An Analysis Of The World Film Industry Economics Essay

In this research undertaking, the mark audience should to be the people working in the movie industry. The consequences might be better validated through audience with his mark group, nevertheless, obtaining this information, e.g. via a study, is debatable, as it is difficult to foretell the return rates. For this ground, this primary research could non be done.

However, secondary research will be adapted in this undertaking, and this chapter will still incorporate the information from some bookmans in order to supply some grounds in reply to the research inquiry. It will besides incorporate some informations and consequences from EcoWin. EcoWin is a web-based database that collates a broad assortment of fiscal and economic clip series from over 100 different states.

Furthermore, the economic constructs used in this undertaking will be the multiplier effects. This is because the multiplier consequence is a method by which occupation chances and wealth are created by pulling new industry to an country. It is used to explicate the relationships between an industry and the related creative activity of wealth in the country. It could increase the sum of industries in the country, which would make more occupations and hence wealth and the overall image of an country.

3.1 The Multiplier Effect

The multiplier consequence can be seen in most industries, and can exemplify the betterment and development of an industry. The multiplier will run into its greatest impact where idle resources exist. The undermentioned theoretical account ( diagram 1 ) is an illustration of this theory. It shows how the movie industry could impact the economic system. Although the movie industry has been established in a peculiar state, it will necessitate to make up one’s mind whether the movie will hit locally or overseas. Each measure will take to different effects. For case, where the movie industry decides to hit a movie overseas, it may bring on occupations to that state, which will assist the state to better their engineering and cultural. Furthermore, this will assist them to pull more companies from abroad to put in their state. This may successfully raise some of the state ‘s GDP. As seen in Appendix 1, information from the UK council, it was stated that the multiplier consequence had helped the UK addition ?425 million in revenue enhancement gross and had contributed ?1.6 billion to their GDP per twelvemonth. This shows the significance of the multiplier consequence to the economic system.

Diagram 1 Example of the Multiplier Effect in the Film Industry.

Chapter 4. Data Analysis and Consequences

The factors that might impact the economic system are categorised as employment, touristry, engineering and civilization. Taking a movie festival or hiting a movie as an illustration, we can compare the unemployment rate during the hosting of the festival and during any other clip. This is because the employment rate might merely impact the state ‘s economic system within a short period of clip. In add-on, the touristry, civilization and engineering elements spillover to the movie industry might besides impact the local or national economic system.

India, Korea and Hong Kong are all illustrations of developing states that are demoing good public presentation in their movie industry. This chapter will compare the consequences from selected developing states ( India, Hong-Kong ) and developed states ( UK, US ) , to see if there are any similarities and differences between them and why.

This chapter will besides seek to look into merely one movie – “ Blood Diamond ” , released at the terminal of 2006, because the scopes of the movie industry are excessively large. This movie was produced in America but shooting in South Africa, so it is a good illustration for this undertaking to look into. Furthermore, we will compare the touristry rate before and after the release of the movie to see whether there were any affects to the economic system. It might be easy for people to happen out whether are at that place any relationship between movie industry and the economic system. Besides, by happening some informations of labour income and mentioning to the multiplier consequence ( plot 1 ) , we will pull a timeline of the movie industry to see the threshold and investigate and analyze all the procedure the between developed and developing states. The consequence may able to demo whether the development of a movie industry will assist to increase the LDC ‘s economic system.

4.1 Developing states ( Hong Kong & A ; India ) VS Developed Country ( US )

To happen out whether the movie industry could assist and better the LDC ‘s economic system, we will compare the growing of the movie industry in developing states and a developed state.

4.1.1Hong-Kong & A ; India

Hong-Kong and India are both developing states that are executing good in their movie industries.

Hong-Kong ‘s movie production reached its highest degrees during the 50s and 60s. However, after the universe war, the instruction of the new coevalss became more Occidentalising ; one of the grounds for this is because traditional Hong-Kong movies were non able to run into the audience ‘s gustatory sensation. Bringing in US movies, besides conveying in their civilization and engineering. For illustration, the performed of the new 3D engineering from the US in 2009, it had helped to increase the gross for Hong Kong ‘s movie industry. From a study of US Commercial Service ( 2010 ) , said that the new 3D engineering has helped turn Hong-Kong ‘s box office, it had addition US $ 151.9 million in 2009 which had grown 6.5 per centum from 2008. It shows the affect of the US ‘s movie industry to the Hong-Kong economic system.

Furthermore, from the Financial Express ( 2002 ) , it had stated that the India movie industry could lend around RS 50000 crore to their GDP. Bhushan ( 2010 ) had besides stated that the movie industry had contributed $ 1.5 billion to the Indian economic system from 2008-2009. The Website ( 2008 ) has stated that filmmaking in India may be the best among all developing states because other states are more sophisticated in their engineerings. Furthermore, it besides provided grounds[ 1 ]that the development of the movie industry will back up the economic system.

4.1.2 US & A ; UK

Presents, the US movie industry could be considered the most successful, as it has produced such a high figure of celebrated movies. Besides, the US movie industry might hold a higher budget for hiting movies, because their fiscal resources are much more abundant compared to others. However, the US movie industry was non like this at the beginning, and has undergone a figure of development procedures.

The followers shows the impact from movie industry to UK ‘s GDP in 2009 ; it had reinforced the fact that the movie industry could impact the economic system.

Table 1 Summery of Economic part of UK movie industry 2009.

( Beginning: Oxford Economics )

4.3 Tourism:

The incentive of touristry is one of the of import factors that the authorities should pay attending to. Tourism might increase in other states because of the populace ‘s attractive force to the movies or stars ; it will make an inducement for the local economic system. For illustration, the rise of touristry will besides do a rise in production, which may in bend raise the local economic system.

4.3.1 South Africa

Many bookmans have agreed that the movie industry might impact the economic system by pulling in tourers attracted by the movie. Figure 1 shows the entire reachings and goings of aliens in South Africa. Both the reachings and goings rates are increasing each twelvemonth, demoing successful development. In early 1986, both rates increased at a slow pacing until 1990, after which they both had a crisp addition. During 1995 and 1997, both rates are turning unstably, demoing little fluctuation. Mongabay ( 2009 ) stated that Africa ‘s economic system had been shaped over many centuries, and started acquiring better in 1994 because of their new authorities policies, which besides improved the wellness of their economic system and saw a growing in their GDP[ 2 ].

Figure 1 South Africa: Entire Arrivals/Departures of Foreigners.

( Beginning: EcoWin )

4.3.2 America:

4.4 Labor Market: Employment/Unemployment

The employment rate might merely be important in the developed universe, with no reverent correlativity in the 3rd universe. Mention to the Multiplier consequence ( Diagram 2 ) , the issues of movie industry will supply occupations for the local, and will bring on occupations overseas in short tally. The illustration of a US movie “ Blood Diamond ” shows that, although the movie industry will bring on occupations to South Africa this will merely use while the movie is hiting. This lone shows a little consequence on the local economic system, unlike the states that have built their ain movie studios, like the US, and who will be available to supply long-run employment chances.

Figure 2 United states: Full/Part time/Total Employment.

( Beginning: EcoWin )

It is of import to observe that the national employment rate is non affected by the movie industry ; nevertheless, it will impact the local employment rate temporarily. This is because the employment rate will merely be affected while the movie is hiting, unless the state builds a movie studio in order to use long-run employment. In other words, the movie industry will merely hold a certain sum of consequence in the national labour market.

4.4.1: South Africa:

As the movie industry may convey in some occupation chances for local people, Figure 5 shows the comparing of entire employment and unemployment from 2001 to 2009, while Figure 6 shows the unemployment rate in South Africa.

Table 3 in Appendix 3 shows that while the unemployment rate in South Africa in 2006 is at its lowest, the employment besides starts to lift.

Figure 3 South Africa: Entire Employment/Unemployment.

( Beginning: EcoWin )

Figure 4 South Africa: Unemployment Rate.

( Beginning: EcoWin )

The movie industry will be able to impact the employment rate locally in the short tally ; nevertheless, it will be impacting the income rate of the local people in the longer term. As Figure 7 shows below, the income rate is increasing each twelvemonth ; it started to turn faster in 1985, and rose aggressively from 2000 to 2006. Associate this to Postpone 5 in Appendix 3, the income in 2004 is 141167, 156270 in 2005, lifting to 193678.5 in 2006. It had increased by 37408.5 from 2005 to 2006, a crisp rise. Part of the ground for this might be that the movie “ Blood Diamond ” was hiting during this period. It affected the local income bit by bit.

Figure 5 South Africa: Labour Income.

( Beginning: EcoWin )

4.5 Cultural ;

Culture will demo the feature of a state and could stand for a state in some instances. In the movie industry, each state will hold different involvements in the type of movie they produce. For case, Indian films will be more likely to incorporate song and dance but in the US they prefer more a more high-tech attack. As the vocal and dance in the film are already go a characteristic to Indian movie, this is why people had called the Hindi film as Bollywood[ 3 ].

Presents, people will recognize Bollywood as bring forthing Indian movies and Hollywood as bring forthing American movies ; this could demo the affect of civilization. Sometime, the life wonts of a state will be reflected in the film.

4.6 Technology:

The betterment of engineering will impact the production of the economic system and will hold the power to impact the national economic system every bit good. Where film makers shoot movies in other states, they might convey in some new engineering. Or engineering will be improved through communication and viing with other states. For illustration “ Avatar[ 4 ]“ in 3D was a freshness to many people around the universe and attracted a broad audience, which resulted in high box office net incomes. US Commercial Service ( 2010 ) , it has stated that gross gross of Hong Kong ‘s movie industry is expected to spread out in the coming old ages because of the gap of new multiplexes and 3D film, and strong authorities support

If this movie had been released in some LDCs, it would hold created an consciousness and involvement of some new engineerings amongst the locals, who may non hold seen this sort of high technique movie before. It would enable allow the LDCs to derive cognition and information by the incentive of engineering, or they may make up one’s mind to utilize the same techniques used in the movie in their ain productions. Furthermore, the exchange of engineerings between states will do a engineering spillover.

4.7 Government Policy: Tax

With respects to a authorities assisting the movie industry through revenue enhancement alleviation, Wallack ( 2008 ) quoted a study by Massachusetts Film Office screening that when Walt Disney Pictures spent $ 50 million cinematography in Massachusetts in 2006, the company received about $ 10 million in credits from the province.

The action of the authorities can impact the growing of the movie industry, as shown in the illustration of revenue enhancement alleviation. Furthermore, it will be able to promote local production. The American Jobs Creation Act of 2004 included, amongst a myriad of other concern revenue enhancement interruptions, a step to profit little film production by leting full write-down of production costs up to US $ 15m, at a presumed cost of US $ 336m. On the other manus, in the early 70s there were loopholes in the US revenue enhancement system, which caused hiting to transcend budget, which had a negative consequence on the economic system.

Chapter 5. Decision

Production, ingestion and distribution are of import in the movie industry ; these may impact the net incomes that the state may gain. For case, if a state ‘s production degrees are high, it may increase their employment rates and distribution and may raise the repute of the state, which might so increase investing from other states.

Every state will hold to confront developmental phases, which shows the betterment of each sector in the state. Take the movie industry as an illustration: non every state had cinemas from the really get downing but each started to develop as clip went on. The development of the movie industry might impact the economic system because as people had more societal clip than working clip in the yesteryear, they would be given to pass their clip observation shows or public presentations.

The addition of globalization has made the movie industry an international trade good. The success of the movie industry in Hollywood has ever been an aim for most of the states. However, Rod ( 1998 ) argued that there is grounds that the US is losing the comparative advantage in the international media market. This is because of the rise in competition ; nowadays most states have their ain productions in the movie industry. But most of the movie industries in the universe were impacted by American filmmaking because it used the highest engineering in this field during the movie ‘s Golden Age


5.1 Deductions of the Survey:

The intent of this survey was to happen out whether the movie industry could impact a local economic system. If it is a successful tract, this sector could alarm LDC authoritiess to pay more attending to this.

5.2 Restrictions of the Research:

Not many bookmans are concentrating on the development of the movie industry in a state. There is small informations on this, therefore, which will impact the truth of this undertaking. Furthermore, jobs associating to the primary research study might impact the concluding consequence.

5.3 Recommendations for Further Research:

The movie industry might be one of the sectors that the authorities should seek to pay attending to. While it may non ensue in big additions to an economic system, there are still benefits to be gained.

Because of the word bound that applies to this undertaking, it is non possible to cover in item every inquiry associating to this subject. Further research should foremost concentrate on whether the movie could impact the income in developed states, if yes, it may be a utile resource for LDCs. Second, is the degree of development is of import in finding, if movie is traveling to impact the national consciousness. In add-on, probe should be made into the steps that could be utilizations to reply the inquiries of impact.