Since 1985, the label “European Capital of Culture” (ECoC) has been awarded annually to one or more European cities. Throughout the year, the cities organize numerous events and activities that promote their culture, such as art exhibitions, music and dance festivals, and conferences or workshops. In 2023, the host cities will be Vezprém (Hungary), Elefsina (Greece) and Timisoara (Romania). Host cities see the event as a great way to boost tourism and expect a significant economic stimulus, ideally lasting beyond the year of the event.

In this blog post, we’ll provide an overview of the ECoC program from both a cultural and a socio-economic perspective and present new quantitative evidence on the economic and democratic impacts.

Background of the European initiative

To highlight the depth and diversity of cultures across Europe, the EU launched the ECoC initiative in 1985. Being an ECoC is expected to significantly promote the cultural, social and economic development of a city. At the same time, it should bring citizens from different Member States closer together, for example, by encouraging cooperation with other host cities.

Until 2000, only one city  – usually a country’s capital and cultural powerhouse – was awarded the title ECoC. Over time, as the EU grew from ten to 28 member states, a rotation system was introduced to ensure an equal distribution of ECoCs among EU countries. Under this new system, two Member States are selected each year and cities from those countries can apply to become that country’s ECoC.

A panel of up to ten “European experts” is appointed from a pool of applicants by the European Parliament, the Council of the EU, the European Commission (three experts each), the Committee of the Regions (one).

In addition to these “European experts” each selected Member State may appoint up to two experts to the panel. This panel selects one city per country based on specific assessment criteria. For example, the city must have an adequate and viable infrastructure to host the event, feature local and European artists and have plans for long-term cultural, social, urban and economic development.

Once selected, the city is then formally designated by the country four years before the event. Throughout the process of hosting the ECoC the expert panel is responsible for the monitoring procedures. By 2023, a total of 68 European cities will have hosted the event. The map below indicates the NUTS-3 region of each Capital of Culture since 1985.

The socio-economic effects of European Capitals of Culture

The contributions of culture to economic development have been well-established in the literature. In addition to direct contributions to economic development through the production of goods and services, there are many indirect effects, such as on innovation, welfare, social cohesion, lifelong learning and local identity. This impact is why culture is so multifaceted in its effect.

While the economic impact of the ECoC was initially not officially declared, it is now an integral part of the selection criteria. Hosting the event should also develop long-term links between the cultural, economic and social sectors of the city, for example, by revitalizing and improving the image of the city or by attracting tourists, investments and employees.

Hosting the European Capitals of Culture boosts tourism, employment and GDP per capita

The map shows all 68 host cities at the NUTS-3 level, the most granular EU regional classification.  To estimate the regional impact of being an ECoC a difference-in-difference modelling approach controlling for the region and time-fixed effects, as well as some standard macroeconomic control variables (population, investment, human capital and government spending) was used.

This analysis shows that being an ECoC does indeed attract more tourists: In regions that hosted the event, tourism is, on average, 3.2% to 6.2% higher after the event than in regions that did not host the event. Our result is similar to the 8% increase in tourism found in another study.

Another growth effect from hosting ECoC exists for the number of people employed. Compared to regions not hosting the event, total employment increases by between 2.2% and 3.2% in regions hosting the event in subsequent years. This increase is most likely due to increased demand for labor in the service sector (due to the increase in tourists) and in the cultural and creative sector.

The increase in both tourism and employment due to hosting an ECoC is reflected in a positive contribution to a region’s GDP per capita. I find that hosting the event increases GDP per capita by 1.1% to 4.34%, very similar to the 4.5% found in another study looking at the period from 1985 to 2012.

These results provide strong evidence for the economic ambitions that the program claims to have.

Policy with a hidden place-based dimension can foster economic cohesion

While it is still a cultural program that focuses on cultural heritage and stimulates cultural vibrancy, the analysis has shown that the program has long-term spillover effects on the local economy. Such spillover effects can have a significant impact on the distribution of wealth and income in the EU.

To better understand these effects, the EU’s classification into less-developed regions (GDP per capita below 75% of the EU average), transition regions (between 75% and 90% of the EU average) and more-developed regions (above 90% of the EU average) was used.

To be able to compare the regions’ development status over time, the 2007-2013, 2014-2020 and 2021-2027 classifications were used. These classifications served as the basis for classifying regions that hosted the event before 2007.

 

The graph above shows that in the years prior to 2000, it was mainly the more-developed regions that hosted the events. Since then, more and more less-developed and transition regions have been designated as ECoC. Interestingly, also smaller cities have been favored over larger ones in recent years.

The initiative, with its focus and impact on regional economic development, meets the criteria of a place-based policy. As less-developed regions hosting the event are able to reap local economic benefits, this can accelerate their convergence process with more-developed regions in the EU.

Although this catching-up effect is not an explicit goal of the ECoC initiative, it may still help to reduce regional economic disparities and thus promote EU regional cohesion, an objective to which the EU is devoting billions of euros each year.

No gain in citizens’ engagement with the EU

From the beginning, the program has had a strong European dimension, bringing together people from different countries. At the same time, it is an official EU program and the local population may project their positive or negative experiences with the ECoC events onto the EU institutions. It is, therefore, interesting to see whether hosting such a major European event affects citizens’ engagement with the EU. This can be proxied by the voter turnout in the European Parliament elections.

The results do, however, not suggest such an effect. Regions that hosted the event are not significantly different from regions that did not host the event in terms of voter turnout at European elections.

Policy recommendations and outlook

While the ECoC initiative has a relatively low level of investment (the average operating budget in 2007-2017 was around €60 million), it has the potential to deliver both local and European benefits. But as the program’s success is now linked as much to economic and social results as to cultural ones, it has become much more than a cultural policy. This should be acknowledged and reflected in the funding and budget decisions for each event. Otherwise, the program risks crowding out investments for its main concern, highlighting the European cultural richness and diversity.

About the author

Clemens Gerland was an intern at Bertelsmann Stiftung. He supported the Europe’s Economy project from September 2022 to February 2023. He studied Economics and Business Economics at Maastricht University.

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