Location Patterns of Creative Capital and Regional Disparities in Spain

‘Creative class’ as a source of growth has gained increasing awareness in recent years. However, creative people are not spread equally; instead tend to concentrate within particular locations across space. According to Florida, a main factor in explaining differences in growth and development is about this diverse location choice of creative people (Florida, 2002; Fritsch and Stuetzer, 2009). Inspired by these contemporary discussions of the creative class theory; this study investigates the spatial distribution of creative capital and its connection with regional disparities by considering the geographical divergence of provincial income in Spain. First to understand the tendency of the dispersion of creative employment and regional income differences, global spatial autocorrelation (Moran’s I) is calculated. Since local realization of the global measure is expected to yield superior set of information regarding the local non-stationarity; both the decomposition of the global measure as well as the computation of local indicator of spatial association (LISA) is carried out. Both the decomposed Moran’s I as well as the individual LISA values of the provinces are used to evaluate the geographical distribution of regional income and creative employment. Second issue of the paper is to explain the geographical differences in regional income by using the regional creative employment of provinces. Two central cross section econometric models that allow for local spillovers are preferred. A spatial lag model and a spatial error model are estimated by also controlling the regional differences in industrial development as well as human capital endowments. Data sources are INE and SABI and cover the period of 1996-2004. The level of regional analysis is NUTS 3 and covers the 47 territorial provinces of Spain (Balaric and Canary Islands as well as the two small provinces in North Africa - Ceuta and Melilla - are not included as they are not in the territorial borders of the country). Our findings indicate that although provinces with low creative capital around 1996 realize an acceleration of creative employment during the 1996-2004 period they still lag behind the northern (especially north eastern) provinces of Spain. More interestingly there are strong spillover effects between the leading and lagging provinces. This spatially diverse location pattern of the creative capital also explains the north-south duality in Spain; our empirical evidence validates that provinces with high creative capital level in northern Spain are still more developed in terms of provincial income even other determinants of the process are controlled for, such as industrial development, regional spillover effects and human capital development.