A dynamically equivalent statement is that the rate of total factor productivity (TFPCI) growth is less in the creative industries than in other sectors (TFPY), as assumed in Baumol and Bowen (1966). In this model, the creative industries are essentially a ‘merit good’ sector that produces cultural commodities that are welfare enhancing (dU/dCI > 0), but that are only economically viable with a transfer of resources from the rest of the economy (dY/dCI < 0). Furthermore, positive knowledge spillovers associated with production that would augment TFPY are excluded.