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News : Innovation Last Updated: Oct 7, 2015 - 1:18 PM

The Baroque Opera House Index: Why politicians should not reduce spending on culture in times of tight budgets
By Finfacts Team
Mar 25, 2011 - 4:03 AM

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Free-standing baroque opera house locations and the share of high skilled workers (average 1998-2004); the map shows the 29 sites of baroque opera houses and the average share of highly qualified people in total employment per district over the period 1998-2004.

The Baroque Opera House Index: Politicians faced with budget constraints like to cut spending on culture. This, however, turns out to be wrong and is even counter-productive since attractive cultural offerings increase regional economic growth, as the Ifo Institute has determined.

The Ifo Institute for Economic Research at the University of Munich is one of Germany's leading economics institutes. It was established in 1949 from the Süddeutsche Institut für Wirtschaftsforschung and the Informations- und Forschungsstelle at the Bavarian Statistical Office. One of the founders was Prof. Ludwig Erhard, the architect of the German social market economy, who was the second chancellor in the post-war Federal Republic.

Ifo researchers Oliver Falck, Michael Fritsch and Stephan Heblich went all the way back to the absolutist rulers in examining the impact of culture. They show that the apparently lavish baroque opera houses that these princes had constructed contribute to a blossoming economy today. “Cultural offerings make cities and regions interesting for highly qualified personnel,” according to Oliver Falck of the Human Capital and Innovation department of the Ifo Institute. And highly qualified workers demonstrably increase economic growth.

In order to exclude distorting effects, the three researchers examined the regional distribution of baroque opera houses in the 17th and 18th centuries that resulted from a battle of prestige among absolutist princes. “Culture leaves its traces in history,” explains Falck: Cultural centres of the past are still today’s cultural centres. They attract creative people that play key roles in regional development: The knowledge they spread and their innovations are the driving force for sustainable economic growth.

The researchers say that the love of ostentation of the absolutist princes is legendary and very well documented. Even at the Prussian court it knew no limits. Three quarters of a year into his regency Friedrich I had already spent 7m Thalers only for the maintenance of his court - - with annual revenues of around 3m Thalers. Much of this was spent on the splendid opera houses, which with their outstanding machinery and stage effects were able to compete with the large houses in Paris, Venice and Vienna.

In the baroque era, the period between the Thirty Years’ War and the first industrial revolution, 29 free-standing opera houses were built within the borders of present-day Germany - - all on orders of the respective princes. The existence and effect of such opera houses proved to be long-term: All 29 opera houses are still in operation today. And each opera house attracts highly qualified employees to the region.

The researchers say this is demonstrated by the current spatial distribution of highly qualified employees (university or college graduates), according to the statistics on employees subject to social insurance payments. For every 10 km that a district is closer to the site of a baroque opera house, the share of highly qualified employees increases by 0.28 percentage points. This corresponds to about 4% of the average share of the highly qualified employees of all districts.

The regional growth contribution of highly qualified personnel is considerable: If the share of highly qualified employees in a district rises by only one percentage point, the growth rate of the gross domestic product in the district increases permanently by between 0.24 and 0.49 percentage points. “This effect is economically relevant and confirms the importance of human capital for economic growth in the modern knowledge society,” Falck maintains.

Politicians should thus think twice before they seek savings in the cultural area!

The paper is in German

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