Do Creative Industries Drive Development? Evidence from Colombia's Orange Economy Policy

Federico Corredor
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Federico Corredor: Public Finance Research Cluster, Andrew Young School of Policy Studies, Georgia State University

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: The Orange Economy Policy (PEN) was Colombia's flagship initiative (2018-2022) to position Cultural and Creative Industries (CCIs) as engines of economic development. Using administrative payroll tax data from 2016-2022, this paper employs difference-in-differences and synthetic control methods to evaluate PEN's impact on the formal economy. The results show that PEN increased firm creation and employment while reducing sole proprietorships and self-employment, consistent with a reallocation of economic activity toward more structured, firm-based production. These findings suggest that entry and hiring respond relatively quickly to targeted incentives, whereas wages and pension contributions depend on longer-term consolidation. The paper provides causal evidence on the effects of industrial policy in a non-traditional sector, highlighting its potential to promote formalization and reshape the organization of economic activity, while underscoring the importance of sustained implementation and institutional stability to translate short-term successes into long-term economic transformation.

Pages: 46 pages
Date: 2026-04
New Economics Papers: this item is included in nep-cul and nep-dev
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