Building Consistent Policies on Subsidies in the Film Industry

This paper explores a much-neglected aspect of cultural policies: the role of the institutions in charge and the way they use the instruments at their disposal. It focuses on the film industry which offers the remarkable contrast on how the Korean film industry has outperformed the French one in less than twenty years. This paper provides three conclusions. First, it presents an economic analysis of the French and Korean institutions which shows that building a rich organization with a large degree of freedom for action and granting extensive subsidies is not a sure recipe for the success of the country's film industry. Second, it explains this paradox by the types of subsidies used by the institutions—whether these subsidies target narrowly defined goals (on a film-per-film basis), or have objectives broad enough to benefit potentially all participants in the film industry, such as improving the infrastructure needed for producing films (studios, schools for actors). Last but not least, this paradox is also due to the abundance of subsidies and measures of all types at the disposal of rich institutions, which can easily become a source of costly inconsistencies. This paper provides two illustrations of these conflicts among the instruments provided.