PRODUCTION AND strongPOLITICAL ECONOMYstrong IN THE ANIMATION INDUSTRY.pdfVIP

Paper to be presented at the DRUID Summer Conference 2004 on INDUSTRIAL DYNAMICS, INNOVATION AND DEVELOPMENT Elsinore, Denmark, June 14-16, 2004 Theme B: Competence Building and its Institutional Underpinnings PRODUCTION AND POLITICAL ECONOMY IN THE ANIMATION INDUSTRY: WHY INSOURCING AND OUTSOURCING OCCUR Ted Tschang Singapore Management University 469 Bukit Timah Road, Singapore 259756 phone: (65) 6822-0251 fax: (65) 6822-0777 e-mail: tedt@.sg and Andrea Goldstein OECD Development Centre and World Bank Group 49 avenue des Ternes, 75017 Paris – France e-mail : agoldstein@ This version: May 7, 2004 This paper presents a framework for explaining production patterns in creative industries. In particular, we focus on the conditions under which insourcing occurs in the US three- dimensional animation industry and where outsourcing in the conventional two-dimensional animation industry occurs to the Philippines. The work that is outsourced is not the most creative component of the entire production process. Institutional decisions (as related to the location of decision makers and primary markets), and business conditions in the world market, have both positively and negatively affected the local Filipino industry and its position within the global division of labor. Implications for knowledge-based theories of the firm are discussed. Keywords: Creative Industries, Outsourcing, Animation, Product Development Process JEL code. L82, M11, O1