensitive to all change caused their export costs. Very important to keep the Compared to Hollywood and Bollywood, it can be by Brexit. The Publishing sector has a rich history of freedom of movement of the skilled and highly valued said that Hollywood is making 2-hour long movies innovation: the sector is the forefront of knowledge workforce from EU, UK need to scan the status of EU with more investment, less ticket sales, but higher economy, driving force of innovation, leader of the nationals who lives in the UK. profit than Bollywood in India, which produces 4-hour development of international standards (especially long movies, with less investment, lower profit, but in electronic access of content, bibliographic Furthermore, the Publishing Sector has offices in EU. multiple ticket sales, making it financially stronger and information), legally protected and enforced materials. Last but not least, huge amounts of international globalize. Bollywood is increasingly contributing to There is the Publisher Association to prevents global students come from EU and UK need to find the way the UK film industry (Bradford, Doncaster, Rotherham) copyright piracy, the Statue of Anne the basis of the to increase funding in the higher education which They spent £14 million between 2009 and 2011 on copyright laws in the UK and Berne Convention (1888) will help to produce world-leading research in the 8 films in the UK, in 2014, they spent £44.4 million provided basis for the international protection of UK, government should develop policy because on 15 films, and 2015-2017 £68.9 million on 22 films. intellectual property. (PA, 2018). The Publishing sector publishers need to access to people and skills they Bollywood is becoming more like the original venues participates strongly in the environmental protection need. The 38% of the respondents said that in the outside London, the tax relief has made filming through their innovation to use sustainable paper and Post-Brexit situation it is required to strengthen the cheaper, even in India. The weakening GBP caused reduce chemically waste (The Creative Industry, 2018). government's commitment to the current copyright by Brexit makes the filming attractive to America. framework. It appears that without EU membership, Nevertheless, in the current situation filming in the The Publishing Sector is exporting to every area of the UK will be able to tighten rules on copyright country is made more difficult by expensive costs world market like to Latin America, to the Middle East, protection (PA, 2018). (Youngs, 2017). to North Africa and Asia. EU is the largest market for UK published products (35% of total export revenues), The UK is among the leaders in the world of scientific In the 21st century, economic growth is increasingly the second largest market is Asia. According to research. In order to keep this leading position, the based on knowledge and creativity in the rapidly PA (Publishing Association) Survey, the publishers government will be able to absorb EU subsidies and changing VUCA world. The quality and level of the summarized the most important challenges caused by increase domestic funding after Brexit. More than half Publishing sector are essential prerequisites for broad Brexit in 4 themes: of survey respondents (53%) consider this question knowledge and up-to-date accurate information. the most important in Brexit. Between 2006 and 2015, In the UK’s Publishing sector are 192.000 jobs (2017) Post-Brexit publishing remain strong – 70% the UK received £8 billion support from the EU for that is 10% of the total employment of the Creative of asked said that they will not change their research purposes (PA, 2018). The most important Industry. According on Official Government Data, planning about the future investments and 2% task for the government is to develop a determined in 2010 GVA (Gross Value Added) was £10.3 billion, said that they will increase their investments. and completely clear strategy for negotiating with the which increased with 12.1% to £11.6 billion in 2016. EU to counteract the uncertainty.

30 | Working Paper Series: Volume 5, Issue 1, 2020 31 Case challenges and opportunities Figure 11. Pearson Plc’s goal and strategy With the help of a supporting SWOT analysis it can Impact of Brexit of Pearson Plc realise the company’s situation. Their strengths: Pearson Plc is a global leader publishing company The young student possibly will leave and applications with more than 41000 employees in 70 country, with Pearson plc (Pearson) is world leader global possibly will be declined, most of foreign professors Our Strategy very beneficial relationships with Penguin Publishing educational publishing company, founded in 1844 and teachers possibly will leave the UK. There are company, UN, EU, Microsoft and many stakeholders, by Samuel Pearson. Today, the headquarter is in Our goal is to improve access and outcomes more opportunities for the EU students who can apply strong reputation, supported publishing in developing London, United Kingdom. The company operates in in education through our world-class to other EU, USA, Canadian universities. John Dainton countries and their books written by best authors, publishing markets of Europe, North America, Asia capabilities in educational content professor, a spokesperson for the Campaign for the success by digital transformation. Their weaknesses: Pacific and others, they have about 30.000 employees and assessment, powered by services Defence of British Universities, said to The Guardian: Most of their trade concentrated in North America, in 70 different countries. (Publishers Weekly, 2017). In and technology. “I feel like Britain is right back where we were in the the company focus only on education products, 2014, they merger with Penguin Random House and 1970s when I was a young postdoc. We are losing changing financial situation (unstable), focus on launched new structure of operation and reporting. young people.” Next problem, that the UK Universities English languages. Opportunities: Strengthening their They started to focus on academic education working OUR STRATEGY CAN BE EXPRESSED may lose most of their financial support from EU position through languages diversification, enjoying together with teachers, tutors, learners, authors, AS AN EQUATION: (The Guardian, 2018) advantages from mergers and acquisition, expanding leaders and many stakeholders through their strategy to emerging market and developing countries where It can be a lucrative solution of innovation developed (Figure 11). Their Mission: “To help people make the middle class is rapidly growing, cooperation, by Oxford University for survival, thus taking progress in their lives through learning, because we More effective teaching & CONTENT ASSESSMENT integration to increase their value chain activity, advantage of the possibility of retaining financial believe that learning opens up opportunities, creating personalised learning at scale increasing their regional role. Threats: There are a support from the EU after Brexit, they planning fulfilling careers and better lives.” (Pearson, 2018). wide range of competitors, like McGraw-Hill Education to open their foreign campus in Paris. Warwick Pearson Education has a wide range of content and Cengage or Wiley, Post-Brexit business issues University plan same way as well. In the background, including books, educational materials, learning such as weakening pound, possible new trading rates, it is not novelty that British universities open their Powered by services & technology technologies and services like teacher development, abolishing European subsidies in higher education, campuses one after the another in the Persian Gulf educational software, own schools and tests, scoring the rising costs, decreasing number of students region. For example, University of Aberdeen and models to professional and government bodies in and teachers. University of Birmingham opened campuses in Dubai. Source: Pearson (2018) print and digital formats – help meet student’s needs In our rapidly changing world, Sorbonne and New York It is impossible to know what EU students can and deliver measured results. The organisation University from USA opened their campuses in Abu- expect to study at a British university in the future. is working together with United Nations, EU, Dhabi (The Guardian, 2018). Brexit is not only a challenge for EU graduates, but Microsoft and the University of Cambridge and other also for the islands' institutions: they may be seriously Brexit is able to transform the structure of world institutions (Pearson, 2018). disadvantaged in the ever-growing global competition education, new educational powers can be created, for higher education. British higher education according to forecasts Asia can become the centre is particularly popular among foreign students, of the world’s higher education in the future. The Figure 12. Sales of Pearson Plc by Geography mainly because of the reputation of higher advantages of the universities in the Persian Gulf and North America education institutions, the quality of education Asia is that their financial background is outstanding, Sales and student orientation. while the prestigious universities struggle with £2,929m the payment of their professors, in Asia, millions Our largest market including all 50 US of dollars are being spent on developing higher states and Canada. education and employing world-renowned educators. Dubai launched their Dubai International Academic Core markets City (DIAC) in 2006, where studying 26.000 students Sales from 26 universities of nine countries. Saudi Arabia £815m has spent billions of dollars to build the country's Our international business in established technical university (DIAC, 2018). and mature education markets including the UK, Australia, Italy, France, Germany, Spain, Poland, Singapore, Malaysia and Vietnam

Growth markets Sales £769m Our growth markets in emerging and developing economics, with investment Source: Pearson Annual Report (2018) priorities in Brazil, India, South Africa, Mexico, Hong Kong & China, and the Middle East.

32 | Working Paper Series: Volume 5, Issue 1, 2020 33 Conclusions References The effect of Brexit the centre of global higher education may be relocated, according to recent rankings, Asian universities are increasingly present and ranked among the best universities in the world, Ayers, R., (2013) 5 Innovative Technologies of the special look at China and Singapore. (The World 21st Century. [Online] Available from: http:// University Rankings, 2018). Returning to Pearson www.innovationmanagement.se/2018/05/08/5- Plc, it is not only a matter of adapting to the possible innovative-technologies-of-the-21st-century/ situation of Post-Brexit, but also of the structure and [Accessed 10.01.2019] geographic rearrangement of higher education that Brexit is thoroughly reforming. Important factors in Badkar, M., (2014) China Has Accomplished Something the change to which the strategy should be adjusted In Global Trade Not Seen Since Colonial are the changes in the copyright institution, the Britain. [Online] Available from: https://www. potential increase in costs, the UK teacher-student businessinsider.com.au/china-is-a-true-mega- volume rearrangement, the new commercial trader-map-2014-4 [Accessed 28.12.2018] regulations. BBC, (2018) Publishers warn of Brexit threat to record However, knowing the global displacements, exports. [Online] Available from: https://www. demographic and geographic transformations bbc.co.uk/news/business-44874308 [Accessed already under way, when carefully developing 29.12.2018] the strategy there are plenty of opportunities to Bekhradnia, B. and Beech, D., (2018) Demand for counteract the negative events. Examples include the Higher Education to 2030. [Online] Available creation of a regional headquarter in the EU to get from: https://www.hepi.ac.uk/wp-content/ further financial and other support from EU, and the uploads/2018/03/HEPI-Demand-for-Higher- relocation of part of the production to avoid tariffs, Education-to-2030-Report-105-FINAL.pdf cooperation with European publishers, integration [Accessed 29.12.2018] with other commercial value chain, to play a greater role in cooperation with emerging countries, rather Chapman, S., (2018) The manufacturing shift in Asia to integrate with different trade clusters (such as could affect climate goals. [Online] Available Commonwealth Countries, BRICS Countries, OECD) from: https://www.manufacturingglobal.com/ than to negotiate with individual countries. Exploit lean-manufacturing/manufacturing-shift-asia- the endowments of North Africa, enter the market, to could-affect-climate-goals [Accessed 30.12.2018] use old and new commercial corridors of the world for export and import to avoid EU tariffs and Amsterdam. Creative Industries UK. 2018. PUBLISHING FACTS However, according to the changing trend, that AND FIGURES. [Online] Available from: http:// manufacturing is shifting rapidly to Asia and the role www.thecreativeindustries.co.uk/industries/ of West is changing within this context, the most publishing/publishing-facts-and-figures important task can be, if Pearson Plc develops and [Accessed 29.12.2018] improves their service as fast and well, as possible to CIF, (2018) About us. [Online] Available from: https:// maintaining their world leader position. www.creativeindustriesfederation.com/about [Accessed 27.12.2018]

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36 | Working Paper Series: Volume 5, Issue 1, 2020 37 Key trends in trade of services and goods between the Commonwealth countries

Adam Martin Introduction

Trade linkage between the Commonwealth countries and the UK are strong. Most of the commonwealth countries highly dependent on the UK market for conducting their importing different products such as beef, sugar, fresh vegetables, apparel products and textiles. However, after Brexit, the scenario of UK based trading and investment has been changed due to huge changes in the creative industry and manufacturing sectors. This study is going to determine the key trends of service and goods among the Commonwealth countries. Moreover, this study will also highlight the post-Brexit condition of investment and trade in the creative sectors in the UK. Finally, the study will critically discuss the possible changes as well as opportunities of HSBC Holdings Plc, the London based multinational financial and banking service enterprise, in the post Brexit condition of the creative industry sectors.

38 | Working Paper Series: Volume 5, Issue 1, 2020 39 Key trends in trade of services Figure 2. UK trade balance with Commonwealth Big players in commonwealth trade and goods between the countries, 2015 Commonwealth countries Although there are declined import of UK goods Volume, structure and trend of trade UK trade balance with Commonwealth countires, 2015 and service by Commonwealth countries, UK has several major trading partners and investors in of Commonwealth members Based on the report from Office of National Statics Complete view of world trade Commonwealth nations (Burns and Dewhurst, 2017). (ONS), Commonwealth countries focus on the ways in £ million After the Brexit, the trend, volume and framework to boost trade and investment relationships among 52 Three members of Commonwealth countries such 100,000 of Commonwealth trade have been changed a lot. nations. The exit of Britain from the European Union USA – largest destination as Australia, India and Canada represent the largest for exports, second largest Statistical data from ONS show that combined (EU) provides opportunities to the marketer leaders 90,000 origin for imports economy in the world. exports of entire goods and service of the in eth commonwealth countries to discuss the trade 80,000 Commonwealth countries are increased nearly landscape in the post-Brexit world. As stated by Trade surplus threefold from US$2 trillion to US$4 trillion that Haldorai et al. (2018), commonwealth consists of only 70,000 Figure 3: Commonwealth countries’ total trade accounts for 15% of the entire global export in 2015. a small part of the UK based trade in 2015. The ONS Trade deficit with the UK, 2000-2015 60,000 As stead by Capaldo (2015), during the previous years database shows that nearly 9% of the entire export (1999-2014), Commonwealth countries have shown of UK goes to Commonwealth countries in 2015, as 50,000 Germany – 140 slower trade operations due to the trade barriers compared to the 44% to the EU. Moreover, the ONS largest origin of Total exports 40,000 imports, second 130 imposed indirectly by the EU countries, in which data also shows that EU also holds more than 53% largest destination for exports 120 EU grabbed the major portion UK based import of the entire UK based import against just 7% from 30,000 and export. the Commonwealth countries. 110 20,000 China – third largest 100 For combating the current trade barriers in terms origin of imports 10,000 of operating international business operations, Lower trade levels with 90 Figure 1. UK trade in goods and services $57.3 commonwealth countries million Commonwealth focuses on the full achievement 0 80 with the Commonwealth of Trade facilitation Agreements (TFA), in order 0 70 to get opportunity and liberty to facilitate the 10,000 70,000 50,000 20,000 30,000 90,000 60,000 80,000 40,000

100,000 $57.3 60 easy release as well as clearance of the goods and UK trade in goods and services with the million Total imports service across the customs borders (Brown et Commonwealth, 1999 to 2015 50 Source: Balance of Payments, 2015, ONS al. 2018). Commonwealth Heads of Government 40 Goods Meeting in 2018 has taken the decision to make full 2011 2015 2013 2012

Source: https://www.ons.gov.uk/businessindustry 2010 2014 2001 2007 2002 2003 2005 2009 2006 2008 2000 40,000 2004 implementation of TFA category A and B within the andtrade/internationaltrade/articles/commonwealth five years in order to make the trading relationships 30,000 tradeinfocusasukpreparesforbrexit/2017-03-09 with global business leaders stronger. 20,000 Source: http://thecommonwealth.org/ 10,000 Commonwealth import of UK goods and services sites/default/files/news-items/documents/ For developing trade and investment operation in 0 becomes just doubled in 2010 with £25 billion as BrexitPolicyBrief18112016.PDF poorly developed members of Commonwealth, 2000 2002 2004 2006 2008 2010 2012 2014 compared to £13 billion in 1999 (Commonwealth the government has developed preferential tariff From the database of Commonwealth Secretariat, it is Secretariat, 2015). However, the trends have been system that introduces the liberal rules in terms of seen that Commonwealth-UK trade linkage becomes changed during the 2013-2015 period, due to severe smoothening the export and import relationship of Services strong after Brexit. The total volume of merchandise interference of EU into the into the trade relationships these Commonwealth countries with the other non- 40,000 trade of Commonwealth nations with the UK has between the Commonwealth and UK. ONS database commonwealth countries. 30,000 shows that Commonwealth's import of UK goods and been increased from US$57 billion during 2000 to 20,000 services fell from the £30 billion in 2013 to £25 billion more than US$91 billion during 2015 (Commonwealth Secretariat, 2015). Although the ongoing slowdown 10,000 during 2015. Moreover, due to the falling global trade in the global trade during 20123 affect badly the trade 0 during the recent years, the trend of declining import relationship between Commonwealth and UK, post- 2000 2002 2004 2006 2008 2010 2012 2014 and export by the Commonwealth countries have remained consistent. Brexit condition acts as the catalyst to boost the trade Imports Exports relationship between Commonwealth and UK.

Source: Balance of Payments annual geographical data tables, 2015, ONS

Source: https://www.ons.gov.uk/businessindustry andtrade/internationaltrade/articles/commonwealth tradeinfocusasukpreparesforbrexit/2017-03-09

40 | Working Paper Series: Volume 5, Issue 1, 2020 41 Figure 4. Implementation of the TFA Figure 5. Benefits of tariff preferences Impact of Brexit on the UK Creative Figure 6. Sector’s contribution to the total by Commonwealth Industry Economy in the UK Gross Value Added UK's tariff preferences are worth Recent trading and investment scenarios in the UK 9.5 shows that, during the Brexit negotiations, one of 9.0 €715 million the most UK based sectors has been neglected, the 8.5 to Commonwealth developing countries... Creative sector, that is a fastest growing sector in the UK with lots of investment and trading opportunities. 8.0 ONS database shows that creative sectors account 7.5 for largest contribution into the UK based economy. The production and investment of Creative sector in 7.0 Implementation the UK account for Gross value Added amount of £84 6.5

of the TFA would billion during 2013, that account for at least 5% of the 6.0 reduce trade costs entire GVA in UK based economy. 5.5 worldwide... During the end of 2015, creative sectors in the 5.0 UK account for the 7% of the entire UK based ...this is equivalent 4.5 to 5% of the UK aid employment, as compared to the financial and 4.0 budget manufacturing industry that consists of only 36% $ of the UK based workforce. The creative sector is 3.5 one of the important as well as the fastest growing 2011 2013 2012 1997 1999 1998 2010 2001 2007 2002 2003 2005 2009 2006 2008 2000 sectors in the UK. 2004

Post Brexit condition leads to the reduction of Creative Industry Financial and Insurance Services ...by almost recruitment and employment in UK based creative sector due to lack of creative employee and relevant Source: http://blogs.lse.ac.uk/brexit/2017/02/07/ 17.5% talent. As stated by Ramiah et al. (2017), trading and brexit-will-negatively-impact-the-uk-creative-industry/ investment in the creative industry are associated with the efficiency and intelligence if creative people that attract the investors of overseas market to Source: https://www.odi.org/publications/ Source: https://www.odi.org/publications/ Figure 7. Share of UK employment in UK provide long terms economic support. 10735-10-commonwealth-policy-priorities-trade- 10735-10-commonwealth-policy-priorities-trade- Creative industry and-development and-development 7.5 Post Brexit condition and trading risk 7.0 in UK based creative industry Commonwealth Trade finance for SMEs 6.5 After Brexit, UK based creative sector has to deal with According to Azam and Ahmed (2015), nearly 78% 6.0 quality and cost issues. The ONS database shows of the global trade is facilitated through the insurance 5.5 that UK based marketing and advertising creates only and trade financing. Commonwealth nations focus on £13.3billion GVA, which is 2% lower than the previous 5.0 the increasing number of investors in the global trade years. This is because most of the overseas investors 4.5 landscape, in order to double the fund and profit. focus on strengthen their relationship with EU nations 4.0 A recent statistical report from Commonwealth due to having high quality as well as affordable 3.5 secretariat shows that there is a huge trade financial promotions of their products and services. Moreover, gap (financial demand that is still unmet) between the lack of accessing the EU fund that previously assists 3.0 Commonwealth African trade of US$120 billion and advertising and marketing companies in UK creative

Jun 79 Jun 14 Jun 89 Jun 94 Jun 99 Jun 09 Dec 11 Mar 13 Sep 15 Jun 84 Sep 85 Mar 93 Sep 95 Jun 04 Sep 10 Sep 80 Dec 81 Mar 83 Sep 90 Dec 91 Mar 98 Dec 01 Mar 03 Sep 05 the expected Commonwealth developed African trade industry to make the well-organised promotion of the Dec 86 Mar 88 Dec 96 Sep 00 Dec 06 Mar 08 of US$700 billion. In this aspect, the Commonwealth brand enhances the cost of production in the creative Creative Industry Financial Industry prioritise the development of SMEs acting as catalysts sectors with very rare improvement in the quality. in order to boost the export and growth of the trade According to Baker (2017) trading and export of the Source: http://blogs.lse.ac.uk/brexit/2017/02/07/ and investment. Commonwealth governments have creative service are based on the efficiency if talented brexit-will-negatively-impact-the-uk-creative-industry/ seen the Commonwealth Trade Finance Facility that as well as skilled people who deal with creativity and will back up at least 20% of the trade finance of the innovations. Based on recent Brexit report analysis, member’s nations. it is clear that the UK creative industry suffers from severe skill shortage.

42 | Working Paper Series: Volume 5, Issue 1, 2020 43 Figure 8. The UK Creative Industries Framestore, the Oscar winning creative studio in Expired passport the trade relationship with the other developing and London that works across the different aspects of the developed countries. In the Pre-Brexit condition, the Brexit poses a significant impact on eth UK based creative industries such as medium, music videos, marketers of the creative industry need to take proper Value (GVA*) creative industry due to severe loss of passporting feature film, feature animation, commercials and digital governmental approval from both the EU government The UK Creative Industries 2016 rights of UK. Before Brexit, Framestore was allowed to pictures. After Brexit, the overall creative industry and UK government in terms of operating the business operate its business relationship with the EU countries has faced several challenges in terms of meeting relationship with countries other than the EU countries. without requiring any types of authorisation. During the financial, social and business needs. Framestore There are several legislative obligations that British £91,8bn £10.5m 7.6 % the pre-Brexit conditions, Framestore is allowed to a year an hour increase in value has also experience the different challenges, which Creative industry needs to follow while performing since 2015 perform different operation related to the creative not only affect its overall business strategies but business reaction with the countries other than the EU industry such as recording, filmmaking, and choosing also compel marketers to standardise its service and countries. On the other hand, in Post Brexit condition, destination in the EU countries without paying any UK Creative Industries split 2016 (£m) Change in GVA products. Along with the challenges, there are some UK based Creative industry is no longer obliged to take 2010-2016 additional fees or penalties to EU government. opportunities that the Framestore get being part of permission and approval from the EU government in However, after the Brexit, the scenario the scenario Advertising the British creative industry. The challenges and the terms of conducting any business relationship with the has been changed a lot for the UK based creative opportunities faced by the Framestore. other countries. In this aspect, Framestore has grabbed 12,312 44.8% industry. Now, Framestore is no more allowed the business freedom after the Brexit decision of UK, to shoot the vision and recording into European 3,537 which assists the staffs of this company to extend their 34,704 places without taking prior approval from eth EU IT, Software & Games Design 4,203 Fund transfer into EU countries market space. & Fashion government. Moreover, moist if the places on EU 22.7% Architecture Recent ONS report on creative sector in the UK countries that are proved to be the best film set for Secondly, post-Brexit condition also offers the political, shows that, although Brexit has provided several 421 the shooting are banned for the UK creative sectors. social, legislative and demographic freedom to the 11,622 financial and legal liberties to UK based creative Therefore, post Brexit condition pose huge challenges Publishing Crafts UK based creative industry. During the pre-Brexit 8,237 15,361 sectors, a majority of the economic stock in this on UK based Creative sector. condition, Framestore has faced severe constraints TV & Film sector comes from EU investments (Howarth and and objections by the EU government in terms of Music, Arts & Culture UK CREATIVE Quaglia, 2018). Therefore, during the post-Brexit AVERAGE AVERAGE shoot different video and films in rural villages or the condition, Framestore has faced huge challenges on Shortage of workers suburban areas of London, due to the risk of poor the fund transfer process for conducting the trade GVA= Gross Value Added Before Brexit, British creative industry enjoyed promotional advantage in this rural place. In m terms All data is provisional www.thecreativeindustries.co.uk relation with the EU countries. Moreover, Framestore the huge supply of cheapest labours from eth EU of recording the feature film, production manager has also faced the severe issues in terms of getting countries. Through offering minimum wage, UK needs to choose the destination in rural villages. their due credits and debts from the EU countries for Source: DCMS, November 2017 based creative sector hire the large number if EU Nevertheless, in the pre Brexit stage most it was performing the films shooting and recording inn their labours to works in the film-sets. The reason behind difficult for eth UK based creative companies such countries, therefore, the UK based creative industry as Framestore to shoot the feature film in eth rural Global talent report and Creative Industry Federation the workers working at low wage is that, UK based faced huge challenges in terms of conducting the sites. After Brexit condition, the scenario has been report show that post Brexit condition poses creative directors and produces spend lots of money smooth financial operation with the EU countries. changed with offering lots of political, legislative and severe constraints on the free movement as well in the accommodation, foods and protection of these demographic freedom. Now, Framestore is able to as immigration system for eth EU workers that labours. The selected organisation, Framestore also shoot the films in any suitable places without taking makes UK creative sector unable to access the high has more than 50% of the low-grade workers in the Poor investment any prior approval from the EU government. Moreover, skilled staffs and new talent in EU nations. Report video recording segment, which belongs to the EU the marketers of the UK based creative organisational from the Department for Digital, Culture, Media and One of the most common and long terms affect that countries. However, after the Brexit, EU government are now free from any legislatives obligations and Sport shows that more than 12,000 workers in the UK based creative sectors have experienced is poor set the rules to not offering any mire workers in constraints regarding conducting trade relation with UK‘s performing, visual and music arts come from access to EU investment. Before Brexit, the majority to the British creative industries, which pose huge the other country. EU nations. A recent survey on the 300 creative of the funds and revenue in the creative sectors challenges into this industry. No, Framestore comes from EU investment. However, after Brexit, UK experiences huge shortage of the labours who businesses in the UK shows that, during the pre-Brexit On the contrary Schiereck et al. (2016) argued that, based creative sectors are unable to grab the financial worked in video, recoding and casting departments. condition, more than 75% of the employees in the UK although post Brexit condition has offered financial, assistance from eth EU countries. In this aspect, the Moreover, Framestore also face challenges regarding based creative companies belonged to EU nations. legal and political freedom to British creative sector, different film production and recording companies hiring the local labour at minimum rate which pose in most of the times, UK based creative sectors suffer face severe challenges regarding the financial severe financial risk on this organisation. from huge opinion mismatches and political tantrums service. In case if the Framestore, the marketers huge Challenges and opportunities for within the country that affect the overall financial challenges in getting consistent flow of financial framework. In this aspect, it can be started that along London creative industries post-Brexit investment which in pre Brexit conditional meets Opportunities with the legal, political and financial freedom, the majority of the financial needs of this company. After Although there are huge challenges that the UK Post-Brexit condition also provides the lots of finical Multinational enterprises (MNE) are the key parts of Brexit, Framestore is unable to make any agreement based creative industry has faced after Brexit, British uncertainties, labour shortage and political tantrums the UK base financial industry that is highly affected and financial deal with EU investors, which spoil the creative sectors also grab several opportunities to the creative industries. Framestore has taken by the Brexit decisions. There are several challenges strong economic source of this company. in the post-Brexit condition. The first advantage new approaches in terms of dealing with all these and opportunities for multinational enterprises in the British Creative industry has after the Brexit is challenges that are created after the Brexit decision. the UK after its exit from EU. This study has selected freedom and opportunities in terms of conducting According to Johnston and Buongiorno (2017),

44 | Working Paper Series: Volume 5, Issue 1, 2020 45 Cumming, D.J. and Zahra, S.A., 2016. International Mariotti, S. and Glackin, C. 2015. Entrepreneurship & business and entrepreneurship implications of small business management. Pearson. References Brexit. British Journal of Management, 27(4), Mendez-Parra, M., Willem te Velde, D., and Winters, pp.687-692. L.A., 2016. The impact of the UK's post-Brexit Cumming, D.J. and Zahra, S.A., 2016. International trade policy on development. Overseas business and entrepreneurship implications of Azam, M. and Ahmed, A.M., 2015. Role of human Development Institute: UK Trade Policy Brexit. British Journal of Management, 27(4), capital and foreign direct investment in promoting Observatory. Online at: http://sro.sussex.ac.uk/ pp.687-692. economic growth: evidence from Commonwealth id/eprint/65055/1/ODI%20essay%20series.pdf of Independent States. International Journal of Dhingra, S., & Sampson, T. (2016). Life after Brexit: Parra, M.M. and Rollo, J. 2014. The Trans-Pacific Social Economics, 42(2), pp.98-111. what are the UK’s options outside the European Partnership and Excluded Commonwealth Union? London School of Economics and Political Bachtler, J. and Begg, I., 2018. Beyond Brexit: Reshaping Developing Countries. Science, LSE Library. policies for regional development in Europe. Pollard, J.S. 2018. Brexit and the wider UK economy. Papers in Regional Science, 97(1), pp.151-170. Dhingra, S., Ottaviano, G., Sampson, T. and Van Geoforum. In Press, Corrected Proof, Available Reenen, J., 2016. The impact of Brexit on foreign online 28 February 2018. Ahead-of-print. https:// Baker, L., 2017. The impact of the General Data investment in the UK. BREXIT 2016, 24. Protection Regulation on the banking sector: Data doi.org/10.1016/j.geoforum.2018.02.005 Dhingra, S., G. Ottaviano, T. Sampson and J. Van although there are several economic burden and labour subjects’ rights, conflicts of laws and Brexit. Journal Reenen (2016) ‘The Consequences of Brexit Ramiah, V., Pham, H.N. and Moosa, I. 2017. The sectoral shortage in the creative inductor after the Brexit in of Data Protection & Privacy, 1(2), pp.137-145. for UK Trade and Living Standards’, CEP Brexit effects of Brexit on the British economy: early UK, the creative sector has gain high level of financial, Blackaby, D., 2018. The UK Economy and Brexit. Analysis No. 2 (http://cep.lse.ac.uk/pubs/ evidence from the reaction of the stock market. legislative and political freedom in post Brexit condition In Emerging Markets from a Multidisciplinary download/brexit02.pdf). Applied Economics, 49(26), pp.2508-2514. which is important for expanding the market boundary. Perspective (pp. 37-45). Springer, Cham. Through conducting different FTA agreement, UK Haldorai, A., Ramu, A. and Murugan, S., 2018. Social Sahr, D., Compton, M., Carr, A., Wilkes, G. and based creative sector emphasize on strengthening its Brown, R., Liñares-Zegarra, J.M. and Wilson, J.O., 2018. Aware Cognitive Radio Networks: Effectiveness Behrens, A. 2016. Brexit: what are the options relation with eth global organisations, which will assist What Happens If the Rules Change? The Impact of Social Networks as a Strategic Tool for for the financial services industry? Journal of the marketers to improve their customer base. of Brexit on the Future Strategic Intentions of Organizational Business Management. In Social Investment Compliance, 17(4), pp.45-53. UK SMEs. The Impact of Brexit on the Future Network Analytics for Contemporary Business Sampson, T. 2017. Brexit: the economics of Strategic Intentions of UK SMEs (March 1, 2018). Organizations (pp. 188-202). IGI Global. Conclusions international disintegration. Journal of Economic Buckley, P.J., Munjal, S., Enderwick, P. and Forsans, Howarth, D. and Quaglia, L., 2018. Brexit and the Perspectives, 31(4), pp.163-84. N., 2017. The role of country alliances in reducing battle for financial services. Journal of European Based on the above-discussed aspect following Schiereck, D., Kiesel, F. and Kolaric, S. 2016. Brexit: the transaction costs of internationalisation: public policy, 25(8), pp.1118-1136. recommendation can be made for UK based (Not) another Lehman moment for banks? evidence from Indian multinational enterprises. industries to resolve the post-Brexit issues in terms Johnston, C.M. and Buongiorno, J., 2017. Impact of Finance Research Letters, 19, pp.291-297. of improving the operations and productivity. UK Cambridge Journal of Economics, 41(3), pp.807- Brexit on the forest products industry of the government should put the UK based creative and 828. United Kingdom and the rest of the world. Seid, S.H. 2018. Global regulation of foreign direct financial industries at the centres while analysing Forestry: An International Journal of Forest investment. Routledge. Burns, P. and Dewhurst, J. eds., 2016. Small business the Brexit impact on the multinational organisation. Research, 90(1), pp.47-57. and entrepreneurship. Macmillan International Te Velde, V. 2016. The commonwealth brand: Global It is important that the UK government should Higher Education. HSBC UK (2018), Our unique European presence voice, local action. Routledge. communicate and consult with different industries [Online], Available at: {accessed on 23 March 2018] Watson, D., Yap, S., Pandi, S., Husband, J. and for making possible as well as effective changes investment partnership: European disintegration, Tekelas, F. 2018. BREXIT and the Implications into their framework. UK should conduct proper unemployment and instability. Economia & Kazzazi, F., Pollard, C., Tern, P., Ayuso-Garcia, A., of Food Safety Cultural Compliance in the evaluation and review of eth EU legislation including lavoro, 49(2), pp.35-56. Gillespie, J. and Thomsen, I., 2017. Evaluating the Food Manufacturing Sector. Acta Scientific legislation on the digital market, financial service impact of Brexit on the pharmaceutical industry. Microbiology, 1(4). and fund management to assist different sectors to Commonwealth Secretariat, 2015. Commonwealth Journal of pharmaceutical policy and practice, make any future deal with EU. From the above, it can Trade Review 2015: The Commonwealth 10(1), p.32. Ziv, G., Watson, E., Young, D., Howard, D.C., Larcom, be concluded that Commonwealth nations have a in the Unfolding Global Trade Landscape- S.T. and Tanentzap, A.J. 2018. The potential Kierzenkowski, R., Pain, N., Rusticelli, E. and Zwart, S., strong trade relationship with the UK. Although the Prospects, Priorities, Perspectives (Vol. 2015). impact of Brexit on the energy, water and food 2016. The economic consequences of Brexit. relationship of UK and EU before Brexit affect the Commonwealth Secretariat. nexus in the UK: A fuzzy cognitive mapping trade relations between the UK and Commonwealth Lai, K.P. and Pan, F., 2018. Brexit and shifting approach. Applied Energy, 210, pp.487-498. Crafts, N., 2017. UK Economic Growth Performance in nations, a post-Brexit condition in the UK assists geographies of financial centres in Asia. a European Context: Has EU Membership Made Commonwealth nations to grab the trading Geoforum. In Press, Corrected Proof, Available Much Difference? In The Economics of UK-EU opportunities again into their court. online 12 February 2018. Ahead-of-print. https:// Relations (pp. 9-45). Palgrave Macmillan, Cham. doi.org/10.1016/j.geoforum.2018.02.004

46 | Working Paper Series: Volume 5, Issue 1, 2020 47 UK Creative

Industries, McDougall (2018, p. 549) argues that the Regarding the trade trends, the Commonwealth Commonwealth has a “minor role” in the global countries are trading more “between themselves” politics and its members are in general developing whereas members have lower trading costs -19%- and small countries. India is the “only major power” “when trading with each other” (City of London, Brexit and the and Nigeria and South Africa are also significant within 2018, p. 5). Further, referring to the nature of traded their “regional context”. However, important “middle goods between Commonwealth nations, majority powers” are Canada and Australia, followed by a post- is represented by merchandise goods (76%) and Brexit United Kingdom (McDougall, 2018, p. 549). services (24%) (The Commonwealth, 2015). On the Commonwealth Particularly for the post-Brexit United Kingdom, the other hand, numerous members are trading Commonwealth represents a “new promised land” with non-Commonwealth “advanced countries” due to its “intense web of trade deals” and 13.6% of based on a “unilateral preferential trade offers” the global GDP (Bott, 2018). Moreover, this “club of (The Commonwealth, 2015, p. 41). For example, nations” encapsulates almost one-third (2.4 billion the African Growth and Opportunity Act (AGOA) Claudia Mourescu people) of the global population and its combined and the Caribbean Basin Initiative (CBI) represent GDP achieved US$10tn (£7tn) in 2017, almost equal a basis for trade between African and Caribbean Introduction to China’s GDP which is US$11Trillion (£7.7tn) countries (The Commonwealth, 2015). (BBC, 2018b). In 2016, UK imports from the Commonwealth were Established in 1949, the Commonwealth of Nations However, Bott (2007) suggests that the significant £45.9 billion and UK exports to the Commonwealth encompasses 53 independent countries across six growth of the Commonwealth is due “predominantly” represented £48.5 billion and had a “trade surplus” geographically dispersed continents. Every member is to the India’s performances. Similarly, BBC (2018b) of £2.6billion with a significant focus on trading with considered equal regardless of size or wealth. Documents highlights that India is able to “claim” the number one “Australia, Canada, India, Singapore and South Africa” show that being part of this association is not dependent position and become the biggest Commonwealth (Ward, 2018, p. 3) (Figure 2). However, in present, upon the national economic performance or size, it can economy. Moreover, Bruce (2015) argues that India the European Union represent for the UK the biggest be supported by the significant economic difference will “leapfrog” UK and France and become the fifth source of imports and exports likewise (Ward, 2018) between the top and bottom three Commonwealth global economy as a part of a trend which forecasts and, following Brexit, UK is “hoping to secure some countries. In this article, the aim is to highlight the place Asian economies as dominants of “the top 10 largest international trading partners” (Chambers, 2018). of the Commonwealth taking into consideration two economies over the next 15 years”. major developments across Europe since 2016 – the Brexit referendum and the renewed Commonwealth campaign. In line with this forecast, Commonwealth (2018b) Particular emphasis would be placed upon the impact of indicates several changing dynamics within its internal these on the creative industry in the United Kingdom. trading situation. For instance, the volume of exports of its Asian members is significantly increasing (41.1%) Although the Commonwealth is not a “formal trading bloc” whilst the exports of its developed economies are (The Commonwealth, 2018b, p. 63), for its members, trade “declining over time” (The Commonwealth, 2018b, represent the “lifeblood” in terms of “output, growth, p. 21). Moreover, regarding the Asian export of employment and livelihoods” (The Commonwealth, services intra-Commonwealth, there is a significant 2015, p. 8) based on “important trade advantage” increase in the last decade, from 25% to 39.6% of (The Commonwealth, 2018b, p. 63). In 2013, the combined the total services trade (The Commonwealth, 2015). exports of all 53 members totalised US$3.4 trillion or 14.6% Further, due to developing of numerous member of the global exports (The Commonwealth, 2015). However, countries, the demand for “financial and professional due to the global economic “slowdown”, in 2016 the total services” has increased across Commonwealth and exports of the Commonwealth’s countries declined to the exchange of services exceeded US$200 billion US$3.1 trillion (The Commonwealth, 2018b). (City of London, 2018).

48 | Working Paper Series: Volume 5, Issue 1, 2020 49 Figure 1. Biggest and smallest Commonwealth whereas 49 out of 53 of the Commonwealth countries Figure 3. Countries having data on ICT use of However, the performances of the emerging markets Nations (by GDP) are members of WTO (World Trade Organisation) businesses, by development group, 2003-2016. or economies are not equally. By analysing 71 (The Commonwealth, 2018b), it can be argued that emerging economies, McKinsey (2018, p. 9) found the trade is stable and transparent in respect to that 18 of them have a “rapid, sustained growth”; 3 Biggest three in 2017 (GDP in $bn) Data available | No data international agreements. of this countries – India, Malaysia and Singapore- are Percent of total members of Commonwealth (The Commonwealth, Whereas trade represent “transactions” between 100% 2018c). Overall, the Commonwealth emphasize the actors that are “physically located in different parts” importance of technological innovation, as a key (Collinson et al., 2017, p. 5), additional to the global factor to reduce the unemployment among young trading context, the local factors that can affect thus 80% people (The Commonwealth, 2018b). Although trends should be taken into account. One of these numerous Commonwealth members already adopted factors is represented by an accelerating urbanisation and successfully implemented “transformative 60% process, which is reshaping the business environment technologies”, there are still targets to be achieved and trade opportunities. In present, more than a half and “bridge” “the gender gap in digital connectivity” of the global population is living in towns and cities 40% and employment in ICT sectors (The Commonwealth, (Thia, 2016) and by 2030, this proportion will reach UK INDIA CANADA 2018b, p. 25). 2,496.757 2,454.458 1,600.265 60% (McKinsey, 2013).

20% Less urbanised countries adopt an “intra-country” Smallest three in 2017 (GDP in $bn) trade and will have to produce both “agricultural Brexit and the UK

TUVALU NAURU KIRIBATI and modern goods”, followed by export of 0% 0.036 0.114 0.173 more “differentiated goods” and import more Least developed Developing Transition Developed creative industries countries (LDCs) countries, economics economics Source: BBC (2018b, courtesy of the IMF) “agriculture and commodities” when “production is excluding LDCs agglomerated” (Thia, 2016, p. 854). Whereas 31 out of The Creative Industries represent the Department 53 Commonwealth members are categorised “small” Source: UNCTAD (2018a) for Digital, Culture, Media and Sport (DCMS) sectors Figure 2. UK-Commonwealth trading surpluses countries (McDougall, 2018, p. 547) which depend with the largest number of jobs (2 million or 6.1% of the UK jobs) and from all DCMS jobs, 5.8% are “held in 2016. “crucially” on international trade (The Commonwealth, Particularly, digitisation and automation technologies by EU nationals” (DCMS, 2018a). The sub-sectors 2015, p. 26), it can be argued that this urbanisation could raise “challenges” to some “traditional of the Creative Industries and the correspondent UK-Commonwealth trade surpluses trend will provide significant trade opportunities. development paths” are can increase GDP and employment are illustrated in Figure 4. Goods and services, £ millions Moreover, there are opportunities for numerous productivity (McKinsey, 2018, p. 18). Whereas in the Commonwealth cities to become fluent metropolitan last decades the number of individuals using the areas, especially Asia Pacific region where cities such Australia Internet significantly increased, achieving 51.2% (3.9 as “Jakarta, Manila and Mumbai” have “huge potential Figure 4. Employment in the Creative Industries Singapore billion people) of the global population by the end of […] for future growth in investment volumes” (Feenan, sub-sectors. Canada 2018 (ITU, 2018), the opportunities brought by this 2016). Similarly, “smart cities” from Ghana (Hope Nigeria “digital revolution” also grew in terms of increasing City), Lagos in Nigeria (Eko Atlantic) and Rwanda Advertising & Ghana productivity and per capita global GDP (McKinsey, marketing may represent “sustainable cities” which use ICT to Brunel 2018, p. 18). For developing economies particularly, Architecture “improve quality of life and city services” (Giles, 2018). due to the automation, the productivity was forecast 0 1,000 2,000 3,000 4,000 5,000 Crafts Another factor that can affect “global trade patterns” to increase by 0.8-1.2% by 2030 and digitisation already accounts for “new business models” and Design & designer Source: Adapted after Ward (2018, p. 9) is represented by the Information and communication fashion opening new markets in Kenya and Indonesia technologies (ICT) “through transaction costs on Film, tv, video, radio the supply and demand sides” (Abeliansky and (McKinsey, 2018, p. 18). Moreover, numerous African & photography The global economy is still recovering after the 2008- IT, software & Hilbert, 2017, p. 35) whereas technology, “historically countries “leapfrogging landline telephony to 09 global financial crisis, gaining “some momentum” computer services served” as a critical globalisation’s driver (The mobile connectivity” associated with “enormous (The Commonwealth, 2018b, p. 3) within a volatile Publishing Commonwealth, 2018b, p. 24). Although ICT can developmental gains” (The Commonwealth, 2018b, and complex environment; the uncertainty which p. 24). McKinsey (2018, p. 18) associates these gains Museums, galleries provide trade opportunities for companies and for & libraries have been increased by the recent Brexit and with new jobs which will require “new skills and higher entrepreneurs likewise (Abeliansky and Hilbert, Music, performing & the “ongoing trade war” between US and China visual arts 2017), there is a general lack of data about how educational attainment” compared with actual jobs. (Chambers, 2018) promote short-time thinking and 0 100 200 300 400 500 600 700 800 “companies operate in the digital economy” (as Figure overall is fuelling a volatility, uncertainty, complexity Number of jobs (thousands) 3 illustrates) and this represents an UNCTAD’s active and ambiguity (VUCA) environment. Oppositely, 2011 2012 2013 2014 2015 2016 2017 preoccupation to encourage developing countries to Commonwealth members are “less protectionist” “engage in an international dialogue related to data and the measures applied against other members collection and analysis” (UNCTAD, 2018a). Source: DCMS (2018a, p. 10) are “even fewer harmful” compared to global trends (The Commonwealth, 2018b, p. 24). Moreover,

50 | Working Paper Series: Volume 5, Issue 1, 2020 51 Regarding the contribution to the UK economy, the Whereas 61% of the exported advertising services are Figure 6. Ed Sheeran, the best-selling global Creativity Industries accounts for £101.5billion in for Europe (Advertising Association, 2017) and in line recording artist of 2017 2017, which represent “an increase of 53.1% since with the Brexit concerns, 100 out 150 companies from 2010” (DCMS, 2018b, p. 1). Moreover, the creative the sector highlight that “UK is now a less attractive sectors are in 2018 worth £268 billion, becoming the place to do business” (Creative Industry Federation, “heart” of the UK’s economy (UK Government, 2018). 2018, p. 17). In particular, the access to talent It seems that this sector has a significant impact on represent a higher concern whereas 72% of employed the UK’s economy being an “exporting powerhouse” staff is outside the UK (Advertising Association, 2017). (Creative Industry Federation, 2018, p. 3), a “vital However, regarding the investments decision, there is employing sector” and has an “important place” in “optimism” (Creative Industry Federation, 2018, p. 17) the UK’s politic agenda in the last decades (Lorenz whereas the majority investors within the sector kept and Moutchnik, 2016, p. 245). Therefore, concerning their investment decisions unchanged (Advertising the impact of Brexit – the actual politic turmoil- on Association, 2017). UK’s Creative Industries, form its nine sub-sectors, four will be discussed further as follows: Advertising, Architecture, Fashion and Music. Architecture

The UK Architecture creative sub-sector is a “global Fashion Advertising success story” (Creative Industry Federation, 2018, p. 21) contributing every year with £4.8 billion to The UK design sector (product, graphic and fashion Compared with other creative sub-sectors, the UK economy and a supplementary £1 billion as design) is “the second-largest in the world and the Advertising tend to be more “geographical support for other industries (RIBA, 2017). Moreover, lead¬er in Europe” (Creative Industry Federation, concentrated” whereas it can “thrive in larger cities” the practices of the UK Architecture embrace 2018, p. 47) and an important global fashion hub (Nesta, 2018, p. 22) with interconnected hubs in West pioneering innovation and “futuristic techniques Source: International Federation of the Phonographic (The creative industries, 2018d). Moreover, the sector Midlands and “noticeable hotspots” in North West and technologies” reflected in results that “that Industry (IFPI, 2018a). worth £32 billion (Daily Mail, 2018) and employs of England (Nesta, 2018, p. 21). This clusters or challenge every architectural orthodoxy” (The 177,000 people (Creative Industry Federation, 2018) “hubs of activity” represent communities, which are creative industries, 2018c). In terms of trade, in 2016, from which 6.9% were in 2016 EU nationals (UK The UK music industry exports £2.5billion and its interacting and enhance their creativity whereas British Architecture sub-sector exported £500 million Parliament, 2017). Due to the lack of local “skilled top five markets include Australia, France, Germany, are “more interconnected” (Nesta, 2018, p. 8). worth in value, Europe being its largest market (RIBA, manufacturing talent”, companies recruit skilled Sweden and the United States (Creative Industry With “reputation for creativity and effectiveness” 2017). Furthermore, in 2016, 9.2% of the Architecture workforce from EU from countries such as “Poland, Federation, 2018). However, there are challenges for (The creative industries, 2018a), the UK Advertising sub-sector workforce were from EU nationals (UK Romania and Hungary” (UKFT, 2017, p. 2). Thus, by this creative industry. Parry et al., (2011, p. 320) argue sub-sector is one of the global “top performing Parliament, 2017), representing 1 in 4 architects limiting the free movement of this skilled workforce, that the “rise of music on the internet” generated advertising sectors” (The creative industries, 2018b) (RIBA, 2017). Thus, it can be argued that regarding the consequences on the UK fashion industry can be losses for the recording industry. Similarly, IFPI (2018b, with advertising agencies ranked in top five of the the success of this sector, EU plays a significant role significant. Whereas the EU represent a significant p. 14) suggests that 35% of users do not paid for an best ads in 2018 (Figure 5). in terms of providing talented staff. Moreover, this is destination for 74% of UK design sector exports audio subscription whereas “anything they want to also valid for UK architecture schools, which recruit (Creative Industry Federation, 2018), Brexit created listen to” is already on YouTube. from EU a “significant number of students” (Creative “uncertainty” for UK fashion industry (Daily Mail, Figure 5. Best Ads Ranking for 2018 Industry Federation, 2018, p. 22). Another challenge for the UK music industry 2018. Whereas this industry is very “complex” with is represented by Brexit. Additional to several designing in the UK and “manufacturing abroad” Agency rankings Client rankings As a possible solution to reduce the impact of Brexit opportunities which can arise, such as “renegotiating (Daily Mail, 2018), “currency volatility” represent on the pool of talented EU architects which want existing terms of trade”, Brexit can generated more to work in the UK, post-Brexit visas are planned to a “huge” concern (Porter, 2016). Additionally, by 1 | AMV BBDO, London 1 | Ikea expensive for “musicians and crews to move across returning to the WTO tariffs which are between 10 be granted to architects with “outstanding talent” Europe” (Creative Industry Federation, 2018, p. 50). (Block, 2018). Moreover, whereas 1 in 5 architects and 15% for fashion and textiles, Creative Industry 2 | adam&eveDDB London 2 | Burger King Based on these discussions, it seems that the creative Federation (2018, p. 48) highlights that this will have are “planning to expand abroad” (Creative Industry industry has a consistent impact on the UK economy a “significant impact”. Federation, 2018, p. 21), a mutual recognition of and thus it receives significant attention. Whereas 3 | Wieden & Kennedy, Portland 3 | Nike professional of qualification between UK and EU 45% of the services and 40% of the goods of the represent a priority. Additionally, in the case on a UK’s creative industry exports are going to the EU 4 | BBDO, New York 4 | Volkswagen “No deal” scenario, British Architecture exports can Music (Polianskaya, 2018), the UK Government provided decline by £73 million per year or “15% of the total £20 million “boots” for the industry (Manning, 2018); 5 | Mother, London 5 | Apple exports” (RIBA, 2017, p. 5). In 2016 from top five bestselling artists, there were £14 million will be used within the Creative Careers from the UK (The creative industries, 2018e) and in Programme which aims to encourage “industry 2017 Ed Sheeran (Figure 6), a British singer, was “the experts work with schools and colleges to improve Source: Best ads, 2018 best-selling global recording artist” (IFPI, 2018a). access to jobs” (Manning, 2018).

52 | Working Paper Series: Volume 5, Issue 1, 2020 53 Economic interdependence is defined as the Table 1. Global trade 1990-2016 Challenges and relationships exiting between counties, which are depending on a mutual exchange of goods, and opportunities for UK services (Surugiu and Surugiu, 2015). Moreover, the World trade 1990 (US$billion) 2000 (US$billion) 2010 (US$billion) 2016 (US$billion) interconnection is occurring due to “the specialization Intra-EM trade 322 770 4,332 4,934 Design and Advertising: of countries” which relies on others to produce goods or services which are not created “nationwide” % of EM trade 26% 26% 40% 41% The Case of AMV BBDO (Surugiu and Surugiu, 2015, p. 133). Although this EM trade with DMs 939 2213 6628 7054 index encountered a 5% decrease during 2015 and % of EM trade 74% 74% 60% 59% 2016, for 2017 and 2018 statistics suggest a “less The global trade landscape encounters significant alarming picture” (UNCTAD, 2018b, p.1). Total EM trade 1,261 2,983 10,960 11,987 changes described by Shepherd (2017) as “in flux”, % of global trade 18% 23% 36% 38% “uncertain” and “ambiguous” fuelled by political It can be argued therefore that the trade Total world trade 6,883 12,995 30,486 31,932 events such as Brexit, US’s “departure” from TPP interconnectedness represents an important factor, (Trans-Pacific Partnership) and renegotiating NAFTA which shapes the international trade landscape. (North American Free Trade Agreement) terms. The World Bank Group (2017, p. 3) highlights that Source: Dehn (2017, p. 2) UNCTAD (2018b, p. 1) argues that after a significant among the EMDEs (Emerging Market and Developing or “rebounding” recovery after the financial crisis Economies) commodity exports face lower obstacles Whereas the UK Advertising agencies “regularly” Although Africa’s contribution to the global creative from 2009, the global trade fell “dramatically negative” while commodity importers activities remain compete with the US for “international industry industry is “negligible” (Van Graan, 2014, p. 15) there in 2015 (Figure 7). Moreover, the decline in goods “generally robust”. Moreover, developing economies leadership” (UK Trade & Investment, 2014, p. is significant potential for the creative industries on and services trade from 2015 and 2016 was a are considered to remain the “main driver” of the 8), another challenge faced by AMV BBDO is the African continent such as increasing popularity “reflection” of changes within the “international global growth (UN, 2018, p. 2). Gray (2017) suggests represented by the possibility of losing market of the Nollywood- the Nigerian film industry (Mbonu, integration” and a decline in “economic that Africa and Asia are “experiencing rapid growth” share to other global advertising agencies, especial 2018) and developing advertising industry in Ghana. interdependence” (UNCATD, 2018b, p.1). with EMDEs expecting to grow 4.1% faster than from the US, such as Wieden and Kennedy, In this regard, Now Available Africa a “renowned developed economies. Portland and BBDO New York which occupied in advertising agency in Accra (Ghana)” won at 2018 Figure 7. Global Trade Trends 1998-2018 However, Dehn (2017, p. 1) argues that the intra-EM 2018 the third, respectively, the forth place in the Gong advertising ceremony “four Silvers, three Golds (Emerging Markets) trade is “big and fast-growing” best advertisements top (Best Ads, 2018). Several and the enviable Platinum Gong for Digital” opportunities can be possible. Although the company (Bratt, 2018). 32 20 and it is the “fastest growing segment of global trade” and represent more than 40% “of all EM trade” already has a presence in Africa – e.g. Egypt, Kenya Further, the Commonwealth association aims to (Table 1). The interconnectedness implied by the and Nigeria (BBDO, 2018), opening more offices on create strong relationships between traders and 30 GVCs (Global Value Chains) is reflected in accessing the African continent can be an appropriate strategy 10 investors, “including MSMEs (micro-, small and the knowledge represented by “skilled workers, whereas the African continent “has long been ripe medium-sized enterprises and young entrepreneurs” 28 Forecast universities, research centres or other sources of with talent and cultural riches” (Hruby, 2018). (The Commonwealth, 2018b). Moreover, more African expertise” and therefore can facilitate business Furthermore, in 2017 “much of” Africa experienced MSMEs are including digitisation as part of their 0 collaboration (OECD, 2013, p. 10). For Abbott Mead 26 significant growth (Gray, 2017) with countries such as domestic and international trade activities (UNCTAD, Growth (%) Vickers (AMV), the most creative advertising agency “Côte d’Ivoire, Ethiopia, Kenya, Mali, Rwanda, Senegal, 2018c). Thus, for AMV BBDO this is an opportunity in 2018 (Best Ad, 2018) and the “biggest agency in the and Tanzania” encountering more than 5.4% annual on the African continent to help new and established Trade over global output (%) output global over Trade 24 -10 UK”, as part of BBDO network “which has 289 offices growth rates between 2015 and 2017 (The World businesses by implementing advertising to enhance across 81 countries” (AMV BBDO, 2018), within the Bank, 2017). Whereas Kenya, Rwanda and Tanzania their business performance. Brexit and changing global trade landscape discussed 22 are Commonwealth members (The Commonwealth, above, there are rising several challenges but also -20 2018c) as the UK, it can be argued that AMV BBDO 1998 2002 2006 2010 2014 2018 opportunities too. can expand into these markets due to the free trade Trade over global output Global output Trade AMV BBDO works within the Design and Advertising agreements between members. sector and therefore at AMV BBDO agency, is “labour Source: UNCTAD (2018b, p.1) intensive” whereas every “project is different” (Nesta, 2018, p. 27). Thus, having access to a high skilled workforce is a challenge for the company especially since the Advertising sector has 72% staff outside the UK (Advertising Association, 2017, p. 2).

54 | Working Paper Series: Volume 5, Issue 1, 2020 55 DCMS (2018a) DCMS Sectors Economic Estimates ITU (2018) Measuring the Information Society Report. 2017: Employment. DCMS [online]. Available Volume 1. ITU [online]. Available from: https:// References from: https://assets.publishing.service.gov. www.itu.int/en/ITU-D/Statistics/Documents/ uk/government/uploads/system/uploads/ publications/misr2018/MISR-2018-Vol-1-E.pdf. attachment_data/file/726136/DCMS_Sectors_ [Accessed 18 December 2018]. Economic_Estimates_2017_Employment_FINAL. Lorenz, P.M. and Moutchnik, A, (2016) Corporate Social Abeliansky, A.L. and Hilbert, M. (2017) Digital Bratt, M. (2018) Now Available Africa celebrates pdf. [Accessed 20 December 2018]. technology and international trade: Is it the advertising wins with an agency freestyle. The Responsibility in the UK Creative Industries: quantity of subscriptions or the quality of data media online [online]. 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56 | Working Paper Series: Volume 5, Issue 1, 2020 57 OECD (2013) Interconnected economies: benefiting The Commonwealth (2018b) Commonwealth UK Government (2018) Britain’s creative industries break the £100 from global value chains. OECD [online]. Trade Review 2018. Strengthening the billion barrier. UK Government [online]. Available from: https:// Available from: https://www.oecd.org/sti/ind/ Commonwealth Advantage. Trade, Technology, www.gov.uk/government/news/britains-creative-industries- interconnected-economies-GVCs-synthesis.pdf. Governance. The Commonwealth [online]. break-the-100-billion-barrier. [Accessed 21 December 2018]. [Accessed 28 December 2018]. Available from: http://thecommonwealth.org/ UKFT (2017) Fashion & Textiles after Brexit. UK Fashion & Textiles sites/default/files/inline/Strengthening_the_ Association [online]. Available from: http://textilehouse.co.uk/ Parry, G., Bustinza, O. and Vendrell-Herrero, F. (2011) Commonwealth_9781849291798_UPDF.pdf. wp-content/uploads/UKFT-Brexit-Position-Paper.pdf. [Accessed Servitisation and value co-production in the UK [Accessed 11 December 2018]. music industry: An empirical study of Consumer 22 December 2018]. Attitudes. International Journal of Production The Commonwealth (2018c) Member countries. The UK Parliament (2017) Creative Industries Sector Report. UK Parliament Economics, 135(1), pp.320–332. Commonwealth [online]. Available from: http:// [online]. Available from: https://www.parliament.uk/documents/ thecommonwealth.org/member-countries. commons-committees/Exiting-the-European-Union/17-19/ Polianskaya, A. (2018) What creative businesses [Accessed 18 December 2018]. need to know in case of a no-deal Brexit. Sectoral%20Analyses/10-Creative-Industries-Report.pdf. Design Week [online]. Available from: https:// The creative industries (2018a) Advertising. 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(2015) International The creative industries (2018e) Five reasons to UNCTAD (2018c) Nairobi manifesto on the Digital Economy Trade, Globalization and Economic work with the UK music sector. The creative and Inclusive Development in Africa. UNCTAD [online]. Interdependence between European Countries: industries [online]. Available from: http://www. Available from: https://unctad.org/meetings/en/ Implications for Businesses and Marketing thecreativeindustries.co.uk/industries/music/ SessionalDocuments/Africa-eWeek2018_NairobiManifesto_ Framework. Procedia Economics and Finance, music-why-the-uk. [Accessed 27 December 2018]. en.pdf. [Accessed 29 December 2018]. 32, pp. 131-138. Thia, J.P. (2016) Trade and Urbanisation. The World Van Graan, M. (2014) African Creative Industries: The Sleeping Giant. The Commonwealth (2015) The Commonwealth Economy, 39(6), pp. 853-872. 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58 | Working Paper Series: Volume 5, Issue 1, 2020 59 Brexit and the

The Commonwealth Trade Review (2018) listed The UK already has strong economic ties throughout UK Creative five major findings for the countries of the the Commonwealth and some of its members, Commonwealth. These were; trade between Australia, India and Canada are some of the largest Commonwealth countries, export of goods and economies in the world, whilst others in Africa and Industries services which is projected to rise to 700 billion USD Asia are some of the fastest growing economies in by the year 2020, it is currently at 560 trillion USD the world (ONS, 2015). Figures for 2015 show that the (Ibid). Furthermore, the report found that the global value of goods and services exported to Australia world downturn in trade of both goods and services in 2015 was £8.6 billion and the value of imports has seen the same effect on Commonwealth trading from India for goods and services amounted to £9.5 resulting in the 2016 total commonwealth trade million (Ibid). Although these figures lose some Valerie Small registering a fall to US$3.1Trillion from a high of US$3.5 significance when compared with UK trade and the Trillion, which equates to a decline from 15% to 14.8% European Union, as in 2015 exports to Germany Introduction between 2013 - 2015 (Ibid). Foreign Direct Investment alone was valued £48.5 billion and equated to more (FDI) is in excess of 5 Trillion USD and cumulative than the combined value of exports to Canada, This assignment will give a brief description Greenfield FDI (new physical facilities), the result of Malaysia, Australia, New Zealand and India which of the Commonwealth countries and look at some 10,000 projects, have created 1.4 million job and is was £32.8 billion (Ibid). Intra-commonwealth trade of the key trends in both services and goods worth US$700 billion (Ibid). The connectiveness of the (Fig. 1) shows that although the Global trade share between these. Secondly, it will look at the creative world today elucidates how a downturn in one part of the Commonwealth has seen a decline, intra- industry and its sub-sectors in the UK to assess of the world is seen elsewhere in the world, almost commonwealth trade is seeing a growth of nearly the impact Brexit could have on both trade and immediately, and shows that distance is no longer the 20% (Commonwealth Trade Review, 2018). These investment therein. Before concluding this report main obstacle to trade. figures confirm that there is room for trading with will also look at the Universal Music Group and the Commonwealth after Brexit and expanding The predicted value of goods and services Sotheby’s to evaluate opportunities and challenges the relationship further, but the figures also show to US$700 billion in 2020 between Commonwealth faced by a London Multinational Enterprise after that it will not be a quick fix if there is, following countries (Commonwealth Trade Review, 2018) is, Brexit within a shifting global trade landscape. an agreement, a significant loss of trade with the in part, due to relationships between the countries European Union or trading within the EU becomes There are 53-member countries in the Commonwealth of the Commonwealth and how they work together. more expensive. and they are found in Africa, Asia, Caribbean & the The ease of trading between Commonwealth Americas, Europe and the Pacific. They consist of countries, when compared to the rest of the world, Notwithstanding, trade between the Commonwealth both large and small member countries with the who are exhibiting tendencies towards protectionist countries is predicted to be in excess of 1.5 trillion population of 31 of the smaller countries 1.5 million policies, has been shown to take 20% less time, USD by 2020 (Jeger, 2018). This trend aligns with or less. All commonwealth countries adhere to leading to a reduction in trading costs (Jeger, 2018). the global megatrends, which are being seen, and, the Commonwealth Charter and each country has This relatively open trading model is an advantage in some quarters, being identified as the next super- an equal say in shaping the Commonwealth but for UK when trading with the other Commonwealth cycle, that is a period of high global growth covering there is no trading bloc agreement, as can be seen countries. The developed Commonwealth economies a generation (Dobbs et al, 2016). There is an influx of in the European Union (Commonwealth, 2018). account for over half of all exports from the countries entering the global economy and many of The world today is seeing rapid changes, and the Commonwealth countries and the UK accounts for these are from the emerging economies, including the environment can be described as “VUCA”, that is 25% all exports with Canada accounting for 16% Commonwealth, the urbanisation of people moving volatile, uncertain, complex and ambiguous (Mack of all exports (Commonwealth Trade Review, 2018). away from the countryside and into large cities, and et al, 2016). The UK and the other Commonwealth Asian Commonwealth members account for 41% the rise of the middle class, with spending power countries and their industries will be required to with Sub-Saharan Africa accounting for 4% (Ibid). to match is a megatrend which bodes positive for react in a proactive, timely and effective manner The Caribbean Commonwealth members rely more trade partnerships and collaborations therein (Ibid). if they are to create positive outcomes for trade, heavily on the service industries, which is 70% of The speed of technological advances, as a driver of both in intra-commonwealth trading and worldwide their exports (Ibid). Two thirds of the Commonwealth globalisation is facilitating connectivity, trade and trading. The unpredictability of the world today are the small states, and these have seen their share international business (Ibid). makes it imperative to have strategies in place that of global trade steadily declining (Ibid). The UK help to manage the speed of change with integration, is positioned to foster working relationships with learning, agility and flexibility in order to grow and the smaller states to develop mutually beneficial survive (Groth and Mahon, 2018). trade partnerships.

60 | Working Paper Series: Volume 5, Issue 1, 2020 61 Figure 1. Commonwealth Global Trade Figure 2. Individuals using the Internet 2005 – Figure 3. Number of smartphone users in There will be challenges to overcome, after Brexit, Comparison with Intra-Commonwealth Trade 2017 (Individual Per 100 inhabitants) Nigeria from 2014 to 2019 (in millions) to forge mutually beneficially trade agreements with the Commonwealth, and although technology will play a part, in making distance less of an obstacle, it 30 Relative significance of intra-commonwealth trade 90 cannot be denied that exporting and importing from 79.6 in countries' total trade. 80 our Commonwealth partners could cause issues for 25 1994-2018 (%) the environment insomuch as, transport and the 70 65.9 23.3 long distances, be it, ships or planes damages the 20% 20 60 20.5 ozone layer. Furthermore, much of the emerging 19% 18 economies in the Commonwealth could require 50 43.9 15 projects to update infrastructure, such as roads 18% 15.5 40 13.2 and adequate utilities to foster efficient working 17% 10 conditions. Politically, barriers to entry into the UK 30 11

16% 21.8 millions Smartphone in users and onerous visa requirement could impact cohesive 20 15% 5 collaborations, also.

10 14% 0 0 13% 2014* 2015* 2016* 2017* 2018* 2019* 2011 2017 2015 2013 2012 2016 2010 2014 2006 2008 2005 12% 2009

11% Africa Asia & Pacific Source: Statista (2018) Europe The Americas 10% 1996 2012 1998 2016 1994 2010 2014 2002 2006 2008 2000 2004 Moreover, Africa is one of the fastest growing Brexit Implications on the UK Creative Industry

Share of Commonwealth in global trade continents in its use of technology, with mobile

Share of intra-Commonwealth in Commonwealth total trade technology surpassing landline technology The Creative Industry in the UK consists of music, Additionally, the loss of European employees, if there (Commonwealth, 2018). The widespread use of the film, TV, design, publishing, fashion, arts, culture, is not an acceptable agreement, could also lead to skill Source: Commonwealth Secretariat internet will help to make trading more accessible advertising, games, architecture and craft. In addition shortages, in the industry, which would reflect on the (calculated from UNCTAD Stat data) than ever, with distance becoming a less important to these distinct models, there are also further Industry’s growth continuum (Pickford, 2016). Many factor. Statista (2018) survey of use of mobiles embedded creative sub-sectors, marketing and workers in the creative industry are female and the loss Figure 2 shows the growth of broadband technology in Nigeria predicts that by 2019 there will be 23.3 design, in other industries, such as the manufacturing of workers could equate to a high proportion of women. around the world, and how the number of people million Nigerians will be using smartphones (see industry. (CIC, 2018a). The industry is big and has a The UK Music sector carried out a recent survey in using the internet has grown (Minges, 2015) and Fig. 3 below). The UK is in the best position to take large impact on the UK economy. In 2017, the creative which it found that women represented 49.1% of the Studies (Minges, 2015; Katz, 2009), have surmised that advantage of these trends as they pertain to the industry in the UK accounted for 3.2 million jobs and workforce in 2018 and this was up from 45.3% two broadband use can cause positive effects on GDP, other countries in the Commonwealth, harnessing its was worth £101.5 billion. The latest available figures years previous, in 2016. The survey also showed a rise employment and job creation and for the first time advantage as one of the Commonwealth developed values exports in 2016 at £27 billion. This represents a from 54.6% to 65.3% of young women between the measurement indicates that over 50% of the world economies and making use of its history with the growth of 27.4% in one year (CIC, 2018b). ages of 16 to 24, working in this sector (CIC, 2018c). (51.2%) now use the internet (Sanou, 2018). countries therein. One of the implications of Brexit could be the impact The European workforce in the UK creative industry’s A caveat to the use of technology is the unfortunate on the workforce employed in the UK creative contribution to the UK economy is not insignificant reality that studies have shown that in much of the industry. Overall, in 2015, workers from European and Brexit could be detrimental to the companies developing world, gender inequalities prevails and Union (EU) countries accounted for 9% of the working within this industry, the economy of the women do not have the same access to ICT as the employees in the creative industry, which is 115,000 UK and the long-term buoyancy of the industry. men (Perryman and De Los Arcos, 2016) even though people (House of Commons, 2018). Following the In addition to the loss of skilled workers, the creative evidence indicates that the access by women to ICT referendum, the percentage of EU workers in this industry in the UK, as members of the European Union is an important variable to the enhancement and industry for 2016 is reported as 6.7% (Parliament, (EU), receives funding from Creative Europe (House empowerment of women (Elia and Andrea, 2017). 2017) which could be interpreted as the UK is already of Commons, 2018). Any loss of funding would be seeing members of the EU returning to their country detrimental to the industry. of origin and leaving the UK creative industry. The The sub-sectors within the UK Creative Industry loss of freedom of movement could see the industry submitted evidence to the Government regarding losing many of its European workforce, and with this, their thoughts on the possible impact of Brexit to their the ability to operate internationally, with multi-lingual industry. The British Fashion Council (BFC), a none employees working on behalf of the UK creative profit organization that represents the fashion industry, industry abroad, in local languages helping to create identified the loss of talent is an important concern. and maintain competitive advantage (Ibid).

62 | Working Paper Series: Volume 5, Issue 1, 2020 63 EU workers compliment UK talent and in some 2018). The industry requires assurances that the UK Furthermore, UMG, as well as distributing western companies have been reported to represent up copyright laws would be maintained in a post Brexit music throughout Africa, has signed many new Conclusion to 85% of the workforce (Parliament, 2018). They situation (Ibid). Additionally, all sub-sectors above African artist to its labels and works in collaboration also state that many of the jobs require specific highlighted loss of funding as a major concern (Ibid). with non-UMG artist to display the talents, via all its The creative industry in the UK, consisting of nine skills, which are not currently available within the available platforms, including festivals throughout sub-sectors all have many of the same concerns UK workforce, and would take a number of years of Africa and internationally (UMG, 2018b). A challenge with the uncertainty of Brexit. These include loss of training to acquire (Ibid). Government funding could Post Brexit Evaluation on London MNEs to internationally displaying African artist is the skilled workers, loss of funding and the robustness be made available to train UK workers and working lengthy and costly visa application procedure for of laws protecting infringement of their copyright permits could be made available to EU workers, many of the Western countries, where there is no following Brexit. This report has identified links with As can be seen above the uncertainty of Brexit brings without copious layers of bureaucracy to reduce any guarantee of success. In August 2018, three African the Commonwealth, which could be advantageous many challenges but also opportunities for the UK negative impact of Brexit. bands booked for a UK festival were refused visas in facilitating International Business between the UK creative industries. A multi-national creative company (Hutchinson, 2018) and many have had visas creative industries, and London-based multinationals operating in London could lose market share if there The Royal Institute of Architecture also identified approved after scheduled appearances (Ibid). using the growing trends of urbanisation, growing is a no deal Brexit and the UK Government does that loss of talent would be an issue and informed To trade harmoniously, the visa procedure needs technology use, inter-connectiveness and growing not bring in policies to compensate for the losses. the committee that, at this time, 25% of registered to be overhauled. Coupled with the continuing middle class in the emerging profitability in the Furthermore, emerging multinationals from within architects were from the EU (Parliament, 2018) uncertainties that come with Brexit, UMG continue fast globalisation world. Using UMG, the report has the EU could be left in a better position that the UK Additionally, UK Universities are renown for the quality to look towards many of the emerging economies to shown than they are already operating in some of to capture trade. That said, many MNE’s are already and standard of architectural training around the forge collaborations and trade, as Brexit could result the fastest growing economies in the world today forging their way into the developing counties to world, in-fact, three of the ten top global universities in loss of market share within Europe for UK based and recommends that they forge even deeper trade and there is a rapidly growing economy, which are in the UK, and figures for 2015 show that 47% of MNE’s. There could also be competition from the connections with the emerging economies, whatever has large growing urban communities, with economic applicants for these courses were from the EU (Ibid). emerging economies as the dominance of the West the outcome of Brexit. globalisation leading to growing interconnectedness Not only would there be a loss of qualified architects, in creative industry such as the fashion industry and growing middle class (Collinson et al, 2017). With UK universities could also lose students and, therefore, could be tested. income. Another issue is the uncertainty surrounding effective trade agreements, undertaking international Brexit impinges on current students who are scheduled business outside Europe could be profitable for all A further example of a London MNE is Sotheby’s, the to study abroad (within Europe) in 2019 and are now involved parties. famous London Auctioneers, who have looked to the not sure if they will have to obtain visas or even if emerging economies for growth and has entered the Universal Music Group (UMG), a large MNE with educational visa will be made available. Indian market for new opportunities. Since opening offices around the world and London, are one of the its first auction house in Mumbai Sotheby’s have, in world’s largest music company (UMG, 2018a). As a Employment and education were also concerns November 2018, sold their first multi-million- dollar successful MNE, UMG recognises the opportunities highlighted by the Design Industry (Parliament, 2018). painting for US$2.54 (Cascone, 2018). Proof that the of doing business internationally, within Europe, The creative industry, as a whole, stated that Brexit growing middle class in the emerging economies and expanding globally to include the emerging could lead to a lack of workers with the required have money to spend and are willing to spend on the economies for continued growth. In July 2018 UMG skills to undertake the work and the design industry creative industries. stressed Brexit could lead to even less diversity than announced its strategic expansion into Western there is currently in this sector where male workers Africa, by opening an office in Côte d’Ivoire, allowing account for 78% and 9% of workers in the industrial the company to reach most of the French speaking design is female (Ibid). Brexit could lead to a smaller regions of Western Africa from this base (Ibid) and labour pool to choose from, and less females. Lagos in Nigeria (UMG, 2018b).

The design industry further identified issues which This expansion takes advantage of the changing patents and trademarks. An uncertain Brexit could global landscape in which the emerging economies leave this industry vulnerable to breaches in copyright are becoming more and more urbanised (Dobbs et al, (Parliament, 2018). If agreements do not continue, 2016) with many inhabitants moving away from the the industry stated that current UK laws are not countryside to the big cities. This corresponds with enough and would need to be strengthened to a growing middle class, as moving to urban areas is protect designers (Ibid). Membership of the Hague a means of earning higher wages (Dobbs et al, 2016) Agreement, which allows UK designers to register and these new middle-class citizens have access to their design in the UK, for a single cost, across many the internet, via their smartphones keeping them countries (Gov.UK, 2016) could go some way to reduce connected with the world at large and very able to the impact of Brexit on these matters. Intellectual spend their money on, for instance, streaming music. property rights could also affect the advertising A 2018 report states that Africa is the fastest growing industry as without strong copyright laws throughout continent for technology use (Commonwealth, 2018) Europe the industry could lose funded advertising which is a substantial interconnected, untapped and be put at a competitive disadvantage (Parliament, market with significant potential for market growth.

64 | Working Paper Series: Volume 5, Issue 1, 2020 65 References

Cascone, S. (2018) Amrita Sher-Gil, Known as ‘India’s Dobbs, R., Manyika, J and Woetzel, J. 2016. No Katz, R. 2009. “Estimating Broadband Demand Perryman, L., and De Los Arcos, B. (2016) Open Frida Kahlo,’ Is a Standout at Sotheby’s Inaugural Ordinary Disruption: The Four Global Forces and its economic impact in Latin America”. Education Global Conference Selected Papers. Auction in Mumbai. Art News. [Online] https:// Breaking all the Trends. McKinsey and Company. Presented at the III Conference Acorn- Women’s Empowerment through Openness: news.artnet.com/market/sothebys-india- Perseus Book Group. Philadelphia. Redecom, Mexico City, September 4. [Online] OER, OEP and the Sustainable Development results-1405789 Accessed 8 Jan 2018) http://www.acornredecom.org/presentation/ Goals (pp. 163-180) Volume 8(2) Open Praxis. Elia Elisa, C.A. & Andrea, Q.S. 2017. Globalization, acornredecom2009presentationKatz.pdf ISSN 2304-070X [online] https://openpraxis. CIC (2018a) Creative Industry CIC UK to the Technology and Female Empowerment: Breaking (Accessed 20 December 2018). org/index.php/OpenPraxis/article/view/289 Rights or Connecting Opportunities? Social World. Industries [online] http://www. (Accessed 13 December 2018). thecreativeindustries.co.uk/industries (Accessed Indicators Research, vol. 133, no. 3, pp. 859-877. Mack, O., Khare, A., Krämer, A and Burgartz, T. 2016. 15 December 2018) Managing in a VUCA World. Springer. Cham. Pickford, J. 2016. UK’s Creatives worry Gov.UK (2016). The Intellectual Property Office. UK Switzerland. Brexit will Stunt Performance. FT.Com, accession to the Hague agreement [online] CIC (2018b) Creative Industry CIC UK to the [online] https://search.proquest.com/ https://www.gov.uk/government/consultations/ World. Infographics [online] http://www. Minges, M. (2016). Exploring the relationship between docview/1843399532?accountid=191445 uk-accession-to-the-hague-agreement (Accessed thecreativeindustries.co.uk/resources/ broadband and economic growth (English). (Accessed 16 December 2018). infographics (Accessed 15 December 2018) 29 December 2018). World Development Report background papers. Washington, D.C.: World Bank Group. [Online] Santou, B. 2018. Telecommunication Development CIC (2018c) Creative Industry CIC UK to the World. Groth, O. and Mahon, J. F. (2018) Management http://documents.worldbank.org/curated/ Bureau (BDT) International Telecommunication UK Music Diversity Results [online] https:// Innovation in a VUCA World: Challenges en/178701467988875888/Exploring-the- Union. Measuring the Information Society Report www.ukmusic.org/equality-diversity/uk- and Recommendations, California relationship-between-broadband-and-economic- Volume 1 [online] https://www.itu.int/en/ITU-D/ music-diversity-taskforce-workforce-diversity- Management Review, 61(1), pp. 5–14. doi: growth (Accessed 20 December 2018). Statistics/Documents/publications/misr2018/ 10.1177/0008125618805111. survey-2016/ (Accessed 15 December 2018) MISR-2018-Vol-1-E.pdf (Accessed 20 December Office of National Statistics (2015) Commonwealth Cocco, F (2018). Highest fertility rates in Europe still House of Commons Digital (2018), Culture, Media and 2018). trade in focus as UK prepares for Brexit below ‘replenishment level. The Financial Times Sport Committee The potential impact of Brexit [online] https://www.ons.gov.uk/ Statista (2018). The Statistics Portal. Number of [online] https://www.ft.com/content/d54e4fe8- on the creative industries, tourism and the digital businessindustryandtrade/internationaltrade/ smartphone users in Nigeria from 2014 to 2019 3269-11e8-b5bf-23cb17fd1498 (Accessed 21 single market. Second Report of Session 2017–19 articles/commonwealthtradeinfocusasuk in millions. [Online] https://www.statista.com/ December 2018) printed [online] https://publications.parliament. preparesforbrexit/2017-03-09 (Accessed 13 statistics/467187/forecast-of-smartphone-users- uk/pa/cm201719/cmselect/cmcumeds/365/365. December 2018). in-nigeria/ (Accessed 14 December 2018). Collinson, S. Narula, R and Rugman, A. (2017) pdf (Accessed 16 December 2018). International Business. Harlow: Pearson Parliament (2017). Creative Industry Sector Report. UMG (2018a) Universal Music Group. Universal Music Education Limited. Hutchinson, K. 2018. What the Womad visa fiasco House of Commons Committee on exiting the Group to expand strategic Operations within tells us about live music in Brexit Britain. The European Union [online] https://www.parliament. Africa [online] https://www.universalmusic. Commonwealth (2018) The Commonwealth. Member Guardian [online] https://www.theguardian.com/ uk/documents/commons-committees/ com/universal-music-group-expand-strategic- Countries [online] http://thecommonwealth.org/ global/2018/aug/02/womad-visa-fiasco-brexit- Exiting-the-European-Union/17-19/Sectoral%20 operations-within-africa/ Accessed 8 January member-countries (Accessed on 13 December britain-live-music-festival (Accessed 8 January Analyses/10-Creative-Industries-Report.pdf 2019). 2018) 2019). (Accessed 21 December 2018) UMG (2018b) Universal Music Group. Universal Music Commonwealth Trade Review (2018) Strengthening Jeger, N. 2018. The Commonwealth: Commonwealth Parliament (2018). Written Evidence Submitted by Group to launch Strategic Division Nigeria the Commonwealth Advantage: Trade, adopts forward-looking Connectivity British Fashion Council (IOB0065). House of [online] https://www.universalmusic.com/ Technology, Governance DOI:https://doi. Agenda for Trade and Investment [online] Commons Digital, Culture, Media and Sport universal-music-group-launch-strategic-division- org/10.14217/fab35c83-en [online] https://read. http://thecommonwealth.org/media/news/ Committee: The potential impact of Brexit on nigeria/ (Accessed 8 January 2019). thecommonwealth-ilibrary.org/commonwealth/ commonwealth-adopts-forward-looking- the creative industries, tourism and the digital economics/commonwealth-trade-review-2018_ connectivity-agenda-trade-and-investment single market. [Online] http://data.parliament. fab35c83-en#page21 (Accessed on 13 December (Accessed on 13 December 2018). 2018). uk/writtenevidence/committeeevidence.svc/ evidencedocument/culture-media-and-sport- committee/impact-of-brexit/written/42275.html (Accessed 21 December 2018).

66 | Working Paper Series: Volume 5, Issue 1, 2020 67 Post-Brexit Creative industries in a changing Global Trade Landscape

Patrick Eworetshabor Introduction

The commonwealth countries are made of 53 countries of both small and large spreading across the continent from Africa, Asia, the Americas, Europe and the Pacific who share the same values and principles as stated in the commonwealth charter. The leaders at the Commonwealth Head of Government Meeting (CHOGM) decided to create six-point plan to connect and boost trade and Investment links among member countries. Due to the recognition of how important and powerful international trade is to achieve both economic and social development hence it encourages all member states to join the global trade association. The Commonwealth is a voluntary association and not a trading bloc yet trade between members are on the increase and projected to reach US$1 trillion by 2020 rising to US$2.75 trillion by 2030 (Thecommonwealth.org). The Commonwealth also focus on empowering women and youth in business activities. Brexit will affect both human and businesses in the UK especially in creative industries, which may lead to restrictions on EU workforce, and some businesses moving away from UK therefore creating challenges and some opportunities for Multinational Enterprise (MNE) and Small and Medium Enterprise (SME).

68 | Working Paper Series: Volume 5, Issue 1, 2020 69 Figure 1. Intra-Commonwealth Trade in Goods economic growth projected to reach US$1.4trillion Trade in the Commonwealth & Services 1995-2020 (US$billion) by 2020, most of which are held in developed countries with Australia, Canada, Singapore and The 53 commonwealth members export of goods Brexit will signal less purchasing power for less 1200 the UK and their investors. India and South Africa and services are valued at US$3.4 trillion in 2013 developed members due to weakness of the pounds have their FDI in various countries with Nigeria about 15% of which comes from developed members affecting importation of goods and services from 1000 and Mauritius benefitting more. states however, other members have grown from reduced earning and exports, reduced remittance 1,009 36% to 50% since 2000, a trend driven mainly by by diaspora community in the UK, trend in trade 800 Globalization with Asian members being significant and services would also be affected should Brexit Figure 2. Intra-Commonwealth FDI flows in the world economy creating opportunities for all result in lower economic growth which may affect 687 & stocks members (Commonwealth Trade Review, 2015). importation of goods and services from developing 600 592 commonwealth members. (www.thecommonwealth. The commonwealth is seen as a potential trade 519 Intra-commonwealth FDI flows org). The emergence of the south is reflected in the 400 partners. It is observed that trading with bloc export and import between commonwealth countries 372 2001–2012 ($ billion) of countries would be easier than trading on a and their involvement in Regional Trade Arrangement 200 90 global level but the “developing countries must be with non-commonwealth advanced nations for 201 strongly considered for benefit in a more inclusive, 133 example, Africa and Caribbean trade with USA, China 80 participatory and development-friendly”. The 0 have also given some commonwealth countries 1995 2000 2005 2010 2013 2015 2020f commonwealth has the potential to push to the access to market opportunities being a major trading 70 fore of International Business with other nations. Source: Commonwealth Secretariat (calculations using data from UNTAD Stat) partner with most commonwealth nations noticeable 60 The trend in trade and services, identify issues in the fast-developing nation like India. affecting economic sustainability and encourage Source: commonwealth trade review, 2015 50 the participation of women and youth in business activities breaking gender barriers to allow Growth in export goods have increased extensively 40 participation in international trade and give the Intra-commonwealth trade in goods between commonwealth countries, 47 of the 53 30 youth access to meaningful opportunities. Trade and members have grown over 5% since 2000 some of Trade between commonwealth countries was about services between commonwealth members had seen these state have grown to double figures by 2013. 20 rapid development through globalisation and inter US$139 billion in 2013 according to the last bilateral connectedness (Commonwealth Biennial Report, service trade data which has been estimated at 10 2018). The developed member state account for US$162 billion in 2015 (Commonwealth Trade Review, Intra commonwealth trade in Services 0 half of commonwealth export however, developing 2015). The dominance of Asia and emerging African 2011 2012 2010 2001 2007 2002 2003 2005 2009 2006 2008 members are fuelling the rise in intra commonwealth 2004 members’ trade contributions has also increased Service trade within the Commonwealth is supported trade in goods with Singapore 22%, Malaysia, 16% Source: Commonwealth Secretariat (calculations using data from UNTAD Stat) since 2009. mainly by five members accounting for 80% of and India with 14%. Asia accounted for 46% intra the trade they are, UK with 32%, Singapore, 17% The aims of the commonwealth could be hindered by commonwealth import of goods with India being the India, 12% Australia, 11% and Canada with 9%. The different issues associated with volatility, uncertainty, highest with 15.2% followed by Singapore 14.8% and commonwealth is also active in the global service Major locations of intra-commonwealth FDI stocks complexity and ambiguity (VUCA) in some members’ UK with 14% as shown in Figures 1 and 2. trade with its top ten countries involvement. India 2012 (% share) state, which must be carefully negotiated to achieve is the major importer and exporter of service trade its growth objectives (CHOGM 2015). The unstable between commonwealth countries Brunei and Nigeria United Kingdom political situation, wars and terrorist activities in are also active in-service trade import (Shingal and some members states are volatile limiting trade 29% Razzaque, 2015). and services. Uncertain economic situation such as Australia the one created by Brexit in the UK limit business opportunities for the commonwealth because many 19% developing members depend on the UK for their Intra commonwealth Investment export goods. Intra commonwealth trade with UK is Singapore strong but will become complex after Brexit because, Intra commonwealth Foreign Direct Investment 10% both UK and the EU are important exporter of about (FDI) has increased since the last decade according 16% to all commonwealth developing countries to UNCTAD’s bilateral FDI data from US$10 billion Source: commonwealth trade review, 2015 rising from $57 billion in 2000 to US$91 billion in 2015 in 2002 to US$65 billion in 2012 reaching the peak (thecommonwealth.org). UK alone import about 18% of US$80 billion in 2007 with more inflow into of developing members goods to the EU and to the member countries. This trend will increase intra world and almost all of Canada’s goods such as gold. commonwealth stock in relevance to the global (www.thecommonwealth.org).

70 | Working Paper Series: Volume 5, Issue 1, 2020 71 Figure 3. UK Creative Industries Service Exports collaborative cultural events and literacy translation (2016 £m) of which local museums are beneficiaries as a source of existing potential income. It also gave €40 million

Exports (services) to audio visual sector for media to support UK film, UK Creative Industries Exports 2016 television and video games. European Structural and Investment Fund (ERDF and ESF) allocated €108 billion to creative industries related projects in the £27bn 11% +27.4 % UK for 2014 to 2020. Withdrawal of these funds will value of service percentage of total year on year change impact on creative industries and UK economy. The exports a year UK services exports 2016-2015 Horizon 2000 programme which is the instrument for EU funding for transitional collaborative research and innovation funded different initiative in academic and Music & Arts £1,119 business commercialisations will be feel the impact of Film & TV £6,523 (parliament.uk).

IT, Software & Games £12,969 State Aid Design & Fashion £380 Publishing £2,317 The UK is restricted by state aid rule to provide Remittance flow between The Impact of Brexit support to commercial undertaking including creative Architecture Commonwealth Advertising £3,271 £461 industries sector this led the sector gets its tax relief Brexit will affect both human and businesses alike from EU state aid rules channelled towards cultural The diaspora connection among commonwealth causing some creative industries move away from the works. Trade and Investment will be affected when EU countries create a link for trade and investment UK. Creative industries according to UK government funding and state aid rules is suspended resulting in supporting remittance flow being one of the main are “those industries that have their origin in Source: DCMS (July 2018) moving products which are in demand to developing sources of external financier of developing countries individual creativity, skills and talents with the economies across Asia, Africa and Latin America potential for wealth and job creation (Demertzis and amounting to US$436 billion in 2014 bigger than Trade as well as in developed countries across EU and official developing assistance. According to World Matera, 2017) through the generation and exploitation America as encouraged by urbanisation and rising in Brexit poses a threat to London creative economy Bank, data Intra commonwealth remittance was of intellectual property” (IP) (parliament.uk). industrialised cities due to the emergence of middle that has prospered on diversity and free movement US$45 billion in 2014, UK being the largest sending The sector comprises of nine sub sectors: class with disposable income. (parliament.uk) of talent in the single market and international supply countries followed by India, Canada and Australia Advertising and marketing chains. (Campbell, 2017) The impact on trade in UK accounting for 75% of total intra commonwealth creative industries will be felt in its service export of Intellectual Property remittance in 2014. Architecture which 9.4 percent to the EU, and its exported £1.4 The importance of human contribution cannot be Craft billion worth of goods, representing 5.2 percent of UK neglected in the creative industries, the current UK total of goods export. Music, performing and visual Intellectual Property (IP) is a mixture of EU/EEA and Drivers of Trade and Investment within Design: products, graphic and fashion design art, craft and publishing being the highest exporter in international regulations, which focus on creating. IP the industries will be affected. (parliament.uk) Commonwealth Film, TV, video, radio and photography rights such as EU- wide registered trademarks and design, which would not have existed. Harmonising Commonwealth do not use policy instrument to IT, software and computer services EU Funding rules that incorporate Trademark and Design Rules promote trade flows between members instead it is into EU laws in that regard. Many EU directives about Museums, galleries and libraries The creative industries in the UK are funded by as negotiated by individual member state as they wish copyright framework that have been incorporated into different EU funding stream such as Creative Europe, to commit to other markets be it regional, multilateral UK law according to international treaties like Berne Music, performing and visual arts European Regional Development Fund (ERDF) or bilateral which may involve non-member countries Convention, The Rome Convention and World Trade European Social Fund (ESF) and Horizon 2020. The because many countries are emerging as economic Publishing Organization Agreement on Trade-Related Aspect of impact of Brexit will be felt more in this industries power in trade for example, Japan, the EU have been Intellectual Property Rights (TRIPS). Brexit is set to They are made up of Small and Medium Enterprise particularly SME outside of London when Brexit recently joined by China and the sparsely geographical exclude UK creative industries from these rights and (SME) majority of which are less than five employees will cause withdrawal of all funding. According to location of some members from the five major conventions. (parliament.uk) according to 2014 recording, about 250,000 enterprise creative Europe Desk UK data between 2014 and markets. (Milner, 2008). When two commonwealth in the UK are SME. The UK export services in creative 2016, 283 UK cultural and creative organisations and countries engage in trade their bilateral trade in goods industries rose by 27.4 percent reaching £27 billion individual companies as well as cinema distribution EU Laws and services are about 10 and 42 percent higher and in 2016 close to the predicted amount of £31 billion of 115 films in other European countries that are The UK will not benefit when EU finally removes the Foreign Direct Investment (FDI) up by 10% therefore by 2020 (UK growth strategy for international data). supported with grant totalling £57 million will be Digital Trade Barriers from its digital single strategy boosting intra commonwealth by 20% (Shingal and Creative industries in the UK account for 1 in 8 affected by Brexit. Funding from Europe culture across member nation as a result of Brexit, removing Razzaque, 2015). businesses and 121 inward investment in the UK in and sub programmes granted €15 million to the UK these barrier permits any sector in creative industry to 2017-2018. cultural, creative and heritage organisation to support practice its profession in any member state which will

72 | Working Paper Series: Volume 5, Issue 1, 2020 73 impact on trade and investment, it will make it easier Multinational businesses are firms that engages in and cheaper for companies to trade freely within EEA, value added international activities that has partners increase competition and productivity in European or affiliates in more than one country which could markets and support the movement of skilled move business to other European cities after Brexit to professionals in MRPQD, recognising qualifications remain in European single market where skilled and in a regulated profession granted in a member state unskilled workforce can be hired cheaply and where across Europe. Brexit will also impact Artists Resale tariffs and taxation are lower. One of the challenges Rights incorporated into UK laws in 2006, which is highlighted by business leaders on the risk of entitle artists a royalty of their work when they are slashing immigration from EU by 80 percent after resold. (Parliament.uk.org) Brexit, may devastate hospitality sector and other creative industries causing a damage to UK economy EU workers according to Kate Nicholls, “Post Brexit should be opened to talents not close” (O’Carroll, 2018). The impact of Brexit on trade creative industries in Salary threshold of £30,000 set by the government UK will affect the 6.7 percent of EU nationals working is another challenge faced by MNE, which had been in the sector by restricting movement between UK advised to be lowered after Brexit to London living and other EU countries will have effect on skill and wage of £20,155 to welcome workforce of diverse the quality of commercial exchange (Newbigin, 2017) skills, otherwise businesses will relocate to other approximately the total number of EU workforce in cities in Europe and urbanised developing countries. creative industries increased by 14 percent in 2016. (Parliament paper). The UK hospitality sector rely on Other challenges facing MNE in London after Brexit EU citizens requiring about 62,000 per year to run is that creative industries is mostly made up of its activities but the impact of Brexit will make this SME which are often patronised by MNE through difficult to achieve. outsourcing, MNE is facing challenges in this regard should some of these SME move away from London In terms of opportunities, London is a global city of advanced services and knowledge intensive sector Travel and Tourism after Brexit as they often operate in their local market excellence with economic capabilities, which may be despite its higher cost as a city it still accommodates because they are not a big player in Foreign Direct encouraged to develop its innovation opportunities skilled employees around similar suppliers to increase The travel and tourism sector has expressed concern Investment FDI as much as MNE despite this limitation for solutions after Brexit. Devolution of power and productivities this is an “agglomeration effect” about the impact of Brexit on talent retention as its Small and Medium Enterprise still operate globally. resources is important for London to continue to creating a learning opportunities, attract and retain workforce are mostly EU citizens Travel and tourism The £130 billion a year hospitality, agricultural, and attract MNE and migrants for its creative industries staff for creative industries after Brexit (Brown and being the 4th largest industry in the UK is supported healthcare sectors who rely heavily on foreign workers to function in a changing global landscape and Bosetti, 2017). by single aviation market which will be affected should from EU will be adversely affected after Brexit and have access to talent and diverse workforce in the it be a No Deal Brexit. Impacts of Brexit will also be London remains one of the leading global centre for may lead to business closure and reduce talent pool sectors (Brown and Bosetti, 2017) and to develop felt in the telecommunications industries where there research and learning with about 400,000 students in some sectors. According to the Office of National UK workforce and diverse workers from other global are possibilities of price hike for UK citizens using across its universities and other educational institute Statistics, the number of EU citizens moving to the cities through outsourcing, offshoring or multinational their mobile phones on the continent after Brexit raising over £7 billion the Crick institute in Kings UK for employment had fallen to a six-year low since multiple visa for skilled workers to enhance London (Parliament.uk). Cross is a potential biomedical laboratory in Europe Brexit many MNE find it difficult to recruit and train businesses commercial success as London relies with capacity to employ about 1,000 scientists. With staff due to uncertainties surrounding Brexit causing on MNE and multicultural teams to market British different MNEs across London, the city infrastructure a skill shortages of 4.2 million by 2024 resulting in £90 products around the world.(parliament.uk). Some will continue to create opportunities for innovation Challenges and Opportunities for billion in economic output. (local.gov.uk). MNE may relocate, others may expand, and many such as the growth of “Fintech” which continue to may choose to remain in London being a link to global London-based creative industries support creative industries attracting talent through Most MNE in London’s creative industries sectors trade. When creative industries move away from its export sectors and higher education with UCL and will face challenges in the changing global landscape London after Brexit they still have chances of trading There is a lot of uncertainty surrounding Multinational Imperial College rated among top ten universities for example, the music and entertainment sector in the capital either directly by franchising or licensing Enterprise (MNE) in London creative industries in the world. ‘The Silicon Roundabout’ London has where London had once led in discovering talent faces and strategically going into partnership and alliance after Brexit that may have possible challenges become the largest technology centre with about challenges inviting entertainers into the country by or by joint venture or indirectly by exporting to MNE in and opportunities within a global trade landscape. 40,000 businesses, the city is considered the best visa restrictions to artists thereby affecting organisers London through domestic intermediary or suppliers. The government should therefore set up a plan businesses, (Hutchinson, 2019). They have already environment for digital startups in Europe this is for the future and regulatory environment for the moved into emerging market in Africa an example London is leading city in Europe in international boosted when google set up a new headquarters with industries in the UK to benefit both the industries is the Universal Music Group, a global MNE who is business with improved infrastructure as globalisation 7,000 staff capacity in London Old Street in November and consumers interest post Brexit because the leading in music-based entertainment with diverse driver. London is a leading innovation city in 2017. London will continue to create opportunities in interdependence of these multinational enterprise business engagement in over 60 countries affecting education, business, finance, tech and the creative creative industries because of the considerable rise partly relies on political stability and policies to what London generate from creative industries. industries more than one fifths on MNE have their in MNE from emerging markets such as China, which create an appropriate environment for businesses global or regional headquarters in the capital, sees opportunities for its MNE at international level in to prosper. (Campbell, 2017). London is a preferred city of London after Brexit.

74 | Working Paper Series: Volume 5, Issue 1, 2020 75 Conclusion

The Commonwealth Head of Government created a six-point plan to connect members to a global Trade and Services Investment to improve their FDI and achieve a sustainable social development, empowering women and reduce youth unemployment. The UK government should relax its immigration rules to allow free movement of EU citizen and skilled professionals around the globe on whom creative industries relies for talents. The MNE will continue to operate from London through partnership and franchising because London presents a good opportunity through its infrastructure and innovation centres however, the Government should have a contingency plan should it be No Deal Brexit.

References

Brown, R and Bosetti, N (2017) Open City: London Hutchinson, K (The Guardian, 2 August, 2018) What after Brexit. Published by Centre for London. the WOMAD fiasco tells us about the live music in Britain. https://www.theguardian.com/ Campbell, T. (Jan 2017) Can post-Brexit London global/2018/aug/02/womad-visa-fiasco-brexit- survive as Europe Cultural and Financial Capital: britain-live-music-festival The Guardian. Intra-Commonwealth Trade: emerging dynamics Commonwealth adopt forward-looking Connectivity, and opportunities: The Commonwealth in the Agenda for Trade and Investment- April 2018 Unfolding Global landscape. Commonwealth www.thecommonwealth.org Trade Review 2015.

Commonwealth Biennial Report 2018. Kharas, H. The unprecedented expansion of global www.thecommonwealth.org middle class: An update global working papers: Demertzis, M and Marita, F (2017) Brexit and its likely Brookings.edu impact on Creative Industries LSE Business Livingston, S. (7 June 2017) How does Brexit affect Review- LSE blogs. Tourism. The Travel Magazine. Retrieved from: Dobbs et al (2016) URBAN WORLD: The Global https://www.thetravelmagazine.net/how-is- Consumers to watch. McKinsey Global Institute. brexit-affecting-the-uk-tourism.html

House of Commons. The Potential Impact of Brexit Mateos-Garcia-Garcia et al (2018) Creative economy on Creative Industries, Tourism and Digital and Culture. Creative Nation www.nesta.com single market: Digital Culture Media and Sport Newbigin, J. (January 2017) The Response of the Arts Committee. Second Report of session 2017-2019 and Creative industries in the UK to Brexit. printed January 2018 O’Carroll, L. (2018) Businesses leaders warned against plan to slash immigration to UK: The Guardian.

76 | Working Paper Series: Volume 5, Issue 1, 2020 77 The Commonwealth in Post-Brexit

Lily Bruneau Introduction

The first part of the report identifies the key trends in trade of goods and services between Commonwealth countries to understand what the outcomes of trading with each other are. The second part is about the creative industries sector in the UK and their impact on trade and investment due to Brexit. Finally, the last part will focus on a particular multinational enterprise based in London and part of the creative industries sector in a post-Brexit environment. The idea is to evaluate the potential challenges and opportunities in a context of a changing global trade landscape.

The Commonwealth Nations includes 53 country members with a trade advantage, which allows its member to trade with each other freely without a need of collaboration (The Commonwealth, 2018). According to the Commonwealth trade review (2015), the countries members’ trade on average 20% more and generate 10% more investment between each other rather than with non-member countries. In addition, if two countries members of the commonwealth are trading with each other, their trade costs will be 19% lower (The Commonwealth, 2018).

The World Trade Organization has proposed the implementation of a trade facilitation agreement, countries which confirmed the implementation have the opportunity to reduce trade costs to an average of 17,5% lower (Mendez-Parra, et al., 2017). In fact, the world of today is in a changing global trade landscape, which will clearly have consequences on both developed and developing countries (The Commonwealth, 2015). Additionally, the Commonwealth trade review (2018) indicates that the combination of those countries is strengthening their trade advantage in two ways. The first one is the application of new technologies to provide more connectivity with each other to trigger new trade and investment opportunities and this is called digitisation (The Commonwealth, 2018). For instance, a universal broadband digitisation could add up one trillion dollars to the GDP of the Commonwealth. The second one is the reinforcement of laws and policies within the member countries to allow them to trade in a cost-efficient manner (The Commonwealth, 2018).

78 | Working Paper Series: Volume 5, Issue 1, 2020 79 Figure 1. UK Trade with the Commonwealth Global internet connectivity 2016 Impact of Brexit and technologies on investment in the UK trade with the Commonwealth compared, 2016 According to a report from the Commonwealth Policies within Commonwealth Goods and services (£ millions) UK creative industries (2018), technology is a key driver for sustainable countries 350,000 development across member countries. In addition, sector the same report mentioned the fact that the cost 300,000 of implementing technologies within developing The developed countries must ensure that the 250,000 The United Kingdom is a significant trade partner countries is dropping every year by over 10% making it development of skills and capabilities from the population are taking part in the least developed within the Commonwealth countries and individual accessible to the poorest states (The Commonwealth, 200,000 members has been trading with the UK through EU 2018). Technology enable the development of countries (Mendez-Parra, et al., 2017). This is helping 150,000 policies for a long time (The Commonwealth, 2016). productivity, competitiveness, growth and exports to facilitate trade of goods and services and engage However, this part of the report will assess the impact between Commonwealth countries, which maximize with skilled human capital. The way they can achieve 100,000 of Brexit on the creative industries sector in the UK in their potential for sustainable development it is by encouraging young graduated to engage in 50,000 terms of trade and investment. This industry includes (The Commonwealth, 2018). international exchange programmes through the Commonwealth Enterprise and Investment Council 0 nine sub-sectors but will be analysed through four The implementation of such technologies could (Mendez-Parra, et al., 2017). segments to illustrate the main impacts due to Brexit. -50,000 improve the quality of trade of goods and services The creative industries are well known within the UK between smaller and bigger states within the The Intra-Commonwealth trade are the advantages -100,000 and require a free movement of people to retain the Commonwealth area (The Commonwealth, 2018). that Commonwealth member states are benefiting best talent around European countries (CIC, 2018). from the political association of those 53 countries -150,000 However, according to a report from the International EU Non-EU Commonwealth The creative industry federation released a guidance Telecommunications Union (ITU, 2018), there are still (The Commonwealth, 2016). They are sharing similar report to advice businesses within these sectors to be Exports Imports Balance 3.7 billion of the world’s population which currently legal systems, common financial systems and the prepared and avoid as many disruptions as possible remain unconnected. Their strategy is based on English language. The fact that the global trade (Creative Industries Federation, 2016). According to improving infrastructure, investment, innovation landscape is changing encourage companies from Source: Office for National Statistics (2018) BBC’s article (2018), this particular industry is part and inclusivity for developing and least developed member states to collaborate with each other in of the UK’s fastest growing sector and the biggest According to the Office of National Statistics countries in order to create a global connectivity order to sustain the growth of the Commonwealth concern is on the free movement of people with an (2018), the UK trading with Commonwealth countries (ITU, 2018). Indeed, the increasing digital connectivity (The Commonwealth, 2018). According to an article impact on finding talented workforce. In fact, the represent 9% compared to 47% with the EU. allows a stronger relationship across members from the commonwealth’s website (2016), the trade statistics from the Mayor’s Brexit report mentioned The reason is that Commonwealth countries does to provide a better capacity to trade goods and between Commonwealth countries has grown from that 27,000 creative jobs in the UK are under threat not form a trading bloc compared to the EU (Office services between Commonwealth countries (The US$200 billion in 2010 to US$600 billion in 2016 with due to a potential loss of £3.3 billion in this sector for National Statistics, 2018). This shows challenges Commonwealth, 2018). This is due to the access of a forecast to go beyond US$1 trillion by 2020. The (Mayor of London, 2018). Also, if the UK fails to for the UK to establish a single relationship with the online social media and the opportunity to enter increase in trade of goods and services is relatively negotiate a deal to provide full access to the Single other 52 member States (Financial Times, 2018). marketing platforms, which facilitates interactions important which means that intra-Commonwealth Market and Customs Union, the UK economy will be However, they could consider some negotiations towards a continuous changing global trade trade is conducted efficiently between members affected with 2.1% lower Gross Value Added by 2030. with other members states to conduct bi-lateral landscape (The Commonwealth, 2018). In emerging (The Commonwealth, 2016). This is due to 42% of creative services, which are agreements with UK’s largest export partners such markets, innovation has a key role for economic directly exported to the EU as a key trading partner as Australia, Canada, Singapore, India and South growth and sustainable development (ITU, 2018). (Mayor of London, 2018). Africa (Ward, 2018). In fact, the globalisation is pushing developing According to a report from the UK Parliament (2018), countries to innovate in a sense that technology, the creative industries are the largest and the most quality of goods and services and the potential innovative in the world. This is the reason why many collaboration with developed countries could be concerns remain at the heart for such industries established (The Commonwealth, 2015). and their potential impact due to Brexit. In 2017, for instance, the investments made for the UK films and high-end TV sector has brought £2 million to the economy (Gov.uk, 2018). This part of the report will assess four sub-sectors including the art, fashion, film and music in order to understand the impact of Brexit on trade and investment within the creative industries sector in the UK.

80 | Working Paper Series: Volume 5, Issue 1, 2020 81 Art industry The Film industry relationship (O'Connor, 2018). The Post-Brexit might increase all costs regarding travelling within EU with Post-Brexit In 2017, the Art Council England has conducted a The UK film industry takes part in a set of regulations a longer process including higher duties and taxes on research to analyse the potential impact of Brexit and policies that are directly linked to its membership royalty payments and this can cause a less attractive on the Art industry and its sub-sectors (Arts Council with EU (Oxera, 2017). The impact of Post-Brexit in challenges and market for music performers (O'Connor, 2018). England, 2017). This particular question is about the this industry will be assessed to understand their impacts of Brexit on trade and investment within relationship and how they are dependent to the EU. The assessment of the impact of Brexit on trade and opportunities the UK creative industries with a focus on the arts In 2017, the UK film industry accounted for 186,000 investment within these four sectors has highlighted industry. In fact, according to a research from Arts direct employment and a contribution of £2.6 billion in the fact that most of the creative industries sector are for the creative Council England (2017), the findings are made of more direct gross value added (GVA) and an additional £3.5 concerned about the future uncertainties (CIC, 2018). potential disadvantages than advantages for this billion in indirect GVA (Oxera, 2017). There are both It all started with the depreciation of the pound, which industries industry. However, the potential advantages could be opportunities and threats according to the potential could on the long-term make trade and investment to explore new opportunities internationally to invest agreements that will be done to leave the EU. First, less attractive for the UK market (House of Commons, The company Hawkins/Brown has been chosen and to form partnerships and collaborations outside the depreciation of the pound could provide a better 2018). Also, the different sectors analysed above to illustrate the opportunities and challenges of the EU (Creative Industries Federation, 2016). competitiveness for the UK to export outside the EU shows similar concerns such as policies regarding of a multinational enterprise in a post-Brexit Furthermore, a short-term advantage for the UK post- (BBC News, 2017). In addition, there is an opportunity free movement of people, increase in import of goods environment in a context of a changing global trade Brexit could be an increase in tourism in the result to sign free-trade agreement with non-EU countries and services and the EU funding potentially stopped landscape. They are based in London and part of the of the pound being depreciated. On the other hand, such as the members of the Commonwealth countries for UK market (Arts Council England, 2017). However, creative industries by delivering services such as the environment of the post-Brexit remain uncertain and encourage investments from abroad (Springford, the same sectors also demonstrate the potential architecture, interior design, urban design, master which leaves trade and investment potentially 2014). In the other hand, there are potential threats opportunities regarding trade and investment with planning and also collaborate with artists (Hawkins affected due to the overall disruption in the UK such as the freedom of movement for labour within non-EU countries. Brown, 2018). They are operating across multiple economy (Creative Industries Federation, 2016). the EU that could limit the interest of highly skilled sectors and committed to build an environment that people to work in the UK (Oxera, 2017). Another promotes social changes (Hawkins Brown, 2019). The Fashion industry important point to consider is the breakage with EU They have taken a strategic decision to expand producers and their source of funding and support, A survey has been conducted from the British internationally by opening offices in Los Angeles which could impact on the British culture and its Fashion Council before the referendum occurred and in response to the uncertain environment resulted reputation (Oxera, 2017). the result shows that 90% of fashion designers will by Brexit (RIBA, 2018). The company has chosen to vote to remain in the European Union (Hendriksz, avoid the competitive market within EU and looked at 2016). According to an article from Forbes (2018), The Music industry opportunities outside European markets to expand in the industry is currently worth £29 billion in the UK. The music industry is one of the most popular in UK Los Angeles (RIBA, 2018). In fact, the fashion industry in the UK is one of the with one in eight albums purchased by fans across The Royal Institute of British Architects and the most important export industries and the impact the world is from a British artist (Best for Britain, Home Office have announced that a new “exceptional of the pound being depreciated will affect directly 2019). The Brexit will potentially disrupt this industry talent” visa will be available from 10 January 2019 for businesses which are outsourcing their production by reducing the free movement of people around applicants qualified as architects (RIBA, 2018). This (British Council, 2016). However, if the costs of European Union countries (UK Parliament, 2018). represent an opportunity for Hawkins Brown and outsourcing become too high, it could have a positive Also, the negative impact will be coming from a lower other companies within this industry to continue impact by starting to manufacture within the UK and purchasing power, which will result in a decrease in attracting international talent from the EU and outside results on creating more jobs for UK citizens (Pinnock, the number of fans purchasing tickets to participate European markets. In fact, Benjamin Derbyshire Chair 2018). Companies within this industry will need to into music events (Best for Britain, 2019). Moreover, of HTA Design LLP at RIBA, has mentioned that this consider higher investment costs in order to maintain most of the musicians are given short notice to travel particular industry requires and based on professionals their trading operations (Hendriksz, 2016). In the other and this will be affected if a visa is needed in the exchanging ideas, collaborations with countries in and hand, disadvantages include the disruptions of supply future (UK Parliament, 2018). Although, in 2017 the UK outside the EU and experienced workforce coming chains with an increased in the price and time for music industry was worth £4.5 billion with Live events from all around the world (RIBA, 2018). goods to access the UK due to customs inspections and has brought £1 billion of revenue with the O2 and regulatory requirements (Deloitte, 2017). arena in London which have been the most popular According to the official data, the UK creative in the world that year (O'Connor, 2018). The British industries has grown by 27.4% its export of services Phonographic Industry (BPI) requires an agreement to reach £27 billion in 2016 and is forecasted to with the EU that avoid a negative impact on import reach £31 billion by 2020 (The creative industries, and export within this industry or it would affect the 2018). Also, the import of services to the UK has economy of the UK if the outcome end with a bad grown by 41.3% in the same period to contribute to wider creative projects that could either by exported afterwards or remain in the UK as part of developing the Britain’s culture (Department for Digital, Culture, Media & Sport, 2016).

82 | Working Paper Series: Volume 5, Issue 1, 2020 83 The main territories that the UK is dealing with in In terms of opportunity, the case of Hawkins Brown terms of exports of services are the USA, Switzerland, shows the increase in south-south trade is an the Gulf, Australia and Japan (Department for Digital, important factor to consider in order to grow market References Culture, Media & Sport, 2016). If the UK can establish shares internationally (Ali, 2016). In fact, within the 53 free trade agreements with those countries, it could countries members of the Commonwealth, 18 of them represent an opportunity for them and companies are located in Africa. In addition, a report from the within this industry to increase their market Commonwealth (2015) has highlighted few priorities, Ali, S., 2016. The changing global trade landscape: share globally and grow their exports of services which the following are: building productive capacity, Implications for African Commonwealth (Department for Digital, Culture, Media & Sport, 2016). effectively managing trade policy and negotiations, countries. [Online] Available at: https://www. In fact, Prime Minister Theresa May has mentioned addressing implementation gaps, promoting private ictsd.org/bridges-news/bridges-africa/news/the- that the increase in the number of exports of services sector development and securing a trade-supporting changing-global-trade-landscape-implications- is part of the UK’s growth strategy for international global architecture. This will provide the opportunity for-african trade (HM Government, 2018). for such a company to expand within the African Arts Council England, 2017. Impact of Brexit on continent by offering their services to contribute to the arts and culture sector. [Online] Available However, the number of both imports and exports the development of those developing countries (The at: https://www.artscouncil.org.uk/sites/ of goods in the UK has declined in 2016. The amount Guardian, 2018). Also, a member of the MP’s named default/files/download-file/Impact_of_Brexit_ of goods exported from the UK in the creative Mark Garnier has approached the fact that the UK will Research_2017.pdf industries has decreased to 12.2% compared with be able to negotiate their own trade agreements only a similar drop at 13.2% in terms of goods imported after they are leaving the EU (Booth, et al., 2017). The BBC News, 2017. Reality check: Is the fall in the pound which account respectively for £13.2 billion and UK already had discussions about their future trading boosting exports?. [Online] Available at: https:// £10.1 billion loss to the UK economy in 2016 relationships with other important members and non- www.bbc.co.uk/news/uk-41268585 (The creative industries, 2018). This fact could be members of the Commonwealth including Australia, due to British citizens that voted to leave the EU in India, China, New Zealand, Norway, South Korea and Best for Britain, 2019. Brexit will badly damage the the same year and the uncertainty for companies the Gulf Cooperation Council (Booth, et al., 2017). This music industry. [Online] Available at: https:// and the UK economy directly linked to the Brexit. potential trade relationship could create opportunities www.bestforbritain.org/music Although, some challenges and opportunities has for Hawkins Brown to be involved in the Global Booth, L., Webb, D. & Ward, M., 2017. Promoting trade been explained above, no deal has been made yet in Britain project by expanding their capabilities into with the Commonwealth, London: House of terms of agreements on how to leave the EU on the new markets and collaborate with other companies Commons Library. 29th March 2019 and after the two years transition worldwide (Booth, et al., 2017). period (Hunt & Wheeler, 2019). However, in order to British Council, 2016. The power of fashion. [Online] understand deeper what are the possible challenges Available at: https://www.britishcouncil.org/ and opportunities of a multinational enterprise based Conclusion organisation/policy-insight-research/insight/ in London, examples for the company Hawkins Brown power-fashion will be listed in the context of a changing global The political and economic uncertainties involved trade landscape. with Brexit has resulted on pressure for companies CIC, 2018. Creative Industries. [Online] Available at: http://www.thecreativeindustries.co.uk The challenges are made of uncertainty as a result regardless which industry they belong to. However, most of the businesses within the creative industries of no agreement done in order to exit the EU. Creative Industries Federation, 2016. Brexit sector have anticipated by defining scenarios that Also, according to the World Trade Organization Report. [Online] Available at: https://www. could occur and adopt strategies accordingly. (2017), the global trade growth has been slowing creativeindustriesfederation.com/sites/default/ Despite the possible challenges related to Brexit, down in the last years, which has impacted the global files/2017-05/Brexit%20Report%20web.pdf economy. According to the Financial Times (2018), there are also multiple opportunities including the it means that the global economy is growing slowly trade advantage for the UK to be a member of the Deloitte, 2017. Impact of Brexit on the manufacturing and has still not totally recovered from the global Commonwealth (The Commonwealth, 2018). industry - Managing through uncertainty. [Online] financial crisis of 2008. However, the potential Available at: https://www2.deloitte.com/content/ challenges that Hawkins Brown could face includes dam/Deloitte/uk/Documents/manufacturing/ the regulation regarding free movement of people deloitte-uk-brexit-impact-manufacturing.pdf within European countries as well as maintaining the Department for Digital, Culture, Media & Sport, 2016. access to the UK market for talented workforce. This DCMS sectors Economic Estimates 2016: Trade. is also due to the changing global trade landscape [Online] Available at: https://assets.publishing. where Brexit brings uncertainty to the UK economy service.gov.uk/government/uploads/system/ and could impact its important reputation in terms uploads/attachment_data/file/731948/DCMS_ of creative industries sector which are recognised Sectors_Economic_Estimates_2016_Trade_final. internationally (GOV.UK, 2018). pdf

84 | Working Paper Series: Volume 5, Issue 1, 2020 85 Financial Times, 2018. A British illusion of Mayor of London, 2018. Mayor's Brexit report warns The Commonwealth, 2015. The Commonwealth in The creative industries, 2018. Creative services Commonwealth trade after Brexit. 27,000 UK creative jobs under threat. [Online] the unfolding global trade landscape. [Online] exports reach £27bn. [Online] Available at: http:// [Online] Available at: https://www.ft.com/ Available at: https://www.london.gov.uk/press- Available at: http://thecommonwealth.org/sites/ www.thecreativeindustries.co.uk/uk-creative- content/2761fc62-42eb-11e8-93cf-67ac3a6482fd releases/mayoral/mayor-warns-27000-creative- default/files/inline/Commonwealth%20Trade%20 overview/news-and-views/news-creative- jobs-under-threat Review%202015-Full%20Report.pdf services-exports-grow-to-£27bn Gov.uk, 2018. Creative industries: Sector Deal. [Online] Available at: https://www.gov.uk/ Mendez-Parra, M. et al., 2017. 10 Commonwealth The Commonwealth, 2016. Brexit and Commonwealth The Guardian, 2018. The scramble for African trade government/publications/creative-industries- policy priorities for trade and development. Trade. [Online] Available at: http:// has moved on, but Britain hasn't. [Online] sector-deal/creative-industries-sector-deal-html [Online] Available at: https://www.odi.org/sites/ thecommonwealth.org/sites/default/files/news- Available at: https://www.theguardian.com/ odi.org.uk/files/resource-documents/11341.pdf items/documents/BrexitPolicyBrief18112016.PDF commentisfree/2018/sep/04/africa-britain-trade- GOV.UK, 2018. Creative industries: Sector Deal theresa-may-brexit (HTML). [Online] Available at: https://www.gov. O'Connor, R., 2018. How Brexit will affect the UK The Commonwealth, 2016. Experts praise $1 uk/government/publications/creative-industries- music industry, from touring to copyright. trillion Commonwealth "trade advantage". UK Parliament, 2018. Arts: Impact of Brexit. [Online] sector-deal/creative-industries-sector-deal-html [Online] Available at: https://www.independent. [Online] Available at: http://thecommonwealth. Available at: https://hansard.parliament.uk/ co.uk/arts-entertainment/music/features/ org/media/news/experts-praise-1-trillion- lords/2018-10-11/debates/64E52F7D-D698-40DD- Hawkins Brown, 2018. We are Hawkins/ brexit-latest-music-industry-ed-sheeran-stormzy- commonwealth-trade-advantage 8A11-9F50F94E542C/ArtsImpactOfBrexit Brown. [Online] Available at: https://www. touring-copyright-visas-a8623511.html hawkinsbrown.com The Commonwealth, 2018. Harnessing the Ward, M., 2018. Statistics on UK trade with the Office for National Statistics, 2018. Who does the Commonwealth trade advantage. [Online] Commonwealth, London: House of Commons Hawkins Brown, 2019. History. [Online] Available at: UK trade with?. [Online] Available at: https:// Available at: http://thecommonwealth.org/ Library. https://www.hawkinsbrown.com/about-us/ www.ons.gov.uk/businessindustryandtrade/ media/news/harnessing-commonwealth-trade- Wolf, M., 2018. The global economic recovery is history internationaltrade/articles/ advantage real but fragile. [Online] Available at: https:// whodoestheuktradewith/2017-02-21 Hendriksz, V., 2016. 6 effects a Brexit may have The Commonwealth, 2018. Special Edition of the www.ft.com/content/532f1142-4163-11e8-93cf- on the Fashion industry. [Online] Available Oxera, 2017. Impacts of leaving the EU on the UK's 2018 Commonwealth Trade Review for the XXI 67ac3a6482fd at: https://fashionunited.uk/news/fashion/6- screen sector. [Online] Available at: https://www. Commonwealth Games. [Online] Available at: WTO, 2017. World trade and GDP growth in 2016 and effects-a-brexit-may-have-on-the-fashion- bfi.org.uk/sites/bfi.org.uk/files/downloads/bfi- https://www.embracing2018.com/sites/default/ early 2017. [Online] Available at: https://www. industry/2016062020813 impact-leaving-eu-uk-screen-sector-2017-v2.pdf files/trade-horizons-xxi-commonwealth-games. wto.org/english/res_e/statis_e/wts2017_e/wto_ pdf HM Government, 2018. Export Strategy supporting Pinnock, O., 2018. British Fashion industry voices chapter_03_e.pdf and connecting businesses to grow on the world Brexit concerns in white paper. [Online] The Commonwealth, 2018. Strengthening Youngs, I., 2018. What could Brexit mean for the stage. [Online] Available at: https://assets. Available at: https://www.forbes.com/sites/ the Commonwealth Advantage. [Online] UK's creative talent?. [Online] Available at: publishing.service.gov.uk/government/uploads/ oliviapinnock/2018/05/03/british-fashion- Available at: http://thecommonwealth.org/ https://www.bbc.co.uk/news/entertainment- system/uploads/attachment_data/file/737201/ industry-voices-brexit-concerns-in-white- sites/default/files/inline/Strengthening_the_ arts-44300562 HMG_Export_Strategy.pdf paper/#7694d3f3803d Commonwealth_9781849291798_UPDF.pdf

House of Commons, 2018. The potential impact of RIBA, 2018. Brexit drives diversification. [Online] Brexit on the creative industries, tourism and the Available at: https://www.architecture.com/ digital single market, United Kingdom: Authority knowledge-and-resources/knowledge-landing- of the House of Commons. page/brexit-drives-diversification

Hunt, A. & Wheeler, B., 2019. Brexit: All you need RIBA, 2018. New "exceptional talent" visa for to know about the UK leaving the EU. [Online] architects. [Online] Available at: https://www. Available at: https://www.bbc.co.uk/news/uk- architecture.com/knowledge-and-resources/ politics-32810887 knowledge-landing-page/new-exceptional-talent- ITU, 2018. Rapidly Evolving Technologies. [Online] visa-for-architects Available at: https://broadbandcommission.org/ Springford, J., 2014. Would Britain's trade be freer Documents/publications/SOB2018-Chapter2.pdf outside the EU?. [Online] Available at: https:// www.cer.eu/insights/would-britain’s-trade-be- freer-outside-eu

86 | Working Paper Series: Volume 5, Issue 1, 2020 87 Possible challenges and opportunities for Alexander McQueen’s after Brexit

Diana Barska Introduction

There are different core changes occurring 2006-2008. Due to the global economic recession, the in the global trade, specifically between the total global exports of the Commonwealth members Commonwealth countries. These changes are decline greatly from US$2.9 trillion in 2008 to US$2.3 taking place due to various factors, for instance, the Trillion in 2009. The rise in the Commonwealth global advancements in the regional trading arrangement trade trend in 2009-2013 was observed to decline at (RTA), the increasing trade of developing countries, 4.3% (The CommonWealth, 2015). increasing trade links through global value chains Nevertheless, the African countries’ economic (GVCs), the immense necessity of addressing increase remains constant despite the global the global climate change issues. In 2000, the economic recession. The global trade for the small Commonwealth countries’ total global exports of countries has not experienced an increase, due to services and goods increased from US$1.3 trillion various factors such the small local trade markets, to US$3.4 trillion. From among these total global increased trade costs, undesired geographical region exports, half of the export share is from Cyprus, have resulted in the decline of their global trade share. Canada, Malta, Australia, the United Kingdom (UK), The developing countries of the Commonwealth and New Zealand (The CommonWealth, 2015). have experienced an increase in the global GDP share The share in the Commonwealth global exports from 20% to 40 %, with an increase from 30% from the developing countries has also grown to 50% share in the global merchandise trade from 36% in 2000 to 50% in 2013, specifically from (The CommonWealth, 2015). the Asian countries who are responsible for more The Commonwealth countries’ trade profiles than four-fifths of the shares in the exports among display a rise from 2000 to 2013; the total the developing countries of the Commonwealth. merchandise export from the Commonwealth The total exports of 18 African countries from the countries to developing countries as part of the total Commonwealth has also experienced growth, global exports grew from 26% in 2000 to 46% in 2013. reaching up to US$300 billion in 2013 (The The Commonwealth trade with China since 2000 has CommonWealth, 2015). displayed a significant trend in the global trade. Countries such as Malaysia, India, Singapore, The Commonwealth countries’ exports to China have Nigeria, and South Africa contribute greatly to the grown from US$19 billion to US$268 billion, with the Commonwealth global exports. During the period China imports’ increase from US$46 billion to US$359 of global economic recession, 36 Commonwealth billion, making China an important destination for countries experienced a decline in GDP in 2011-2013, the Commonwealth trade, since it is an emerging which was less than the pre-financial crisis time during economy (The CommonWealth, 2015).

88 | Working Paper Series: Volume 5, Issue 1, 2020 89 The recent trend of 2013 in the intra-Commonwealth The trend in these increased intra-Commonwealth and natural resources (World Trade Statistical Review, trade of goods and services was US$592 billion trade to a great extent is due to the commonalities 2018). The imports show an increase of around 0.9% Impact of Brexit on as an average increase of around 10% in 1995. It is shared by the Commonwealth countries such as the mainly due to factors such as the high prices of the predicted that by 2020, the trade rate will expand old and well-established trade relations, well-known primary commodities that increase export revenues trade and investment to or even greater than US$1 trillion. The rise in the legal and administrative structures, use of a common and enable more imports to be traded. The oil prices 2013 trade of goods and services express a trend trade language for interaction with the international are stable to US$ 70 per barrel. The U.K. however, within the UK creative of an increase from 13% in 1995 to 18% in 2013 trade partners and great number of communities experienced changes in the trade growth in 2017, (The CommonWealth, 2015). sharing the same heritage allow a successful trade mainly due to Brexit issues, which predicts a great industries sector process within the Commonwealth countries and lengthy impact on Britain’s trade and investment The factors that drive a stable trade by the (The CommonWealth, 2018). The global trend of processes (World Trade Statistical Review, 2018). The creative industries in the UK are defined by the Commonwealth countries are the effective Commonwealth trade in 2016, was observed to be U.K. Government as the industries, which possess regulation of the trade policies and negotiations, US$560 billion, representing 20% increase in the total extensive creativity, potential, and skills and have the developed trade preferences combined with global trades. promotional policies for trade to attract investments capacity in creating employment opportunities and and create diverse exports. In addition, eliminating However, the developed countries of the fortune through creation and usage of intellectual trade gaps in strategies by matching the hard Commonwealth, along with Canada and the UK, property. This definition comprises of various infrastructure with soft infrastructure (for example; had experienced a decline in the total share in the business sectors of the UK such as architecture, increasing stakeholder knowledge and potential), trade. Asian countries such as Singapore, Malaysia, crafts, designs, advertising and marketing, TV, film, and promoting private sector growth are some of and India experienced an increase in their global photography, museums, publishing, software and the greatest drivers of smooth Commonwealth trade share from 31% to 41%. There had been game technology, music, visual arts, galleries and trade flow. The intra-Commonwealth trade of 2013 a significant change in Commonwealth trade in libraries, and acting. comprises mainly of goods, reaching US$450 billion. 2016. Commonwealth developing countries were Until 2015, the creative industrial sectors contributed However, the global trade of services has risen more observed to be the greatest service exporters in 2016, to 7% of the total U.K. employment, as compared to than the goods; being 12% of service trade and 8% producing up to US$ 498 billion, contributing to 54.5% 3.5% of the financial sector contribution (Demertzis, of goods trade (The CommonWealth, 2015). The of the overall Commonwealth service exports (The 2015). Despite the global economic crisis of 2008, Commonwealth countries active in the intra-trade CommonWealth, 2018). the creative industries sector continued to increase are India, Singapore, Malaysia, the UK, Nigeria, The Asian countries’ share in the exports of goods the UK economy. In addition, the creative business South Africa, Australia, Canada, and the Caribbean and services had risen up to 41.1% in 2016. The is responsible for the U.K.’s economic output, with regions. Malaysia, Singapore, and India are part of Commonwealth trade with the developing countries its gross value added (GVA) increase to £84 billion in more than half of the total good exports in the intra- in 2016, showed a great expansion since 2000. The the year, as recorded in 2013. The creative sector is Commonwealth trade (The CommonWealth, 2015). total merchandise imports from the developing also a great exporter to the Commonwealth and non- The UK contributes to 10% of the share, Nigeria countries had increased or 31% in 2000 to 50% in Commonwealth countries (Demertzis, 2015). and South Africa 6 %, Australia 8%, and Canada 5%. 2016. Since 2000, the Commonwealth trade with It is evident from the Brexit reports that Brexit does In 2000, the African exports were directed mainly China had increased from US$ 33 billion to US$277 not support the good trade agreement for the creative towards the European Commonwealth countries, billion in 2016 (The CommonWealth, 2018). The 2016 business industries, therefore, it has a destructive specifically the UK, displaying a total of 40% of their intra-Commonwealth trade in goods and services was impact on the economic output and job opportunities exports in the intra-Commonwealth trade (The US$ 560 billion, which was a little decrease due to the provided by this sector. The reason evident from the CommonWealth, 2015). The African trade with other slowed process of global trade. However, the intra- Brexit report is that 6.1% of the U.K. creative industry Commonwealth countries had expanded to include Commonwealth trade continued to expand, reaching labour have origins from EU. The report reveals that other African countries contributing to 45 % of their up to 52% of trade in 2016. The general trends in 2017 creative businesses have started to complain about total exports. About 30% of their exports went to Asia Commonwealth trade recorded the greatest increase their productivity and employment issues following and 18% to Europe. There was a rising trend of 83% in in six years since 2017. The merchandise trade in Brexit (Dhingra, Ottaviano, Rappoport, Sampson, & the Commonwealth Pacific Island Members’ exports exports and imports increased up to 4.7%, which was Thomas, 2018). in the intra-Commonwealth trade, all traded to the a 3% increase since 2011 (The Commonwealth, 2018). developed countries, mainly Australia. Strong EU candidates are rejecting employment offers However, comparing the merchandise growth since due to the uncertain situation Brexit has created in However, it is observed that there was a decreasing 2016, there was only a 1.8% increase in the trade due the U.K. since there are chances that the upcoming trend experienced by the imports’ trade from 73% to the global recession period of 2008. A significant laws under Brexit might restrict the U.K. visa policies in 2000 to around 54% in 2013. This is due to the increase in 2017 Commonwealth trade was due for the EU nationals EU markets since the EU is increasing importance of the Asian trade suppliers, to the cyclic factors since the world was already an important target for the UK creative business especially Singapore (The CommonWealth, 2015). experiencing an increase in GDP at market exchange industries. Half of the exports from this sector rate from 3% to 2.3%. This was due to increased reached EU in the past decades (Demertzis, 2015). For investment activities between the Commonwealth instance, following hard Brexit, the UK’s advertising countries and China, stability in the quantity of oil

90 | Working Paper Series: Volume 5, Issue 1, 2020 91 and marketing company find it difficult in recruiting recruiting professionals from the EU countries due a talented designer from Italy, France, or Spain. to strict entry regulations after Brexit. However, Furthermore, it experiences tariffs in the exporting opposing this view, a different perspective reveals activities to Germany. The UK had constantly received that the film industries have expanded due to the US great funding from the EU for innovation and business funding in Britain’s films and industries. development along with expansion in social and This was in response to the Brexit decision, which had regional elements of the state (Hix, 2018). The UK had decreased the value of pounds. This made the U.K film also enjoyed being one of the greatest beneficiaries market more interesting for the US studios (Youngs, by Creative Europe, following Germany in receiving 2018). With regards to the U.K’s digital market, 42% of great funds. The decision and implementation of its exports were directed to the EU However, with the Brexit have prevented the UK’s creative industries to elimination of funding forms Creative Europe, Horizon receive those funding, resulting in adverse impacts 2020, and the European Regional Development after on creative business investments and recruitment Brexit, there is a threat in the growth of this business procedures (Demertzis, 2015). along with major threats on the intellectual rights of It is assessed that the creative industries sector in the the talent (Patel, 2018). U.K. is expanding at the double rate than the entire Along with the adverse effects related to the downfall founded in 1992. Its global business expands to the the funding in the local fashion institutions, economy of the state. Therefore, the masses involved in the British currency, and lack of EU funding, the UK U.S. and various countries of Europe, Africa, Asia, and specifically, the London College of Fashion. However, in this business sector had been against Brexit, with artists from the art industry have issues in travelling Australia. It is part of the contribution of £32 billion the opposing view states that Brexit could be Creative Industries Federation (CIF) revealing that 96% to other European countries. The arts and design the fashion industry makes to the UK’s economy, beneficial for the UK’s business industry. This is of its members’ votes were Remain (Youngs, 2018). education business are also greatly impacted since with 2% rise in the state’s GDP, worth as £50 billion because there has been a fall in the sterling value, The reason behind this is that the public fear Brexit most of the experienced design tutors in the UK increase in the British economy (GOV.UK, 2018). The making the UK’s fashion and clothing industry highly to have numerous destructive effects on the creative come from various parts of Europe (Schoenmaker, global business landscape of the fashion industries, competitive in the global market (Kee, 2017). industry. For example, the Local Government 2017). London’s design community and architecture along with Alexander McQueen after Brexit. The Brexit has decided to impose customs duties on Association in the U.K. conducted a survey on companies are starting to become less attractive However, Brexit had posed numerous challenges the EU imports as well as from other imports. This different museums in the state and evaluated that for the global market. In the near future, it will also on Alexander McQueen Company. The company is would make the imports more expensive and be less many museum authorities held the EU funding as the become less attractive as a business hub since Brexit experiencing a rise in the manufacturing costs as a competitive as compared to the UK’s fashion goods. major source of the current and future income (Giles, puts a restriction on diversity in employment as well result of the imports manufactured outside the U.K, Brexit also promises the UK’s local trade deals, which 2018). The film industries also face uncertainties in as talents (Schoenmaker, 2017). along with the tariffs on the imports and exports. would not have been possible as a member state of The company is threatened of losing EU funding EU (Cumming, 2016). As a result, Alexander McQueen Post-Brexit Challenges and opportunities: since most of the company’s talents and goods come could smoothly deliver its exports to China, Japan, from the European country. Alexander McQueen and the US market, where UK products are primary. is threatened by the preservation of its intellectual The tariff-free trade between the UK and the US is a The case of Alexander McQueen’s property. During the association of the UK in the EU, great opportunity for Alexander McQueen. However, the EU trademark system applied in the UK, which the challenges outweigh the opportunities since there The impact of Brexit on the global business of the greatest impact by Brexit, since 9% of goods and protected the state’s major companies (Davies, 2018). are not great manufacturing plants of the company U.K. It has also had a great impact on the entire global services exports are directed to the U.K. with 5% of However, since the implementation of Brexit, the UK in the UK and the success of the opportunities are economy. Following Brexit, the global economic the imports from the UK. Therefore, it will be greatly is void of the EU trademark, which has threatened the uncertain (Dhingra, 2016). systems are experiencing structural changes due to impacted by partition of the UK from EU. intellectual properties of the UK’s global companies, the impact of Brexit on the UK’s economy. The foreign Following Brexit, future trade activities of the UK including Alexander McQueen. investors of various countries are being uncertain will be impacted depending on the sectors. The Conclusion and in investing in the UK due to the irregularities the The British Fashion Council (BFC) has expressed greatest impact is on the creative business sectors, Brexit policies had created (Ardley, 2018). The existing great concern regarding the fashion industry’s trade automotive, technology, and various service sectors foreign investments in the UK have decided to move and investment, the flow of skills and potentials, and recommendation (News, 2017). There is a rise in the trade costs due to their investments out of the state and relocate funds from EU. The BFC states that it worked great to increased levels of tariffs. For instance, in 2016, the In conclusion it can be argued that the UK’s global employment opportunities (Wadsworth, Dhingra, secure tariff-free trade flows in the EU, especially for UK imports tariff had increased to 4.517 as compared business trend is under a risk following Brexit. Ottaviano, & Van Reenen, 2016). globally recognised fashion industries of the UK, such to the EU imports. Brexit also has a great impact on It is recommended that the EU nationals should as Alexander McQueen (Crowley, 2018). The impact of Brexit on global trade represents a the global supply chains since much of the UK’s trade have a right to stay in the UK to preserve the fluctuated landscape. Many countries within the is linked to the global supply chain (PWC, 2016). Furthermore, the rise in the clothing price has made business talents. The UK should still create some EU had the greatest impact of Brexit since they had Alexander McQueen experience a decline in consumer trade agreements with the EU despite its exiting. There are various challenges and threats for creative the largest export shares directed to the UK. For loyalty. The company is also threatened by a decrease Furthermore, it is recommended that the companies multinational companies of the UK after Brexit. example, Belgium is the fourth country to have the in the talents since it consisted of numerous EU come up with expansion strategies themselves so Alexander McQueen is a British luxury fashion house nationals and the current Brexit issue has decreased the impact of Brexit could be reduced.

92 | Working Paper Series: Volume 5, Issue 1, 2020 93 Bibliography

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94 | Working Paper Series: Volume 5, Issue 1, 2020 95 Commonwealth Trade and Post Brexit Situation for Creative Industry in UK

Bethel Abraha Introduction

The Commonwealth is world’s oldest intergovernmental association of different states. The association was established in 1949 from the independent states, which were previously ruled by the British Empire. Currently the Commonwealth association is comprised of 53 independent states from different regions of the world and it is headquartered in London. Free trade is one of the objectives of Commonwealth’s Declaration in 1971 but still there are no multilateral trade agreements (Commonwealth, 2018). For free trade the Commonwealth members are still struggling. Although the intra- Commonwealth trade is not higher due to lack of free trade agreements between members but still the effect of Commonwealth countries cannot be denied therefore the EU have negotiated with various Commonwealth Countries for free trade agreements. In this report, it will be evaluated that how different trends are shaping the global intra-Commonwealth trade and what are the global drivers that are shaping the trends of Commonwealth countries. Further the impact of Brexit on creative industry of UK will be analysed and challenges and opportunities for the businesses in UK will be evaluated after the Brexit.

96 | Working Paper Series: Volume 5, Issue 1, 2020 97 Globalization and Digitalization

Beside the global shifts and megatrends the their living standards. At the same time, these globalization and its drivers have influenced the emerging economies have more labour power and still trade and investment of Commonwealth countries. they are not under the influence of aging. In transition The Commonwealth countries are widespread economies within the Commonwealth countries, the around the different regions of the world and major transformation of public from lower classes to middle markets of Commonwealth countries like UK, Canada, classes has triggered the concept of urbanization. India, Australia and Singapore are apart from each At the same time, this demographic change has also other and rest of the member states, which makes influenced the consumer’s purchasing power and it quite difficult for the member states to access ultimately impacted the trade o0f good and services. these markets at in a cost effective manner. But, in this context the globalization has helped the various Urbanization members to access these markets with effective In this era of digitalization the urbanization is another communication technologies and major global factor that is also influencing the trading transportation systems. and investment trends in Commonwealth nations. Commonwealth Investment Trends Commonwealth countries to improve their export Technological advancement has influenced the In 2050, there are expectations that almost 68% of quality to meet the higher standards of the world. world’s trade significantly therefore the small the world’s population will be living in the cities as The trading landscape is changing rapidly due Since 2000, the trade of Commonwealth countries and medium sized businesses operating in the compared to the rural areas (UN, 2018). This depicts to various factors such as megatrends, global have seen another major shift from developed Commonwealth nations are now directly connected that now cities are offering more opportunities for shifts, drivers of globalization etc. New trends in economies to developing economies and due to this with the international markets and playing a growth and development for public and they now the global trading are emerging and are shaping shift the total trade with the developing countries significant role in the trade of Commonwealth and prefer to migrate to larger cities. In this context, the entire world’s trade and investment. Within have been increased from 31% to 50% (UNCTAD, economic development of the countries. The concept within the Commonwealth countries various cities the Commonwealth Countries various trends can 2017). Trade with the China has played a significant of e-commerce has enabled the small businesses in in the developing economies like Kuala Lumpur, be observed easily which are now evolving and role and most of the Commonwealth countries are the Commonwealth nations to access the various Mumbai, Bangalore, Karachi, Lahore, Nairobi, Dhaka, will influence the trade patterns in coming years. now partner with China. The foreign direct investment international markets and to increase the overall Chennai, and Cape Town are becoming the major Currently the trading volume and Greenfield foreign in the commonwealth countries is also increasing and trading volume between the Commonwealth economic hub. The Most of the people are now direct investment between the Commonwealth till 2020 both FDI and trade expectations are US$1.5 nations. The age of digitalization has also enabled the migrating towards these cities and accelerating the countries is growing rapidly and until 2020, it is Trillion Commonwealth countries. international businesses to outsource their services urbanization. This urbanization is now depicting expected that it will reach US$1.6 trillion. The trade and products from other countries or regions of the a major shift from agriculture sector to industrial Emerging economies and Rising Africa are the two between the member countries was US$600 billion in world. Modern communication technologies has revolution in these countries. major trends in World’s trade as well the trade of 2016 and in 2020 it is expected to grow up to US$700 enabled the developing economies to enhance their Commonwealth countries. In Commonwealth, the billion (Commonwealth, 2018). export shares by trading various products through the countries like India, Nigeria, and Pakistan are the Sustainability online businesses. In addition to this, the e-commerce growing economies, which will play an important role The concept of sustainable trade has been emerged The dynamics of trade of goods and services has given another advantage to developing nations in the coming years. Therefore, the focus of trade is recently in the modern businesses and giving them between the Commonwealth countries are changing. to offer their services to international markets. Now shifting towards the growing economies. According a tough time to adopt the practices that will lead At present time, the developed economies of India is becoming one of the most important country to the report of Economist the Middle East, North to the sustainable development of the economy. Commonwealth like UK, Canada, Australia and in terms of its service export. Singapore still hold more than 50% shares of exports Africa, Asia, Pacific Region and Sub-Saharan Africa will In developed nations, there is a major focus on the but a decline in the shares of these countries can be be major and emerging markets till 2020 and will lead climatic change and protection of natural resources, Demographic Changes observed with the passage of time while the share of the world. The report further states that the growth which is influencing the operation of trading from Asian countries and Africa are now increasing in the in African region will be most significant therefore Demographic change is another important factor, developing countries (Chel and Kaushik, 2018). Commonwealth exports. In 2016, the Asian countries the World trade or Commonwealth trade can observe which is now setting the new trends of trading in Due to this reason, the developing nations of the accounted for 41.1% of exporting shares (WTO, a major shift. In addition to this, international the Commonwealth countries. In the developed Commonwealth are now trying to meet the standards 2018). In Services, the developed countries have their businesses are also playing an important roles in nations of Commonwealth countries the living for sophisticated exports. supremacy and still they hold the shares of more the intra-commonwealth trade and investment. standards are higher depicting the social classes are than 80% of total service export within the Emerging economies like India, China, Nigeria, and in better position. But, at the same time in developed Commonwealth countries. Bangladesh are now attracting the international firms economies aging is becoming a serious issue and is for establishing the businesses into their countries. creating challenges for employers having shortage Export sophistication is another major trends in For this purpose the emerging economies are making of labour (Pettinger, 2016). On the other side, in the global trade, which has also influenced the reforms into their business sector and offering emerging economies or developing economies, the exports of Commonwealth countries, but at the incentives to the international business to invest in social classes are in transition and this transition is same time the export sophistication has enabled the their countries. taking lower classes to middle classes and raising

98 | Working Paper Series: Volume 5, Issue 1, 2020 99 Creative Industry of UK and Impact of Brexit Opportunities and Challenges Brexit will create a situation for the EU nationals for Pinewood Studies working in UK’s creative industry and they will have to leave their jobs to return to their homes. This UK is one the leading centre of world’s creative These statistics depicts that creative industries are will create a shortage of workforce within the UK’s International businesses are operating in highly industries. The UK’s creative industries are playing significant source of inward investment in UK and creative sector thus offering a tough situation to volatile environment where various external factors a vital role in the economic development of country are significant contributor to the UK’s economy. various creative businesses to run their operations can influence their operations. Political, economic, by contributing significant revenues, and offering Nevertheless, ongoing issue of leaving the EU is smoothly (Inman, 2019). In this case, the companies social and globalization are the major factors that are millions of jobs within the UK. Creative industries of one of the major factor that will influence the inward will not be able to hire the new talent directly from influencing the operations of businesses in today’s UK is comprised of the various sub-sectors which investment in creative industries. First of all the the other EU states and skill gap can overwhelm the world. At the same time, the different drivers of mainly include the marketing and advertising, Brexit is damaging the UK’s reputation and after a creative industries. designing, graphic designing, fashion designing, hard Brexit the UK will no longer be the part of EU globalization, and megatrends have changed the crafts, architecture, Computer, Software and IT and its agreements which will influence the trade landscape of trading at global level. Multinational At the same time, there are some opportunities for services, Arts and culture, Performing and visual and investment of UK badly (Byrne and Rice, 2018). enterprises operating in UK are facing the severe the Pinewood Studio that can be utilized after the arts, publishing, music, TV, Film, radio etc. The For example, the EU has cancelled the UK’s turn for challenge of Brexit but still it is not clear that how Brexit. First of all, to handle the after-shocks of Brexit creative industries of UK contributed more than hosting the European Capital of Culture in 2023, which post Brexit situation will be and what will be its the government of UK will take some steps boost £100 billion in to the economy of UK in 2017 and is quite disappointing for the UK. Such moves from impacts on the businesses operating in creative the creative industries. In this context the Pinewood now these industries collectively make more than the EU will directly damage the UK’s reputation as industries in the UK. Studio can be befitted from grants and funding of 5% of the UK’s economy. According to the official centre for the creative industries and will eventually government to run its operation smoothly within Pinewood Studios is a UK based TV and film studio statistics published on the creative industries website influence the foreign direct investment from other the UK. As the company has already expanded its established in 1936. This studio has produced various the services exports were more than £27 billion in EU states. operations in North America and Pacific Regions big-budget films, commercials, TV shows, and 2016 and since 2010 the creative industries exports therefore, the impacts of Brexit will be lower for the Due to Brexit the EU nationals are now leaving the different music promos. This studio is regarded as the witnessed a growth of 83.9%. Now, almost 2 million company. UK’s creative industry, therefore France and Germany home of Carry On and James Bond film franchises. In jobs are offered by the creative industries and until are grabbing this talent to become as one of the major 2013 the company went for an expansion and opened Another major opportunity that Pinewood Studio 2030, 1 million more jobs will be added in this sector. centre for EU cultural and creative activities. If this its studio facility in Atlanta US, and to target the Asia can achieve is through the expansion into new and Currently there are 284,000 creative businesses and happens then UK’s creative industries will face a tough Pacific Region the company has studio in Malaysia. emerging economies. For example, the company 95% of them are microbusinesses employing less competition from the rest of EU member states. At Previously, the Pinewood Studio was benefited can open its studios in Africa, and in South Asia than 10 employees (Creative Industries Federation, the same time, the investment or funding from the EU from the grants given by the EU and foreign direct where film and television industries are booming 2018). The creative industries have made the UK as commission will be terminated for the UK’s creative investment. But after the Brexit the situation will not and can increase its overall revenues. As UK is hub for creative activities therefore, it has become a industries and different sectors will not be eligible be same for the company. Here are some possible already a part of Commonwealth countries therefore, common source of foreign direct investment in UK. for funding (Kentish, 2018). This will create a tough challenges and opportunities for the Pinewood Pinewood’s expansion into Commonwealth nations Beside the foreign direct investment (FDI), the funding situation for the industry as well as for the businesses Studios after the Brexit. will be more beneficial for the company and it will from EU commission and UK’s government are the operating in creative sector because due to Brexit bring more positive results. In addition to this, if UK major sources of investment in these industries. After the Brexit, the trading landscape of creative they will not be able to get a free access to EU single government goes with the regional trade agreements industries of UK will be changed. Currently, the EU UK, being the hub of creative industries receives market and due to reduced investment and funding with different countries or in other regions of the states have 42% of trade with the UK’s creative a lot of investment from the foreign investors. there will be decline in growth of creative industries. world then this can also be a major opportunity for industries in terms of goods and services (House According to the official statistics revealed by the the company. To attract the foreign investors the Furthermore, the trading barriers after Brexit will be of Commons, 2018). However, after the Brexit the creative industries website there were almost 121 government will bring some policies and procedures increased for the companies operating in UK and it restrictions and trading barriers will be increased for direct inward investment in UK’s creative industries that will bring the Foreign Direct Investment within will be more difficult for the businesses to access the companies operating in UK and thus will hinder in 2017 (Mayor of London, 2018). In addition to this, the UK’s creative sector. Through these policies and the single digital market of EU. This factor will also the overall export of service of creative industry. the EU funding comes from the different channels procedures the company can avail investment for influence the FDI in creative industries of UK. like Horizon 2020, ESIF, ERDF, Creative Europe, and In this context the Pinewood Studio may lose its its operations. Further, the rules and regulations New visa policies and migration laws in UK will also Employment and Social Innovation programs. The customers from rest of the EU countries. This will implemented by the EU will be terminated for the play a significant role in the foreign direct investment UK’s government has offered the tax reliefs into ultimately decrease the investment and overall UK and barriers created by the EU regulations will be in UK. The investment from the other regions of the various sectors of creative industries, which have revenue of the company. Further the investment and lowered for the Pinewood Studios. world especially from USA, Japan and Asia will be boosted the inward investment in creative industries. funding from the EU will be stopped and will influence influenced due to UK’s reputation after Brexit and For example due to tax relief on films and high-end the overall growth of the industry. This may also emerging centres for the creative industries. television, the industry received the £1 billion direct influence the operations of company. Further the To handle this situation the Government of UK will inward investment. In 2016 there were 558 projects exchange rates will be another major factor that will need to keenly focus on the creative industries and for receiving foreign direct investment. In addition to create various problems for the company. The Brexit this purpose the different funding programs should be this, the government of UK is keenly focusing on will definitely damage the UK’s reputation and this will launched to support this sector. In addition to this, the funding for creative industries through different directly influence the foreign direct investment in UK’s the government will also need to facilitate and attract programs such as Arts Council England, Creative creative sector. the foreign direct investment through its new policies England, and Innovate UK. and procedures.

100 | Working Paper Series: Volume 5, Issue 1, 2020 101 Conclusions

It is concluded from the report that key trends shift in the commonwealth trade of goods and services are globalization, digitization, demographic shift, sustainability and urbanization. The Brexit is also predicted to have some serious impacts on the creative industry of UK, including the economic problem, visa problems, creative recruitment and the trade barriers. Whereas Brexit is also thought to create certain opportunities for UK’s creative industry including predicted grants from government in order to rectify the effects of Brexit, opportunities for FDI and expansion into the emerging economies other than the EU countries. References

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