When a side sector becomes industrial scale

The creative economy used to be treated as a pleasant cultural ornament to real economic activity. That is no longer credible. According to UNCTAD's Creative Economy Outlook 2024, creative services exports surged to $1.4 trillion in 2022, marking a 29 percent increase since 2017. Creative goods exports reached $713 billion, a 19 percent increase over the same period. Services exports are nearly double goods, reflecting the shift toward intangible value: design, branding, software, media production, and platform distribution scale without the same physical limits as container shipping.

Over the past decade, creative services' share of all service exports rose from 12 percent to 19 percent, while creative goods' share of all goods exports has remained steady around 3 percent since 2002. The most exported creative services in 2022 were software services at 41.3 percent of the total, research and development at 30.7 percent, followed by advertising, market research, and architecture at 15.5 percent, audiovisual services at 7.9 percent, information services at 4 percent, and cultural, recreational, and heritage services at 0.6 percent.

UNCTAD's global survey reveals the varied economic contributions of the creative economy across different countries, ranging from 0.5 percent to 7.3 percent of GDP and employing between 0.5 percent to 12.5 percent of the workforce where data is available. This is the scale of an industrial domain, not a cultural footnote. The employment figures are particularly significant for developing economies where formal sector jobs remain scarce and youth unemployment is high. Creative industries offer pathways to formal employment, skills accumulation, and export earnings that can diversify beyond commodity dependence.

This matters for the Global South because the route to higher income is not only factories. It is also ownership of intangible value. A country does not escape the middle income trap simply by producing more units at thin margins. It escapes by capturing more margin per unit through design, branding, distribution control, and intellectual property, then compounding that margin into skills formation, capital deepening, and institutional capacity that enables climbing to higher value activities.

How streaming and AI reshape the value chain

Digitalization is fundamentally transforming the creative economy. Streaming services expanded their share of the global music market by 10.4 percent year on year, and now account for 67.3 percent of global music revenue streams. This shift from physical media to digital distribution has lowered barriers to global reach for individual creators. An artist in Lagos or Mumbai can now reach global audiences through Spotify, Apple Music, or YouTube without requiring record label infrastructure that was previously essential for international distribution.

Artificial intelligence is accelerating this transformation. AI generates scripts, movies, news articles, music, images, captions, animations, and virtual reality content, while improving post production workflows and analyzing user data to optimize content for engagement. AI is widely used in newsrooms, with 41 percent of news teams employing it to create illustrative art, 39 percent for social media content, and 38 percent for writing and generating articles. Digital tools lower costs and expand revenue opportunities, making global markets more accessible for individual creators in developing economies who previously lacked access to capital intensive production infrastructure.

However, digitalization also brings structural challenges. Quality control becomes harder when production costs fall to near zero. Copyright enforcement weakens when content can be copied and distributed globally within seconds. Privacy concerns multiply as platforms collect granular data on user behavior. And market monopolization accelerates as platform network effects concentrate power in a handful of global technology companies. Robust regulatory frameworks are necessary to ensure these technologies benefit creators in developing countries rather than simply extracting value to platform shareholders in developed economies.

When platforms become gatekeepers

Market concentration poses significant challenges to the creative economy, particularly for creators and firms in developing countries. Dominant players can stifle innovation and limit opportunities for smaller firms. In the United States, the Big Five publishers hold about 80 percent of the book market, while six movie studios account for nearly 90 percent of box office ticket sales in recent years. In 2021, three companies dominated 59 percent of the global streaming music subscription market.

This concentration has profound implications for developing country creators. When a handful of platforms control access to global audiences, they can extract monopoly rents through commission structures, algorithm design that favors established content, and terms of service that shift legal liability and IP ownership away from creators. A musician in Accra or Nairobi may reach global listeners through streaming platforms, but capture only a fraction of the revenue that flows to platform owners, distributors, and rights aggregators in developed economies.

Platform power also extends to creative goods. E-commerce platforms like Amazon, Alibaba, and regional players control access to consumers, logistics infrastructure, payment systems, and customer data. Sellers become dependent on platform infrastructure while platforms capture data on customer preferences, pricing sensitivity, and product performance. This data asymmetry allows platforms to optimize their own private label offerings to compete directly with the sellers who generate the initial market intelligence.

When industrial scale meets structural vulnerability

Bangladesh is the clearest demonstration of the modern production paradox. It is a garment superpower, the world's second largest clothing exporter behind China, with industrial scale that rivals any manufacturing cluster globally. According to the Export Promotion Bureau, Bangladesh exported $39.35 billion worth of garments in fiscal year 2024 to 2025, up 8.84 percent from the previous year. The garment and textile sector contributes 84.58 percent of Bangladesh's overall export revenue and more than 13 percent of GDP. The sector employs 4.5 million workers directly, of whom 57 percent are women, making it a vital driver of female economic empowerment. Including backward linkages in knitting, dyeing, accessories, logistics and services, the industry directly and indirectly affects nearly 20 million people.

The European Union is the largest market, accounting for 50.10 percent of total garment exports valued at $19.71 billion. The United States takes 19.18 percent at $7.54 billion, while Canada and the UK contributed 3.31 percent and 11.05 percent respectively. This export performance generates consistent foreign exchange inflows, strengthening the country's balance of payments and foreign reserves. Bangladesh has built more than 1,800 integrated textile mills in spinning, weaving and finishing, providing stable supply to the garment industry and achieving 85 to 90 percent of yarn demand for knit garments and 35 to 40 percent for woven garments from domestic textile production.

In the short run, that scale is stabilizing. In the long run, it creates a trap. When a national export identity collapses into one product class, the country becomes hostage to foreign demand cycles, compliance shocks, buyer bargaining power, and policy changes in destination markets. The deeper issue is not effort or competence. It is where value sits in the chain. Most of the high margin functions remain off Bangladeshi balance sheets: brand ownership, retail pricing, platform distribution, design IP, and customer data. A supplier can run at full capacity and still watch profitability evaporate because the buyer controls the margin, the timeline, the quality standards, and the payment terms.

The structural vulnerability became visible during multiple shocks. In early 2020 during the pandemic, several American and European retailers unilaterally abandoned binding obligations in formal contracts through contested invocation of force majeure clauses. A cascade of cancelled, deferred, and discounted orders forced hundreds of factories to halt production or close altogether. By September 2020, $3.8 billion worth of export orders had been suspended or cancelled, affecting approximately 2.2 million workers across 1,150 factories. Many factories closed abruptly without informing workers or paying outstanding wages.

More recently, 2025 brought a convergence of external and domestic pressures. US tariff rates rose sharply from April before settling in August at levels still higher than previously. Exporters reported margins eroded and order planning significantly disrupted. High bank interest rates squeezed working capital. Inconsistent gas and electricity supplies disrupted factory operations. A fire at Dhaka airport in October destroyed garment samples, imported accessories, and raw materials worth millions of dollars. Tighter labour regulations introduced later in the year added further compliance costs. Total garment exports rose just 1.67 percent to $35.28 billion in the January to November 2025 period, far below the double digit growth rates once considered routine for the sector.

Compounding these immediate challenges is the approaching graduation from Least Developed Country status in November 2026. This will end trade preferences covering approximately 90 percent of exports, including preferential access to EU markets that currently absorbs half of Bangladesh's garment exports. Competitors like Vietnam, Cambodia, and Indonesia built competitiveness through productivity improvements, diversified export bases, and investments in skills and technology. Bangladesh faces the graduation with an export base still heavily concentrated in low margin garments, energy sector challenges including high generation costs and excessive capacity payments, and tax collection at just 7.7 percent of GDP in FY2023 among the lowest globally.

Bangladesh's next step is therefore not only better factories or higher compliance. It is upstream and downstream capture. Build Bangladeshi labels that sell to South Asia, the Middle East, and Africa first, then to global markets. Build regional distribution systems so export is not solely mediated by foreign retailers whose bargaining power compresses margins. Invest in design capacity so Bangladeshi firms can offer full package services including trend forecasting, pattern development, and sample production, not just cut and sew operations. And build institutional credibility through enforceable labour standards, predictable commercial law, reliable logistics, and stable energy supply that attract higher value contracts and allow graduation to more complex product categories.

None of this is easy. The political economy is challenging: factory owners who profit from current arrangements may resist changes that require investment. Buyers may prefer compliant suppliers to independent brands. And the international trade architecture still favors countries that locked in advantages decades ago through earlier industrialization. But the ladder out of thin margin dependence is visible. It requires treating garment manufacturing not as the final destination but as the platform from which to build design capacity, brand equity, distribution infrastructure, and the institutional quality that allows capturing more value from the same effort.

How geography shapes creative export patterns

The geography of creative trade reveals structural patterns. Europe is the largest exporter of creative services, followed by Asia and North America. Developing countries primarily export creative goods, while developed countries dominate creative services exports. This bifurcation reflects the intangible nature of services, which requires robust digital infrastructure, enforceable IP regimes, skilled workforces, and access to global payment systems and distribution platforms.

Among developing economies, China and Singapore are the largest exporters of creative services, highlighting the rising influence of Asian economies in this domain. China has become the single largest exporter and importer of creative goods globally. In 2022, Asia including China and Southeast Asia accounted for significant creative exports, with China's garment and manufacturing dominance extending into design intensive categories. South South trade in creative goods has almost doubled over the past two decades, representing 40.5 percent of creative exports by developing economies in 2020, compared to developed economies which mainly exchange cultural goods among themselves.

Africa's creative economy is growing but faces infrastructure gaps. While cultural output is globally influential in music, fashion, film, and digital content creation, monetization remains constrained by payment system limitations, logistics unreliability, weak IP enforcement, and shallow domestic capital markets. The continent's high mobile penetration offers opportunities for digital distribution, but platforms are typically owned by companies in developed economies or China, creating data and revenue extraction dynamics similar to traditional colonial trade patterns.

When visibility does not become capital formation

African creative output is already global in influence. Afrobeats dominates streaming charts. Nollywood is the world's second largest film industry by output volume. African fashion influences runways in Paris, Milan, and New York. Digital content creators build massive followings across social platforms. The economic question is whether that influence becomes domestic capital formation, or whether it enriches platforms and intermediaries while leaving creators and their home economies structurally thin.

There is a difference between global visibility and local prosperity. Virality can enrich platform shareholders while leaving creators underpaid and unable to compound earnings into sustainable businesses. Cultural exports can rise while licensing and legal infrastructure remain too weak to protect revenue streams or enforce contracts. When the institutional pipes are missing, the river of creativity still flows, but the country does not capture the water. Revenue leaks to platforms, to payment processors, to logistics intermediaries, and to IP aggregators in jurisdictions with stronger enforcement.

The playbook for fixing this is not mysterious, but it is boring institutional work dressed in glamorous cultural clothing. Payment systems that work reliably for small merchants and creators without extractive fee structures. Contract enforcement that does not punish the honest or require years of litigation for basic commercial disputes. Shipping corridors that do not convert a simple delivery into a two month saga with multiple intermediaries. IP registries that are accessible, affordable, and credible enough to support licensing and enforcement. And financial infrastructure that understands creative inventory, digital assets, and IP portfolios as bankable assets rather than hobbies.

Education and skills formation matter as much as infrastructure. Design, photography, videography, audio engineering, motion graphics, brand strategy, and digital marketing are teachable, measurable skills. Countries that build pipelines to train, certify, and export these skills will capture margin. Countries that treat creativity as an innate personality trait rather than a discipline will remain suppliers of raw talent that gets refined and monetized elsewhere.

Scale as laboratory, but only if margins stay home

India's scale gives it natural platform advantages. A large internal market of over 1.4 billion people can sustain experimentation in brands, formats, distribution models, and cultural production. Bollywood demonstrates industrial scale content production. India's software services industry shows capacity for complex service exports. The diaspora creates instant global audiences and remittance flows that can support entrepreneurship. But scale alone does not guarantee domestic value capture.

If the highest margin layers of the creative economy remain dominated by foreign platforms for distribution, foreign licensing structures for IP monetization, or imported branding logic that positions Indian creativity as exotic rather than universal, the domestic market becomes an audience rather than an engine. The software services model offers a cautionary tale: India exports enormous value in software development but captures far less of the margin than product companies or platform owners in developed economies.

The central issue is whether creative production becomes formalized and bankable. If design remains informal, concentrated in unincorporated enterprises without accounting systems or legal structures, it cannot compound. If it cannot compound, it cannot hire at scale, export systematically, insure against risks, or invest in productivity enhancing technology. The creative economy then stays culturally vibrant while economically thin, generating employment but not the capital formation that enables climbing to higher value activities. That is not success. It is structural leakage masked by cultural celebration.

Industrial policy for taste looks like infrastructure

Governments often misunderstand the creative sector. They either ignore it as frivolous cultural activity unworthy of industrial policy attention, or try to control it as propaganda apparatus for nation branding and soft power projection. Both approaches fail. The correct role is not cultural instruction or propaganda. It is economic plumbing that reduces friction so the private sector can scale.

That means ports that work, so physical creative goods can reach export markets without weeks of delays and rent seeking. Payment systems that function reliably, so digital creators can receive micropayments from global audiences without losing 30 percent to intermediaries. Legal enforcement that protects IP without requiring years of litigation and connections to powerful interests. Power and connectivity infrastructure that does not force creators to invest in generators and satellite links before they can produce. And export promotion designed for small and mid sized firms, not only for politically connected conglomerates.

Education policy matters enormously. Pattern making, digital product design, photography, motion graphics, videography, audio engineering, merchandising, quality control, supply chain management, and brand strategy are skills. They can be taught. They can be measured. They can be certified and exported. Countries that build these educational pipelines, integrate them with industry needs, and treat creative disciplines as seriously as engineering or accounting will capture margin. Countries that treat creativity as an innate gift or cultural essence will remain suppliers of raw talent that gets trained, refined, and monetized elsewhere.

Twelve out of 36 countries surveyed by UNCTAD have specific government initiatives for creative industries, while another twelve promote sustainable business practices including sustainable design, energy efficiency, circular economy practices, and increasing participation of women, youth, and disadvantaged groups. Effective policies in some countries have fostered thriving creative sectors by protecting intellectual property, ensuring competitive markets, providing export credit and insurance, supporting trade missions, and investing in digital infrastructure. The countries that succeed treat the creative economy not as culture policy but as export oriented industrial strategy.

Aesthetic sovereignty is economic sovereignty

The Global South will not become prosperous by producing more low margin output for richer consumers while accepting the position of permanent supplier in value chains designed and controlled elsewhere. It will become prosperous by keeping more value at home through ownership of design, brands, distribution infrastructure, and the institutional capacity to enforce IP and contracts. That requires a shift from cost competition to credibility competition.

In the creative economy, credibility is not only about cultural authenticity or artistic excellence. It is about delivery reliability, quality consistency, contract enforcement, distribution capability, and institutional trust. When buyers can depend on suppliers not just for manufacturing but for design insight, trend forecasting, quality assurance, and logistics management, margins rise because the relationship shifts from commodity transaction to strategic partnership. When platforms are locally owned or regulated to ensure fair revenue sharing, creators capture more value from their work. When IP regimes are credible and enforceable, licensing becomes a revenue stream not just a cost center.

The world is already buying the South's labor. The next step is to make it buy the South's taste, on the South's terms, with margins that remain in Southern balance sheets and compound into capital formation, skills development, and institutional capacity. When that happens, the creative economy stops being a headline about cultural celebration and becomes a development strategy that diversifies exports, generates formal employment, builds human capital, and enables climbing the value chain.

Bangladesh's garment sector shows both the promise and the limits of the current model. The scale is extraordinary, the employment impact is transformative, and the foreign exchange contribution is essential. But the margin is thin, the vulnerability to external shocks is high, and the value capture remains constrained by dependence on buyer controlled channels. The next generation of creative economy development must learn from this: build the production base, but simultaneously build design capacity, brand equity, distribution infrastructure, and the institutional quality that allows keeping more value at home. The South does not merely manufacture the future. It designs it.