Trade in creative services: relatedness and regional specialisation in the UK

Abstract

Creative services have become an important, but understudied, part of global trade. This paper presents new evidence on the transformation, geography, and industrial relatedness of creative service exports in the UK, using the Inquiry in International Trade in Services (ITIS) database. Creative services exports have grown over the past decade, but there are pronounced patterns of geographic specialization in the export of creative and non-creative services. We develop a measure of relatedness between exports of creative and non-creative services and of manufacturing goods. We argue that creative services are economically significant because of their interrelationship with other local sectors.

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Regional Studies
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Trade in creative services: relatedness and
regional specialization in the UK
Patrizia Casadei, Enrico Vanino & Neil Lee
To cite this article: Patrizia Casadei, Enrico Vanino & Neil Lee (2022): Trade in creative
services: relatedness and regional specialization in the UK, Regional Studies, DOI:
10.1080/00343404.2022.2112165
To link to this article: https://doi.org/10.1080/00343404.2022.2112165
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Trade in creative services: relatedness and regional
specialization in the UK
Patrizia Casadei
a,b
, Enrico Vanino
c
and Neil Lee
b
ABSTRACT
Creative services have become an important, but understudied, part of global trade. This paper presents new evidence on
the transformation, geography and industrial relatedness of creative service exports in the UK, using the Inquiry in
International Trade in Services (ITIS) database. Creative services exports have grown over the past decade, but there are
pronounced patterns of geographical specialization in the export of creative and non-creative services. We develop a
measure of relatedness between exports of creative and non-creative services and of manufacturing goods. We argue
that creative services are economically significant because of their interrelationship with other local sectors.
KEYWORDS
creative services; trade; exports; services; relatedness; UK
JEL F10, R11, R12
HISTORY Received 6 November 2020; in revised form 13 July 2022
1. INTRODUCTION
Over the past decade, cross-border services have grown
more than 60% faster than trade in goods (McKinsey Glo-
bal Institute, 2019; United Nations Conference on Trade
and Development (UNCTAD), 2017). New technology,
deregulation and multilateral efforts to liberalize them
have made services increasingly internationalized (De
Backer & Flaig, 2017). In particular, creative services
such as publishing, architecture and design have experienced
unprecedented growth, leading to increasing attention from
policymakers. In 2015, creative service industries (CSIs)
accounted for approximately 19% of total trade in services
worldwide. CSIs are often characterized by their intangible
output (Department for Culture, Media and Sport
(DCMS), 1998;UNCTAD,2008,2010), and so continu-
ous progress in new digital technologies has expanded the
rangeofcreativeservicesabletobeproducedanddistributed
remotely to consumers, thus lowering the barriers to entry in
the global economy (UNCTAD, 2018a).
The literature on creative industries (CIs) has been
growing rapidly (e.g., Casadei & Lee, 2020; Kemeny
et al., 2020; Tether, 2019), yet their tradability has been
largely ignored. The few studies aimed at exploring trends
in CIs trade (Di Novo et al., 2020; Fazio, 2021;
UNCTAD, 2018a) have remarked that its rise has been
mainly driven by the expansion of trade in creative services.
However, to date, little research has focused on the service
component of CIs and, most importantly, its role in trade.
Only a few studies started disentangling creative and non-
creative services, analysing how regional specialization in
CSIs is associated with higher levels of regional gross
domestic product (GDP) per capita and labour pro-
ductivity (Boix et al., 2013; Boix-Domenech & Soler-
Marco, 2017), while their relevance in international
trade has been investigated only descriptively at the aggre-
gate level (Gouvea & Vora, 2016).
It is also important to understand how creative services
originated, and how they are linked to the rest of the econ-
omy. Due to technological advances and digitalization, an
increasing number of creative goods over time have been
transformed into creative services, in particular in the
media and publishing sectors (Abbasi et al., 2017), stimu-
lating a growth as well in cross-border transactions of so-
called ‘intangible goods’(Hill, 1977; World Economic
Forum (WEF), 2018). This has led to an increasingly
blurred distinction between the tangible and intangible
components of the CIs. More generally, the distinction
between manufacturing and services over time has become
increasingly vague, as these are more and more interdepen-
dent with the emergence of servitization in manufacturing
industries combining sales of service- and manufacturing-
© 2022 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted
use, distribution, and reproduction in any medium, provided the original work is properly cited.
CONTACT Patrizia Casadei P.Casadei@lse.ac.uk
a
Science and Policy Research Unit (SPRU), University of Sussex, Brighton, UK
b
Department of Geography and Environment, London School of Economics, London, UK
c
Department of Economics, University of Sheffield, Sheffield, UK
Supplemental data for this article can be accessed online at https://doi.org/10.1080/00343404.2022.2112165.
REGIONAL STUDIES
https://doi.org/10.1080/00343404.2022.2112165

related components (Baines et al., 2017; De Backer et al.,
2015; Miles, 1993; Miroudot & Cadestin, 2017). In this
regard, previous work has called for the research to inves-
tigate the way services and manufacturing industries are
increasingly intertwined, in particular in the CIs (De
Backer et al., 2015; Miroudot & Cadestin, 2017).
To combine these research gaps, this paper provides
quantitative evidence of the growing significance of crea-
tive services exports over time, to identify regional clusters
of specialization, as well as to study their industrial relat-
edness with non-creative services and manufacturing
industries using export data. The focus is on the UK, an
economy dominated by services and second only to the
United States among OECD countries in terms of trade
in services flows (Abreu et al., 2008). The UK has strongly
invested in creativity as an engine of economic develop-
ment, recently experiencing remarkable creative service
sector growth. Between 2009 and 2014, the value of crea-
tive services exported from the UK increased by nearly
50%, three times faster than those from the rest of the
economy, reaching £19.8 billion in 2014 (DCMS,
2016). This reflects a more general worldwide increase
in the demand for creative services, making the UK one
of the top exporting countries in the world thanks to its
pool of creative human capital, long-lasting specialization
in services and world’s leading CIs (Di Novo et al., 2020).
We use Inquiry in International Trade in Services
(ITIS) data in combination with the Annual Business Sur-
vey (ABS) to study trade in services. First, we locate CIs
geographically and trace trade in creative services flows
across the country to identify a pattern of regional special-
ization. Second, using co-occurrence analysis, we develop
a measure of industrial relatedness between exports of crea-
tive, non-creative services and manufacturing goods to
investigate the frequency with which they co-locate with
manufacturing goods (Hidalgo et al., 2007;Neffkeetal.,
2011). The frequency by which creative services exports
are located with non-creative services and manufacturing
industries helps us to analyse their relationship with the
rest of the local economy, in terms of production processes,
product complementarity, technologies and skills, and mar-
kets. Finally, we analyse whether the relatedness of creative
services, which measures how strongly connected these are
with the local industrial structure (Boschma et al., 2015;
Hidalgo et al., 2007), shapes the emergence of new com-
parative advantages and the regional specialization in
knowledge intensive, high added-value creative services.
The paper makes two main contributions. First, it pre-
sents new data on trade in creative services and identifies
clusters of specialization. Second, it provides evidence of
industrial relatedness between creative and non-creative
services and manufacturing industries, stimulating discus-
sion on the nature of these relationships, their comple-
mentarity and how these shape the pattern of regional
specialization in creative services.
Our results show that creative services exports have
rapidly increased, becoming among the UKs most impor-
tant service trade flows. Different creative services have
different regional specialization patterns. However, they
tend to be clustered in the South East of England and
major urban areas. Creative services are strongly related
to other non-creative services, even more than among
creative services themselves, while the relatedness with
manufacturing industries is weaker. Consequently, crea-
tive services have a stronger relatedness density with the
local economy in urban areas and in the South East of
England, the main hubs of knowledge creation where uni-
versities and knowledge-intensive industries are mostly
clustered. An econometric analysis shows that relatedness
with the rest of the local industrial structure explains
regional specialization in creative services, even more
than for other industries, in particular relatedness with
other local services, and in regions with weaker relation-
ships between creative services and the local economy.
2. CONTEXT AND THEORY
2.1. Trade in creative services
Services have often been overlooked in discussions of glo-
bal trade. This was perhaps because of their intangible
nature, which makes it more difficult to envision exactly
what trade in services means (Schöllmann, 2015). The
term ‘services’covers a large variety of activities that cannot
be easily encapsulated within a simple definition. The
World Trade Organization (WTO) General Agreement
on Trade in Services (GATS), in force since 1995, pro-
vides a rather broad definition of what constitutes trade
in services, including four modes of supply: (1) services
that cross the border virtually, such the provision of online
banking; (2) services consumed abroad by foreign consu-
mers, such as healthcare provided abroad; (3) services pro-
vided by branches or subsidiaries of foreign suppliers, such
as the establishment of a local branch by a foreign bank;
and (4) services provided by suppliers temporarily moving
to a foreign country, such as engineers moving abroad to
supervise construction work.
Trade liberalization and information and communi-
cation technological (ICT) advances have enabled trad-
ability of services by lowering trade costs and barriers to
entry and creating new channels for firms to deliver ser-
vices remotely (De Backer et al., 2015; De Backer &
Flaig, 2017). The value of services worldwide has increased
considerably, now representing almost two-thirds of
GDP and half of global employment (UNCTAD,
2017). Services have become the most dynamic com-
ponent of international trade in both developed and devel-
oping economies,
1
and their share of global trade could
grow by 50% by 2040 (WTO, 2019).
Trade in creative services is a growing part of this
phenomenon (UNCTAD, 2019). Since Howkins (2002)
used the term ‘creative economy’, there has been increased
recognition of the role played by the creative economy in
employment, trade and innovation. Central to the creative
economy are the CIs, defined as ‘activities which have their
origin in individual creativity, skill and talent and which
have the potential for wealth and job creation through
the generation and exploitation of intellectual property’
(DCMS, 1998, p. 5). UNCTAD (2010, p. 8) enlarges
2Patrizia Casadei et al.
REGIONAL STUDIES

this definition by describing these industries as ‘a set of
knowledge-based activities, focused on, but not limited
to the arts, potentially generating revenues from trade
and intellectual property rights’.
Creative services are CIs in the service sector character-
ized by an intangible output (Boix et al., 2013; Gouvea &
Vora, 2016; UNCTAD, 2018a). The few studies focusing
on the service component of CIs have highlighted their
contribution to GDP (Boix et al., 2013), labour pro-
ductivity (Boix-Domenech & Soler-Marco, 2017) and
trade (Gouvea & Vora, 2016). Various governments and
economic development agencies have recognized the
importance of creative services, and their exports, for econ-
omic growth (DCMS, 2016).
Creative services are highly diverse and can be exported
under one of the four GATS exports modes: cross-border
provision (e.g., telecommunications, the downloading of
software products, book-keeping service deliveries), con-
sumption abroad (e.g., visits to museums, attendance to
live performance events), commercial presence abroad
(e.g., headquarters of international advertising companies)
and temporary movement of people (e.g., architects, musi-
cians, artists moving abroad). They can also enter the
export market as complements to other goods or services
(e.g., books sold with web resources) (Fazio, 2021).
Once services are sold to entities in foreign countries,
they can be used in both the foreign and domestic markets,
for instance, to support non-UK-based businesses in their
activities in the UK.
Technological advances and digitalization have blurred
the distinction between creative goods and services (Gian-
nini & Bowen, 2019) and increased cross-border trans-
actions of ‘intangible goods’(Hill, 1977; WEF, 2018).
For years, books, movies, games, music and media content
have been moving from physical printed copies to digital
files that can be distributed via channels of electronic com-
munication to customers anywhere in the world
(UNCTAD, 2019). Streaming sites such as Spotify and
Netflix have turned the music, film and television indus-
tries into digital services, a process which was boosted by
the COVID-19 pandemic. Future developments such as
virtual reality and artificial intelligence will expand the
range of creative services.
Creative services are amongst the most dynamic sec-
tors in global trade (UNCTAD, 2010). Yet academic
interest has been limited. Following the 2008–09 econ-
omic and financial crisis, international trade contracted
by 12%, yet creative services have since grown globally
at an average rate of 14%. Between 2000 and 2011,
world trade in creative services more than doubled,
accounting US$624 billion in 2011. Creative services
exports rose from US$52.2 billion to US$172 billion,
growing annually by 17% (Gouvea & Vora, 2016;Hajko-
wicz, 2015). Available creative services exports data from
38 advanced countries show that creative services account
for a significant and growing portion of the overall trade
in services in advanced economies. According to these
data, the average annual growth rate of trade in creative
services between 2011 and 2015 more than doubled
that of all services. In 2015, the share of creative services
in total trade in services accounted for 19% (UNCTAD,
2018a). In the UK, creative service exports were worth
£19.8 billion and accounted for 9% of total service
exports (British Council, 2019), and increased up to
£27.1 billion in only two years (Creative Industries
Trade and Investment Board (CITIB), 2019). However,
tradability of creative services remains a major gap in the
literature.
2.2. Relatedness between creative services and
the rest of the economy
Given the increasing economic contribution of CSIs to
advanced economies, it has become particularly important
to understand how creative services are intertwined with
other services and manufacturing sectors. This helps
evaluate the strength of their relatedness with the rest of
the industrial structure, in terms of input–output relation-
ships, technological and skills mutual needs, and better
understand how it could be possible to boost and exploit
their complementarity.
An established literature has developed several
measures to estimate the similarity and relatedness
between different economic activities, without imposing
a priori assumptions regarding the nature of these relation-
ships (Breschi et al., 2003; Hidalgo et al., 2018; Jaffe,
1989; Teece et al., 1994). One of the most common
approaches to measuring inter-industry relatedness is co-
occurrence analysis which examines how often two indus-
tries are found together in the same economic entity. This
method assumes that cognitive proximity leads to co-pro-
duction of related products/sectors. Teece et al. (1994)
marked an important step forward in this field by measur-
ing coherence of a firm based on the intra-business relat-
edness of its outputs. In this case, two activities that
appear together regularly within the same business are
assumed to be highly related; conversely, those business
activities rarely occurring together are assumed to be lar-
gely unrelated. While these approaches were based on
the co-occurrences of activities within one firm, Hidalgo
et al. (2007) generalized this framework by considering
the number of times that two products showed a joint
revealed comparative advantage (RCA) across countries.
Their relatedness measure is based on the idea that two
products are related if they are co-exported with a higher
intensity than the national average by several countries.
The probability that a country will export a product
increases with the number of related products that this
country already exports. In other words, two products
will be close to each other if countries tend to have RCA
in both products. This is because once a country has devel-
oped the capabilities to specialize in exporting particular
products, it can easily diversify in related products that
require very similar production processes, inputs, technol-
ogies, skills, as well as final costumers or distribution chan-
nels. One important implication is that product or
industrial relatedness is likely to be geographically
bounded, with firms co-locating near related firms (Corra-
dini & Vanino, 2021). Because of this, one way of
Trade in creative services: relatedness and regional specialization in the UK 3
REGIONAL STUDIES

analysing relatedness is to focus on patterns of geographi-
cal proximity in terms of exporting industries (Bahar et al.,
2014). While this approach cannot identify the exact
mechanisms at play, it can –alongside other analysis –
show potentially important patterns.
So far, few studies have applied the concept of related-
ness or related variety to CIs. From an evolutionary per-
spective, higher related variety amongst CIs –in terms
of technologically relatedness with other sectors –implies
that firms can benefit from inter-sectoral knowledge spil-
lovers and that regions will be able to successfully diversify
in new industries that use similar skills, competencies or
knowledge bases (Berg & Hassink, 2014). Cognitive
proximity in the CIs has also been regarded as a key factor
in fostering innovation and economic development in the
area through cross-fertilization processes (e.g., Innocenti
& Lazzeretti, 2019; Klement & Strambach, 2019b; Lee,
2020). Although unrelated variety within CIs is less com-
mon, it becomes particularly significant in the context of
symbolic knowledge creation and through the decontex-
tualization of mobile knowledge from its origin and its
interaction with new contexts (Klement & Strambach,
2019a). Indeed, an heterogenous environment made of
different cognitive frameworks can be an important source
of inspiration and of fruitful collaborations across indus-
tries (Cohendet et al., 2014).
Several studies have also emphasized a positive relation
between creative and non-creative sectors. Bakhshi et al.
(2008) explored the links between the CIs and other sec-
tors in the UK to assess the contribution of CIs to inno-
vation derived from a process of inter-sectoral cross-
fertilization. Their findings support the idea that supply
chain linkages to the creative sector are positively related
to innovation elsewhere in the economy. Chapain et al.
(2010) highlighted co-location patterns and knowledge
spillovers between creative sectors, high-tech manufactur-
ing and knowledge-intensive business services in the UK.
CIs may also play a key role in stimulating growth in non-
creative parts of the economy (Lee, 2014). More broadly,
the UK CIs seem to be highly integrated with the rest of
the economy, as further stressed by the Trident method-
ology (Higgs & Cunningham, 2008) showing that creative
workers are not restricted to creative firms but embedded
throughout all industries.
More recently, Innocenti and Lazzeretti (2019), using
data on Italian provinces, adapted Hidalgo et al.’s(2007)
methodology to explore the relatedness between creative
and other sectors. They found that the major interactions
occur between creative sectors and other apparently distant
sectors, which seem to have a high degree of cognitive
proximity. Higher relatedness implies that these industries
share similar knowledge that allows for cross-fertilization
and spillovers between them. Previous work has also
shown that services more broadly tend to co-locate not
only amongst themselves, but also with manufacturing
and other industries (Wernerheim, 2010). However,
while some scholars have provided evidence of patterns
of co-location between different creative services (e.g.,
Boix et al., 2013; De Propris et al., 2009), to the best of
our knowledge, no studies have adopted the concept of
relatedness to explore the proximity between the exports
of creative services, non-creative services and other manu-
facturing goods.
3. DATA AND SUMMARY STATISTICS
Our primary dataset is the International Trade in Ser-
vices Survey (ITIS), which contains data on UK firms’
trade in services (Office for National Statistics (ONS),
2021a). ITIS provides detailed information on the
type, value and partner country for a sample of repre-
sentative firms which are known to be trading in ser-
vices. It differentiates between 52 service types
following the United Nations Extended Balance of Pay-
ment Services (EBOPS) classification. For this analysis
we focus on exports of services, defined as the sale by
UK based entities of intangible commodities to any
individual or business entity located outside the UK.
2
Weighted measures of exports value at the regional
(NUTS-2) and product level are obtained by summing
the grossed value weighted by the probability of a firm
to be selected in the ITIS sample. The analysis was
restricted to the period 2011–17 to allow consistent
comparison with data from other sources.
3
Creative service exports were identified in the ITIS
database using the DCMS (2016) classification. We
looked for the description of each group and subgroup of
activities in the DCMS and ITIS classifications and
then matched the corresponding categories. The following
types of creative services exports were selected: advertising,
market research and public opinion polling (ITIS code 7),
public relations (9), copyrighted literary works, sound
recordings, films, television programmes and databases
(19), telecommunications (22), computer software (23),
publishing (24), news agency (25), information services
(26), audio-visuals (43), heritage and recreational services
(46), and architectural services (48). Because our aim is to
explore the relationship between exports of creative ser-
vices, non-creative services and manufacturing goods, we
opted for keeping this more granular classification of crea-
tive services compared to the traditional DCMS taxon-
omy. The match between our selected ITIS codes and
traditional DCMS codes can be found in Table A1 in
Appendix A in the supplemental data online. We classified
the rest of the services exports into 10 categories: agricul-
ture, manufacturing and mining supporting services (ITIS
codes 1, 4 and 5), business and professional services (6, 8,
10–15), research and development (R&D) and patenting
services (16–18, 20), postal services (21), construction
services (27), financial and insurance services (29, 30),
trading services (41, 42), personal services (44, 45, 47),
technical and scientific services (49, 50), and other services
(51, 52).
In 2011, only two creative services were in the top 10
most exported in the UK (see Table A2 in Appendix A
in the supplemental data online): architectural services,
which accounted for 4.5% of services exports, and audio-
visuals (2.35%). By 2017, creative services had become
4Patrizia Casadei et al.
REGIONAL STUDIES

much more important, with copyrights (6.3%), advertising
(6.0%), software (5.6%) and telecommunications (5.0%)
among the top 10 services exported.
Focusing on creative services exports, Figure 1 shows
that over the period 2011–17 creative services exports
accounted for about 30% of total UK services exports.
Exports of advertising services, copyrighted creative
works, telecommunication services and computer soft-
ware have mostly driven creative services exports,
accounting for around 5% of total services exports each.
In addition, we note a rapid increase in the share of ser-
vices in four of the sectors which form the top 10: copy-
rights, advertising, software and telecommunications,
while a relative decline in the share of architectural and
audio-visual services exports. The remaining creative ser-
vices exports remained stable below 2% of total UK ser-
vices exports throughout the period. For instance, in
2016 the UK exported £439 million of architectural ser-
vices; however, these only represented 0.3% of total ser-
vice exports (GLA, 2018). There are still many barriers
preventing architectural practices from taking the first
steps to international expansion. Visa restrictions and a
lack of mutual recognition agreements for architects’qua-
lifications outside of the European Union (EU) are
amongst the biggest barriers for working in overseas mar-
kets. Another barrier faced by especially small practices is
being unprepared both financially and in terms of skills
and expertise to work in other countries. Moreover, as
architecture is a highly regulated profession, different
regulatory environments further complicate overseas
work (The Royal Institute of British Architects
(RIBA), 2018).
We then consider the top 10 destinations for all ser-
vices and creative services (see Table B1 in Appendix B
in the supplemental data online). The United States dom-
inates both lists for service and creative service exports,
being responsible for around 23% of service exports and
20% of creative service exports, followed by Germany
(6.3% and 7.4%) and Switzerland (6.1% and 5.7%). Swe-
den, Spain and Norway are amongst the top destination
for only creative service exports. We note that seven of
the top 10 creative service destinations are in the EU, col-
lectively accounting for around 30% of total creative ser-
vice exports. The European Single Market is indeed the
most integrated area for trade in services in the world.
Although member states have regulatory powers, their
rules do not generally discriminate or prohibit access to
their markets. For example, when the UK was still part
of the EU, a programmer in the UK could work for Span-
ish software companies or an Italian architectural business
and was free to establish a subsidiary in the UK and man-
age a branch in Czechia. In the EU, freedom to provide
services is supported by the free movement of people, as
well as cross-cutting and sector-specific rules on mutual
recognition of professional qualifications and common
rules on data. Given the lack of a trade agreement on ser-
vices between the UK and the EU post-Brexit, the intro-
duction of cross-border regulations and restrictions could
potentially create major disruption to exports towards
the EU in such an increasingly important sector of the
UK economy.
Additional information on firms’manufacturing
exports was obtained through the ABS dataset (ONS,
2021b), consisting of a census of large firms with more
than 250 employees, and a representative sample of med-
ium and small firms. Data were weighted and collapsed in
order to calculate the total turnover of exporting firms
across 10 manufacturing industries resulting from the
aggregation of Standard Industrial Classification (SIC) 2
classification sectors: food manufacturing (SIC codes 10–
12), textiles manufacturing (13–15), wooden products
manufacturing (16–18), chemicals (19–23), metals (24,
25), computers (26), electric equipment (27), machineries
(28), transport equipment (29, 30), and other manufactur-
ing (31–33).
4
In this way we provide estimates of Great
Britain exports for 11 creative services, 10 other services
and 10 manufacturing industries across 39 NUTS-2
regions.
From a spatial point of view, Figure 2 shows that
the geographical distribution of creative services expor-
ters is quite different from those of manufacturing and
other services exporters. While manufacturing exports
are more evenly distributed across space, with higher
intensities in the South West, Wales, the Midlands,
the North East, and West and South West of Scotland,
service exports are focused mostly around urban areas,
in particular around London and the South East, Cam-
bridgeshire and Oxfordshire, as well as the Greater
Manchester area and East Scotland. For instance, in
2016 London’s service exports accounted for £117.3 bil-
lion, which represented nearly half of the UK’s total
export of services. Financial services, travel services,
real estate, and the professional, scientific and technical
services sectors were London’s largest exporting sectors
(ONS, 2018). Indeed, services, which benefit from
urbanization economies, tend to concentrate in larger
cities with high density of different economic activities
because of proximity to costumers, the availability of
highly educated employees and learning dynamics aris-
ing from co-located firms (Boschma & Frenken,
2011). However, creative services exports are even
more geographically clustered, mainly in London and
the South East, Oxfordshire, Greater Manchester and
Yorkshire. This partially reflects the geographical distri-
bution of CIs, which have a dominant presence in the
South East and London, which alone accounts for
around 40% of creative industry employees and a
third of creative businesses (Mateos-Garcia & Bakhshi,
2016).
4. REGIONAL SPECIALIZATION AND
RELATEDNESS ANALYSIS
The different geographical distribution of manufacturing,
creative and other services exports could provide relevant
insights regarding the potential complementarity and
similarity between different types of exports. Thus, we fol-
low the established stream of economic complexity and
Trade in creative services: relatedness and regional specialization in the UK 5
REGIONAL STUDIES

relatedness research (Hidalgo et al., 2007; Hidalgo &
Hausmann, 2009; Neffke et al., 2011) in the economic
geography literature to estimate the relatedness between
these exporting activities and the evolution of UK regions
industrial specialization based on their spatial distribution
across regions.
To estimate the relatedness between creative services,
other services and manufacturing exports, we followed
the methodology proposed by Breschi et al. (2003) based
on co-occurrence analysis, as seminally started by Jaffe
(1989) and developed broadly since (Bryce & Winter,
2009; Hidalgo et al., 2007; Teece et al., 1994). We
investigated the frequency with which exports of creative
services iand non-creative services and manufacturing
exports jco-locate across regions relative to all other
exports, analysing the RCA of UK NUTS-2 regions
exports. Co-occurrence analysis measures the relatedness
between two exporting activities by assessing whether
they are often found together in the same local economic
entity. The assumption is that the frequency by which
two products and services are jointly exported from the
same regions can be interpreted as a sign of the strength
of their relationship, in terms of production processes
implemented, inputs of production used, technologies
Figure 1. Share of creative services exports over total services exports in the UK, average and change over the period 2011–17.
Note: Statistics are elaborated using data from the Inquiry in International Trade in Services (ITIS) database. The share is given by
the average ratio between creative services exports over total services exports in the UK over the period 2011–17.
6Patrizia Casadei et al.
REGIONAL STUDIES

developed, skills required, complementarity and final mar-
kets targeted.
First, we measure the RCA of region rin exporting
product ibased on the Balassa index (Balassa, 1965;
French, 2017):
RCAir =Xir/iXir
rXir/irXir
.1
Starting from the value of total exports of product iin
region r(Xir), this index simply computes the relative
share of product iin the total exports basket of region r,
(Xir/iXir) compared with the relative importance of
product iin the total exports of the country. Thus, a region
rwill have a comparative advantage in the export of pro-
duct iin respect to all other regions within the same
country only if RCAir .1. The RCA index has been
initially developed in international economics for calculat-
ing the relative advantage or disadvantage of countries in a
certain class of goods or services, based on Ricardian com-
parative advantage, but has been recently applied in other
fields, including estimating the industrial specialization of
regions (Hidalgo & Hausmann, 2009). Figure 3 maps the
RCA of regions in some of the main non-creative services
exports, namely financial and insurance, business and pro-
fessional, R&D and patenting, and construction services.
Financial services are clearly the most concentrated –in
Inner London and Eastern Scotland (Edinburgh). Simi-
larly, we find evidence of RCA for business and pro-
fessional services primarily in urban regions, as inner
London, South Yorkshire (Sheffield), West Yorkshire
(Leeds), the North East (Newcastle), the West Midlands
(Birmingham) and Bristol. In contrast, regions with high
RCA in the export of R&D and patenting services are
located across the UK and Northern Ireland. On the con-
trary, the distribution of RCA in the exports of construc-
tion services is quite heterogeneous, but mainly focused in
non-urban regions, such as Shetland and Orkney, North-
ern Scotland, Northern Ireland and much of rural
England.
Patterns of regional specialization in creative service
exports are instead given in Figure 4. These show pro-
nounced but relatively distinct geographies. Only four
regions have a high RCA in copyrights: Cheshire, poss-
ibly due to a strong computer games sector, Devon,
Cumbria and Inner London. For advertising, Inner and
Outer London have strong RCA, as do Lancashire,
Leicestershire, Rutland and Northamptonshire, Hamp-
shireandtheIsleofWight,andDevon.Onthecontrary,
many regions register an RCA in the exports of software
services, widely dispersed across the country, including
Northern Ireland, Herefordshire, Worcestershire and
Warwickshire, and much of the South East (excluding
London) and Eastern Scotland. Finally, regions with a
high RCA for the exports of telecommunication services
include the stretch of Western England running north
from Hampshire and the Isle of Wight to Shropshire
and Staffordshire, Lancashire and South Yorkshire
(Sheffield).
Second, we measure the number of occurrences region
rhas a joint comparative advantage both in the export of
product iand j, relative to all other regions and products
combinations. We indicate the number of co-occurrences
between the RCA of exports of creative services iand of
other services or manufacturing product jacross NUTS-
2 regions ras CirCjr. By applying this count of joint
RCA occurrences to all possible pairs of products and ser-
vices exported, we obtained a square symmetrical matrix of
Figure 2. Spatial distribution of creative, other services and manufacturing exports, 2011–17.
Note: Statistics are elaborated using data from the Annual Business Survey (ABS) and Inquiry in International Trade in Services
(ITIS) databases. Manufacturing, services and creative service exports intensities have been normalized and averaged over the
period 2011–17.
Trade in creative services: relatedness and regional specialization in the UK 7
REGIONAL STUDIES

Figure 3. UK regions revealed comparative advantage (RCA) in exports of services, 2011–17.
Note: Statistics are elaborated using data from the Inquiry in International Trade in Services (ITIS) database.
8Patrizia Casadei et al.
REGIONAL STUDIES

Figure 4. UK regions revealed comparative advantage (RCA) in exports of creative services, 2011–17.
Note: Statistics are elaborated using data from the Inquiry in International Trade in Services (ITIS) database.
Trade in creative services: relatedness and regional specialization in the UK 9
REGIONAL STUDIES

co-occurrences (C), whose generic cell Cir reports the
number of times these products and services have jointly
an RCA in the same regions. This matrix of RCA co-
occurrences was then used to derive a measure of related-
ness between creative services, other services and manufac-
turing exports using the cosine index Sij which measures
the angular separation between the vectors representing
the co-occurrences of RCA for creative services iand for
non-creative services or manufacturing product jexported.
As the simple correlation coefficient, the cosine index pro-
vides a measure of the similarity between two exported
products and services, in terms of their mutual relation-
ships with all the other exports, with the advantage of
being symmetric. The final measure Sij is greater the
more the two exported products or services iand jhave
an RCA co-occurrence in the same regions.
Sij =rCirCjr

rC2
ir

rC2
jr

The cosine index Sij gives us a bilateral measure of related-
ness between two exported products or services iand j.
Being agnostic about the source of relatedness could under-
mine the validity of the analysis by generating ‘false posi-
tives’where co-occurrences arise for reasons other than
relatedness. However, a vast empirical literature has
shown the robustness of this methodology in identifying
linkages and relatedness between occupations (Diodato
et al., 2018; Jara-Figueroa et al., 2018), products exported
(Hidalgo et al., 2007), tasks (Teece et al., 1994), industries
(Corradini & Vanino, 2021; Neffke et al., 2011)and
patents (Kogler et al., 2013; Whittle & Kogler, 2020). All
these studies and evidence corroborate the so-called
‘principle of relatedness’, showing how many different,
but related, measures of relatedness applied to different con-
texts are all valid to describe the strength of linkages
between economic activities as a function of the number
of related activities present across locations, with pros and
cons linked to the different spatial scales, type of economic
activities, and the variety of institutional regimes (Hidalgo
et al., 2018). In addition, by focusing on co-location of
RCAs based only on exports of tradable goods and services,
rather than simple employment, we limit the concerns related
to outliers emerging from the co-location of ancillary non-
tradable economic activities,whichareevenlydistributed
across the country and co-locate for reasons other than relat-
edness. Finally, to make sure that our results are not driven by
the uniqueness of the relatedness measure employed in this
study, we replicate our analysis using alternative measures,
such as the Teece et al. (1994) index of industrial relatedness
and the Neffke et al. (2011) measure of revealed relatedness.
5
We are then able to consider the relatedness between
creative, other services and manufacturing exports across
the whole economy in Tables 1 and 2and Figure 5.Essen-
tially each of these shows the two sectors which have the
highest export relationship, that is, where exports in an
industry tend to happen in the same place as exports in
another industry. While we are agnostic about the precise
mechanisms driving this relatedness, and there is a chance
that false positives may arise, these relationships are likely
to be driven by economic relatedness. As mentioned earlier
in the text, services and manufacturing have become grow-
ingly intertwined over time. Manufacturing firms not only
use services as inputs in their production process but also
increasingly provide services. Moreover, service industries
growingly use the output of manufacturing industries to
Table 1. Top 10 relatedness indexes between manufacturing and services exports.
All Sectors Service–Manufacturing
Relatedness Industry pair Relatedness Industry pair
0.961 Financial and
insurance
News agency 0.383 Manufacturing
support
Chemicals
0.906 Metals Chemicals 0.335 Manufacturing
support
Other
manufacturing
0.686 Construction Financial and
insurance
0.309 Manufacturing
support
Machineries
0.649 Transport equipment Metals 0.303 Manufacturing
support
Metals
0.620 Machineries Transport equipment 0.292 Architecture Transport
equipment
0.616 Electric equipment Chemicals 0.280 Trading Computers
0.613 Construction Architecture 0.277 Manufacturing
support
Food
0.584 Transport equipment Textiles 0.273 Manufacturing
support
Textiles
0.560 Heritage Architecture 0.255 Transport equipment Postal
0.529 Machineries Textiles 0.253 Chemicals Personal
Note: Statistics are elaborated using data from the Annual Business Survey (ABS) and Inquiry in International Trade in Services (ITIS) databases based on
2011–17 averages. Highlighted in bold are creative services, in italics other services, while manufacturing exports are in normal text.
10 Patrizia Casadei et al.
REGIONAL STUDIES

provide their activities more efficiently. This is reflected in
the geography of exports. In addition, many industries
share nowadays very similar pool of skills and humancapital.
The strongest relatedness between exports is between a
creative and another service, specifically between finance
and insurance and news agency services. The finance and
insurance sector is one of the main drivers of the economy,
in which the UK is an international leader, exporting ser-
vices beyond Europe. News agency services instead include
the provision of news, photographs and feature articles to
the media, in which the UK has a long-lasting tradition
and comparative advantage. The two sectors could be
strongly related due to their mutual reliance in the pro-
duction process, as well as the sharing of human capital
and other capabilities for rapid information gathering
and processing. Most of the other strongest relatedness
involve industry pairs within the same broad sector, as
Table 2. Top 10 relatedness indexes between creative, other services and manufacturing exports.
Creative–Creative Creative–Others Creative–Manufacturing
Relatedness Industry pair Relatedness Industry pair Relatedness Industry pair
0.560 Heritage Architecture 0.961 News agency Financial and insurance 0.292 Architecture Transport equipment
0.523 Telecommunications News agency 0.613 Architecture Construction 0.235 Architecture Machineries
0.523 Public relations News agency 0.472 News agency Other services 0.234 Audio-visual Computers
0.490 Copyrights News agency 0.467 News agency Personal 0.209 Audio-visual Electric equipment
0.456 Advertising News agency 0.462 Information Financial and insurance 0.186 Architecture Other manufacturing
0.438 Public relations Heritage 0.448 Copyrights Construction 0.181 Heritage Other manufacturing
0.421 Advertising Information 0.418 Heritage Financial and insurance 0.180 Heritage Textiles
0.417 Advertising Copyrights 0.404 News agency Business and professional 0.177 Telecommunications Transport equipment
0.417 Publishing News agency 0.402 Advertising Other services 0.170 Software Computers
0.412 Information News agency 0.394 Public relations Business and professional 0.168 Public relations Textiles
Note: Statistics are elaborated using data from the Annual Business Survey (ABS) and Inquiry in International Trade in Services (ITIS) databases based on 2011–17 averages.
Figure 5. Average relatedness indexes between UK manufac-
turing, creative and other service exports, 2011–17.
Note: Statistics are elaborated using data from the Annual
Business Survey (ABS) and Inquiry in International Trade in Ser-
vices (ITIS) databases. In light grey are the creative services:
C1, Advertising; C2, Public relations; C3, Copyrights; C4, Tele-
communications; C5, Software; C6, Publishing; C7, News
agency; C8, Information services; C9, Audio-visuals; C10,
Heritage and recreational services; and C11, Architectural ser-
vices. In dark grey are other services sectors: S1, Agri and
manufacturing supporting services; S2, Business and pro-
fessional services; S3, R&D and patenting services; S4, Postal
services; S5, Construction services; S6, Financial and insurance
services; S7, Trading services; S8, Personal services; S9, Techni-
cal and scientific services; and S10, Other services. In mid-grey
are the manufacturing services: M1, Food manufacturing;
M2, Textiles; M3, Wooden products; M4, Chemicals; M5,
Metals; M6, Computers; M7, Electric equipment; M8, Machi-
neries; M9, Transport equipment; and M10, Other manufac-
turing. Edges represent linkages between manufacturing,
creative and other service exports in the top quartile of the
relatedness distribution. The location of nodes is determined
using an LGL algorithm.
Trade in creative services: relatedness and regional specialization in the UK 11
REGIONAL STUDIES

metals and chemical in manufacturing, which have been
shown to be increasingly linked from a technological
point of view (Kogler et al., 2013), construction and
finance within services, interlinked in real estate develop-
ments, or architecture and heritage within creative ser-
vices. However, we see that architecture creative services
are also strongly related with construction services, as
expected, highlighting the strongest link between creative
and other services. Considering the links between manu-
facturing and services, we notice a strong relatedness
between manufacture supporting services and several man-
ufacturing exports, important evidence of the growing
trend in manufacturing industries discussed above consist-
ing in intertwining the sale of manufacturing goods
together with the related post-sale assistance and support-
ing services for customers.
Table 2 focuses instead on the specific relatedness links
between creative services and other industries exports.
Public relations and News agency services tend to be
highly related with several industries, both in creative
and in other services. For instance, Public relations and
Heritage exported services are strongly related, as both
are based on the use of very similar set of skills, as the
organization of events, management and dissemination
of information, design and other artistic capabilities.
Also audio-visuals and advertising are highly related to
other services. This can be explained by the fact that adver-
tising services are generally used by consumer-oriented
services to be better placed in the sales market (ECSIP
Consortium, 2014). This is also in line with previous
research that has highlighted co-location patterns and
knowledge spillovers between advertising and these crea-
tive sectors in the UK (Chapain et al., 2010).
Figure 5 shows the structure ofthe network of relatedness
between UK manufacturing, creative and other service
exports, using a large graph layout (LGL) algorithm identify-
ing disconnected clusters in the data, and laying them out
radially starting from a seed node, where for clarity the
reported edges represent only relatedness linkages in top
quartile of the distribution. Our analysis suggests that creative
services are mostly linked with other services exports,
although we identify a close relatedness between architecture,
audio-visual and heritage creative services with other manu-
facturing industries exports, even though at a lower level than
within broad services sector industry pairs. However, these
findings indicate how the exports of manufacturing goods
and creative services could be growingly intertwined and
could be correlated with patterns of re-specialization of
regions from manufacturing to services hubs. As a result,
these findings could form an evidence base to develop
regional diversification strategies from mature manufacturing
industries and services to the exports of related globally com-
petitive creative services.
While the analysis above considers the relatedness
between creative services and other services and manufac-
turing exports for Great Britain as a whole on an industries
pair-by-pair basis, we can also identify how creative services
overall are linked to the industrial structure of individual
regions across the country. This would help us to under-
stand how creative services exports build upon the existing
industrial specialization of regions in other services and
manufacturing exports beyond the specificity of each indus-
tries pair, identifying in this way which regions have the
capabilities, skills and knowledge to foster creative services
exports. To do so, we calculated for each region rthe overall
density of relatedness between creative services exports and
all other manufacturing and other services exports. Follow-
ing Hidalgo et al. (2007) and Boschma et al. (2015), the
relatedness density of each given creative service exports i
in region ris derived from the relatedness Sij of each
exported creative service ito all other exports jin which
the region has relative comparative advantage, divided by
the sum of the relatedness of creative service exports ito
all the other exports jin Great Britain:
REL.DENS.ir =j[r,j=iSij
j=iSij
×100
Figure 6 reports the average relatedness density of crea-
tive services exports across regions in Great Britain, con-
sidering the relatedness between creative service exports
and all other exports in which each region has a compara-
tive advantage. It is possible to notice that creative services
exports are strongly related with the rest of the regional
industrial structure, particularly in urban areas (London,
Figure 6. Average relatedness density of creative services
across UK regions, 2011–17.
Note: Statistics are elaborated using data from the Annual
Business Survey (ABS) and Inquiry in International Trade in Ser-
vices (ITIS) databases.
12 Patrizia Casadei et al.
REGIONAL STUDIES

Manchester, Edinburgh, Leeds) and in hubs of knowledge
creation (East Anglia, Oxfordshire, Surrey, Sussex and
Warwickshire –although not the wider West Midlands),
where universities and knowledge intensive industries are
mostly clustered. These industries could provide the
knowledge spillovers, skills and capabilities needed for
creative services to develop and grow, allowing the hosting
regions to become international hubs for creative services.
Existing comparative advantage in manufacturing and
other services exports could play a key role in creating
the right environment for regional branching in related
creative services, allowing regions to diversify away from
mature industries and specialize in new creative and
knowledge intensive services sectors which are becoming
increasingly important in the UK international trade.
5. CREATIVE SERVICES, RELATEDNESS
DENSITY AND SPECIALIZATION
Next, we analyse whether the relatedness between creative,
other services and manufacturing exports plays a role in
shaping the emergence of new comparative advantages,
particularly in the industrial branching of regions towards
knowledge-intensive, high added-value creative services.
Previous studies have analysed how the relatedness
between new and existing sectors could facilitate regional
diversification and industrial branching (Balland et al.,
2019; Corradini & Vanino, 2021; Drivas, 2022; Xiao
et al., 2018). Following these studies, our final aim is to
detect whether the relatedness density of an industry
with the rest of the regional industrial portfolio correlates
with the emergence of a new comparative advantage in the
region. More specifically, we would like to test whether
this relationship is stronger in the case of creative services,
and to detect whether creative services need stronger ties
with specific existing industries to bloom.
To achieve this, we employ regression analysis to esti-
mate the relationship between relatedness density and
regional diversification, while controlling for other poss-
ible confounding factors using the following model:
RCAirt =
b
0+
b
1REL DENSirt−1
+
b
2EXP VALUEirt−1+
w
ir +
w
it +
w
rt +1irt
In this model, we predict the emergence of a comparative
advantage RCAirt in the export of industry iby region rin
year t, based on the relatedness density of that industry
REL DENSirt−1with the rest of the industrial portfolio
of region rin the previous year t–1. To correctly estimate
this relationship, we control for the total value of exports
from that industry in the previous year
EXP VALUEirt−1, as well as for any other time-invariant
characteristics of industry iin region rby including indus-
try–region fixed effects
w
ir. In addition, we control for
region or industry specific shocks which might explain
the emergence of comparative advantages, including
region (
w
rt) and industry (
w
it) specific time trends.
Table 3 presents the results of this estimation and of
additional robustness and heterogeneity tests. We start
in column 1 simply by testing the validity of the
Table 3. Relationship between relatedness density and regional comparative advantage of creative services export.
(1) (2) (3) (4) (5)
All entry
Creat. Serv.
Entry
Creat. Serv.
Entry
Creat. Serv.
Entry
Creat. Serv.
Entry
L.Rel. Density 0.00129** 0.00340** 0.00392 0.00615***
(0.000653) (0.00178) (0.00299) (0.00173)
L.Rel. Dens. Creat.Serv. −0.00299
(0.00228)
L.Rel. Dens. Oth.Serv. 0.00708***
(0.00178)
L.Rel. Dens. manufacturing 0.000786
(0.000543)
L.Exp. Value 0.0113*** 0.00878*** 0.00533** 0.0125 0.00621**
(0.00168) (0.0024) (0.00263) (0.00795) (0.00241)
Geography Great Britain Great Britain Great Britain South East Non-South East
Reg-Prod. FE Yes Yes Yes Yes Yes
Reg*Year FE Yes Yes Yes Yes Yes
Prod*Year FE Yes Yes Yes Yes Yes
Observations 7254 2574 2574 594 1980
R
2
0.730 0.681 0.696 0.690 0.540
Note: Estimations are based on data from the Office for National Statistics’(ONS) Annual Business Survey (ABS) and Inquiry in International Trade in Ser-
vices (ITIS) databases for the period 2011–17 using an ordinary least squares (OLS) estimator with region–product and year fixed effects, region and pro-
duct time trends. Robust standard errors clustered at the region–product level are reported in parentheses. Significance levels: ***p< 0.01, **p< 0.05,
*p< 0.1.
Trade in creative services: relatedness and regional specialization in the UK 13
REGIONAL STUDIES

relationship between relatedness density and the emer-
gence of a regional comparative advantage for all sectors.
Our results are in line with previous studies, identifying
that overall relatedness density is positively related with a
higher probability that a region specializes in a new
exporting sector (Balland et al., 2019; Drivas, 2022). In
addition, the inclusion of strict fixed effects and region
and industry time trends allows us to explain a much larger
proportion of the dependent variable’s variance in respect
to previous related studies, limiting the impact of omitted
variable bias. Then, in column 2, we focus specifically on
creative services exports, to understand whether specializ-
ation in these industries is relying more or less on linkages
with the rest of the industrial structure of a region than in
the general case. Again, we find a positive and significant
relationship between relatedness density and the emer-
gence of a comparative advantage in creative services.
Our estimate suggests that a 10 unit increase in the relat-
edness density of a creative service exports with the rest of
the goods and services exported by a region would increase
the probability of developing a new comparative advantage
in the export of that creative service by 3.4%. As a rule of
thumb, a 10-unit increase in creative services relatedness
density would be equivalent to creative services exports
in North Yorkshire (with a relatedness density of 10.38
in the 40th percentile of the distribution) being related
to all other exports in the region as creative services exports
are in Warwickshire (20.31, in the 70th percentile). The
magnitude of this relationship for creative services is
more than double, and statistically different from, the
coefficient estimated in the general case. This is a signifi-
cant result, highlighting how important the relatedness
with other surrounding industries is for creative services
to thrive in a region.
However, as previously discussed, we are interested in
understanding not only with which other sectors creative
services are particularly related, but also if these specific
industry-to-industry relationships matter to explain the
specialization of regions in creative services. Thus, in col-
umn 3 we dissect relatedness density for creative services
industries in its three components: relatedness density
with other creative services, with other services and with
manufacturing industries. Our results indicate that the
relatedness density with other services industries in the
region is the only significant to explain a higher probability
of specializing in creative services, as a 10-unit increase in
the relatedness density with other services would increase
the probability of developing a comparative advantage in
the export of creative services by 7%. This is in line with
our previous relatedness analysis in Table 3, that has
shown a stronger relatedness between creative services
and other services, rather than with other creative services
or manufacturing exports. Thus, it appears that creative
services benefit mostly from spillovers generated from
nearby other services industries, possibly in terms of labour
skills pooling and the possibility of synergies around the
sale of services abroad, as UK creative and non-services
could be in high demand in the same markets and face
similar restrictions to trade.
Finally, in columns 4 and 5 we study the spatial hetero-
geneity of this relationship, differentiating between
regions in the South East of England (including London)
and the rest of Great Britain. We split the country in this
way following the relatedness density analysis reported
previously in Figure 6, showing a spatial clustering of
high levels of relatedness density for creative services in
the South East of England. The results of our estimations
show a significant and positive relationship between relat-
edness density and specialization in creative services
exports only for regions outside the South East of Eng-
land, where usually the relatedness density of creative ser-
vices with the rest of the local economy is weaker. This
evidence could be linked to two different factors. First,
as seen in Figure 4, this might be due to a crowding effect,
as many regions in the South East have already a compara-
tive advantage in creative services, and thus it might be
more difficult to develop further specialization in these
sectors. Second, this might be evidence of a non-linear
relationship between relatedness density and specialization
in the case of creative services, where a stronger relatedness
density with the rest of the local economy could be par-
ticularly important for the specialization in creative ser-
vices, in particular in regions where the existing
industrial base is not strongly related to creative services.
These regions will need thus to first create a more conduc-
tive environment to foster creative services exports, devel-
oping an industrial base which is related to creative
services, and from which these services could benefit
from potential positive externalities.
6. CONCLUSIONS
This paper has presented new evidence on exports of crea-
tive services from the UK, geographical clusters, and relat-
edness between the exports of creative, non-creative
services and manufacturing goods. Creative services have
become growingly important in the UK, but there has
been some volatility with exports changed significantly in
the aftermath of the crisis. While in 2011 only one creative
service (architecture) was in the top ten of the most
exported services, by 2017 copyrights, advertising, soft-
ware and telecommunications had all climbed positions
in the list, being included amongst the key UK service
export industries. Over the last decade, international
trade in UK advertising has increased by more than
200%. As for services, the largest destination of creative
service exports is the United States, but much of these
exports go to the EU.
The geographical distribution of creative services
exports differs considerably from those of manufacturing
and non-creative services exports. While manufacturing
exports are more evenly distributed across space and
non-creative service exports tend to focus around urban
areas, creative services exports are the ones more geo-
graphically clustered in a few areas, mainly London, the
M4 corridor between London and Bristol, and Greater
Manchester. There is pronounced spatial variation in
these exports, with the geography of RCAs differing
14 Patrizia Casadei et al.
REGIONAL STUDIES

across each industry but, in general, London is as impor-
tant focal point for creative service exports.
Findings from co-occurrence analysis suggest that a
few creative services sectors seem to have high levels of
relatedness with other creative, non-creative services and
manufacturing industries, interpreted as a sign of the
strength of production relationship in terms of knowledge,
inputs or complementarities. The strength of these
relationships between creative services and the rest of the
local industrial structure is particularly important for the
emergence of new specializations in creative services
exports, highlighting how important the relatedness with
other surrounding industries is for creative services to
thrive in a region, in particular the closeness with clusters
of other non-creative services in regions where the creative
services are not strongly developed yet.
Our findings provide new evidence of the UK role as a
global hub for creative services. Future developments in
ICTs and, particularly, innovation in digital services, in
addition to recent government investments in the pro-
motion of CIs exports are likely to further boost trade
growth in this UK sector. Indeed, the UK CITIB has
been recently launched as part of the government’s Mod-
ern Industrial Strategy with the aim of increasing the value
of exports of creative services and goods by 50% between
2018 and 2023, giving priority to the export markets of
China, the United States, Europe, the Middle East and
Japan (CITIB, 2019). Support to international trade is
particularly important for the CIs as these are comprised
of a large variety of subsectors with specific needs and
many small and micro-businesses. In this regard, this
work provides some first evidence of the relationships
between creative, non-creative services and manufacturing
industries, which can help better understand trade
dynamics and interactions of different creative subsectors
in order to contribute to their international promotion.
Our research opens a number of areas for future
research. First, our work has considered the UK, a country
with strong strengths in creative services but also pro-
nounced regional disparities. Future comparative work
would help understand the extent to which these results
are UK specific. Second, while there are multiple studies
which consider the mechanisms underpinning relatedness,
none is specific to the CIs. Future work could address this
important gap. In doing so it could address a third pro-
blem inherent in the literature on relatedness, as we are
assuming that (1) relationships at a local level are based
on some productive relationship rather than mere happen-
stance, and (2) that relationships are only between expor-
ters, although it is likely that exporters might use related
services from non-exporting firms.
6
These complex
relationships are likely to be revealed through case-specific
qualitative research.
At the time of writing, the UK’s trade in creative ser-
vices faces two major challenges –Brexit and the
COVID pandemic. Brexit means that there is consider-
able uncertainty about the UK’s future trade regimes.
The EU is a key trading partner, with approximately
30% of creative service exports going to the EU. Trade
in services under the WTO GATS terms (i.e., no-deal
scenario) would mean reduced access to EU markets for
UK service producers, as the WTO has made far less pro-
gress than the EU in terms of service liberalization (Ilze
et al., 2019). Therefore, in addition to future additional
government efforts to promote international exports of
creative services, ensuring a favourable trade in services
deal with the EU is key to the future global competitive-
ness of the sector (European Union Committee, 2017).
These problems will be compounded by the aftermath of
the COVID pandemic. It is far from clear what the
long-term impact of the pandemic will be, yet economic
growth is probably the best way to address the fiscal pro-
blems which it has created. For the UK, creative services
are an important potential source of this growth. It may
be that the technological shock of the pandemic, which
forced the uptake of new digital technologies, provides
an opportunity to increase trade in creative services still
further. The question is the extent to which Brexit will
hinder the ability of creative service exporters and so stifle
the recovery.
ACKNOWLEDGEMENTS
The authors are grateful for the comments received at the
GEOINNO 2020 Conference in Stavanger.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the
authors.
FUNDING
This study was supported by the Arts and Humanities
Research Council (AHRC) Policy and Evidence Centre
for the Creative Industries [grant number AH/
S001298/1].
NOTES
1. In 2017, the world’s top services exporter was the Uni-
ted States, representing 15% of global exports, while the
UK, Germany and France jointly captured 17% of the
world market. The top five developing economies were
China, India, Singapore, Hong Kong and the Republic
of Korea, which held a world market share of almost
15%, the same as all other developing economies com-
bined (McKinsey Global Institute, 2019; UNCTAD,
2018b).
2. The ITIS dataset does not provide information about
whether services sold to non-UK based entities are then
used abroad or in the UK market, for instance, to support
non-UK based entities in their activities in the UK.
3. We define regions using the NUTS-2 nomenclature.
We use this level following previous studies on interregio-
nal trade (Thissen et al., 2019), relatedness and regional
specialization (Balland et al., 2019; Drivas, 2022;
Trade in creative services: relatedness and regional specialization in the UK 15
REGIONAL STUDIES

Innocenti & Lazzeretti, 2019; Xiao et al., 2018), and to
assure the representativeness of the data at the region
and industry levels. Northern Ireland was excluded from
the analysis due to lack of data.
4. Data for manufacturing industries are based on the
ABS database reporting the turnover of exporting firms
in each industry, while for services industries we use the
ITIS database providing information on the value of
exports of firms for each service category. These two
sources of data are not directly comparable. However,
they can be used in order to first identify the comparative
advantages of regions in each of the categories, and to then
use these to analyse co-occurrence patterns between man-
ufacturing and services exports. As an alternative
approach, we used data provided by HM Revenue & Cus-
toms (HMRC) on the value of manufacturing exports per
region and broad product category. However, the product
classification used by HMRC is of limited application in
this analysis because it makes meticulous distinctions
between products of marginal interest from a UK manu-
facturing perspective (e.g., crude materials, mineral fuels,
lubricants, animal and vegetable oils), while aggregating
together products at higher added value usually produced
by UK manufactures (e.g., no distinction between machin-
ery, transport equipment, computers and other electric
equipment).
5. The use of different relatedness measures yields con-
sistent results, which are available from the authors upon
request.
6. We are grateful to an anonymous reviewer for this
point.
ORCID
Patrizia Casadei http://orcid.org/0000-0001-8972-
5726
Enrico Vanino http://orcid.org/0000-0002-4740-1501
Neil Lee http://orcid.org/0000-0002-4138-7163
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