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2 Copyright United Nations 2008 All rights reserved UNCTAD/DITC/2008/2 ISBN Material in this publication may be freely quoted or reprinted as long as acknowledgement is provided with a reference to the source. A copy of the publication containing the quotation or reprint should be sent to the UNCTAD secretariat at: Palais des Nations, CH-1211 Geneva 10, Switzerland, and to the UNDP Special Unit for South-South Cooperation, 1 UN Plaza, New York, NY USA. This Report is the fruit of a collaborative effort that was led by UNCTAD and the UNDP Special Unit for South-South Cooperation and that included a team of experts from the collaborating UN agencies UNCTAD, UNDP, UNESCO, WIPO and ITC as well as international consultants. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever concerning the legal status of any country, territory, city or area, or concerning the delimitation of its frontiers or boundaries. The English version of the full report and the French and Spanish versions of its overview section are currently available on the Internet at the addresses indicated below: and

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5 Foreword The world economy has clearly seen an extraordinary expansion in the past five years. This expansion has been more broadly based than ever before, allowing many developing countries to benefit from it. Even some of the least developed countries have been able to generate average annual GDP growth of more than 5 per cent, representing significant progress over that made in the 1990s. Nevertheless, this path of economic growth has not yet been sufficient to ensure the welfare and decent living standards for the large majority of people in the developing world. Despite efforts to diversify their economies, 86 of 144 developing countries still depend on commodities for more than half their export earnings. Prevailing development strategies have yet to succeed in generating expected levels of socio-economic development for these countries. The challenge is to find feasible development options that take into account their specific realities and in particular their scarcity of skilled labour, lack of basic infrastructure and very low levels of foreign direct investment. How to promote development that is both sustainable and inclusive? As economic models do not function in isolation, the time has come to go beyond economics and look for a more holistic development approach that considers their different cultural identities, economic aspirations, social disparities and technological disadvantages. Development strategies also must be updated in order to cope with the far-reaching cultural and technological shifts under way in our society. The world needs to adapt to this new environment by bringing issues relating to culture and technology into the mainstream of economic development thinking. Achieving the Millennium Development Goals calls for dealing with cross-cutting development issues by introducing concerted multidisciplinary policies and reinforcing policy coherence at the national and international levels. Globalization and connectivity are new realities that have brought profound changes in lifestyles worldwide. This is reshaping the overall pattern of cultural production, consumption and trade in a world increasingly filled with images, sounds, texts and symbols. There is a clear need to better grasp the complex interactions among the economic, cultural, technological and social aspects guiding the dynamics of the world economy and the way people live in the twenty-first century. In this era of transformation, creativity and knowledge are fast becoming powerful means of fostering development gains. In this context, the interface among creativity, culture, economics and technology, as expressed in the ability to create and circulate intellectual capital, has the potential to generate income, jobs and export earnings while at the same time promoting social inclusion, cultural diversity and human development. This is what the emerging creative economy has already begun to do as a leading component of economic growth, employment, trade, innovation and social cohesion in most advanced economies. The creative economy also seems to be a feasible option for developing countries. If effective public policies are in place, the creative economy generates cross-cutting linkages with the overall economy at macro and micro levels. It thus fosters a development dimension, offering new opportunities for developing countries to leapfrog into emerging high-growth areas of the world economy. This study is the first to present the perspectives of the United Nations on this exciting new topic. The creative economy is an evolving concept centred on the dynamics of the creative industries. There is no single definition of the creative economy nor is there a consensus as to the set of knowledge-based economic activities on which the creative industries are based. There is no one-size-fits-all recipe but rather, flexible The creative economy has the potential to generate income and jobs while promoting social inclusion, cultural diversity and human development Foreword iii

6 This Report provides empirical evidence that the creative industries are among the most dynamic emerging sectors in world trade The large majority of developing countries are not yet able to harness their creative capacities for development and strategic choices to be made by national governments in order to optimize the benefits of their creative economies for development. At the heart of the creative economy lie the creative industries. Loosely defined, the creative industries are at the crossroads of the arts, culture, business and technology. In other words, they comprise the cycle of creation, production and distribution of goods and services that use intellectual capital as their primary input. Today s creative industries involve the interplay of traditional, technology-intensive and service-oriented subsectors. They range from folk art, festivals, music, books, paintings and performing arts to more technology-intensive subsectors such as the film industry, broadcasting, digital animation and video games, and more service-oriented fields such as architectural and advertising services. All these activities are intensive in creative skills and can generate income through trade and intellectual property rights. This Report provides empirical evidence that the creative industries are among the most dynamic emerging sectors in world trade. Over the period , trade in creative goods and services increased at an unprecedented average annual rate of 8.7 per cent. World exports of creative products were valued at $424.4 billion in 2005 as compared to $227.5 billion in 1996, according to preliminary UNCTAD figures. Creative services in particular enjoyed rapid export growth 8.8 per cent annually between 1996 and This positive trend occurred in all regions and groups of countries and is expected to continue into the next decade, assuming that the global demand for creative goods and services continues to rise. It is clear that developed countries still dominate the global market for creative products. Nonetheless, many developing-country products are already benefiting from the creative industry boom, particularly in Asia. Unfortunately, however, the large majority of developing countries are not yet able to harness their creative capacities for development. In Africa, for instance, despite the abundance of creative talents, the creative potential remains highly underutilized. The continent s share in global trade of creative products remains marginal at less than 1 per cent of world exports despite sharp increases. As is the case for other developing regions, this is a reflection of both domestic policy weaknesses and global systemic biases. The policy-oriented analysis presented in this Report represents an initial contribution to developing a better understanding of the key issues underlying the creative economy and its development dimension. The Report addresses the challenge of assessing the creative economy with a view to informed policy-making by outlining the conceptual, institutional and policy framework in which this economy is flourishing. Given the multifaceted nature of the creative economy, strategic choices for concerted interministerial policy action are crucial. The important implications of multilateral processes in shaping policies for the creative economy also warrant consideration. This Report is an example of cooperation inside the United Nations system, comprising contributions from five international organizations: UNCTAD, UNDP via its Special Unit for South-South Cooperation, UNESCO, WIPO and ITC. It is a joint endeavour that builds on complementarities in order to enhance the effectiveness of international cooperation and policy coherence in this innovative field. The creative economy is producing new opportunities for both developed and developing countries, but the challenges ahead should not be underestimated. Foreword Supachai Panitchpakdi Secretary-General United Nations Conference on Trade and Development Kemal Dervis Administrator United Nations Development Programme iv

7 Acknowledgements The Creative Economy Report 2008 is the result of an initiative put forward by the partnership between UNCTAD and the UNDP Special Unit for South-South Cooperation. This policy-oriented study is the main output of the project, Strengthening the Creative Economy in Developing Countries, jointly coordinated by Edna dos Santos-Duisenberg, Chief, UNCTAD Creative Economy and Industries Programme, and Francisco Simplicio, Chief, Division for Knowledge Management and Operations of the UNDP Special Unit for South-South Cooperation. The Partnership expresses its sincere gratitude to Yiping Zhou, Director, UNDP Special Unit for South-South Cooperation, for his deep support to this initiative. Without his vision and commitment, this work would not have materialized. The Report was prepared under the leadership of UNCTAD and is a pioneering example of multi-agency cooperation reflecting the work of the United Nations Multi- Agency Informal Group on Creative Industries in an effort to build upon complementarities and enhance policy coherence on matters relating to the creative industries and the creative economy. It is the first report to present the United Nations system-wide perspective on this innovative topic and it brings together contributions from five collaborating bodies: the United Nations Conference on Trade and Development (UNC- TAD), the United Nations Development Programme (UNDP) Special Unit for South- South Cooperation, the United Nations Educational, Scientific and Cultural Organization (UNESCO), the World Intellectual Property Organization (WIPO) and the International Trade Centre (ITC). The research and policy-oriented analysis were carried out under the overall guidance of Edna dos Santos-Duisenberg, the main co-writer of this Report. The Report greatly benefited from the invaluable academic insights from Dr. David Throsby from Macquarie University, Sidney, and Dr. Andrew Pratt from the London School of Economics, to whom the team expresses its deep gratitude. The Multi-Agency Group acknowledges and thanks the contribution of the following team of international consultants who provided inputs for various chapters: Avril Joffe, Pernille Askerud, Ana Carla Fonseca Reis, David Diaz- Benevides and Sylvia Amaya Londoño. The Partnership extends its profound appreciation to all the colleagues from the collaborating organizations who participated in this joint endeavour, in particular the members of the United Nations Multi-Agency Group. Acknowledgements are expressed to: Georges Poussin, Richard Engelhardt, Simon Ellis, Lydia Deloumeaux and Guiomar Alonso Cano from UNESCO; Dimiter Gantchev, Wend Wendland, Brigitte Vezina and Richard Owens from WIPO; and Iris Hauswirth, Jean- Michel Pasteels and Kefalla Conte from ITC. From UNCTAD, our special thanks go to the Head of the Central Statistics Branch, Henri Laurencin, and his team composed of David Critsallo, Sanja Blazevic, Yoann Chaine, Mirco Moretti, Flavine Creppy and Sonia Blachier. Analytical inputs were also provided by Matfobhi Riba and Dimo Calowski. Comments were received from Diana Barrowclough, Yuefin Li and Susan Teltscher. Acknowledgements v

8 Research assistance was provided by Carolina Quintana as well as by Cheng Shang Li and Simon Alder, who were extremely devoted to this work during their internship with UNCTAD. The Partnership also expresses its sincere gratitude to all those who kindly accepted our invitation to contribute with signed articles featuring concrete cases and/or their experiences in the creative economy as illustrated in the boxes throughout the Report. These articles helped to bring pragmatism to the policyoriented analysis of this Report and evidence for some of the empirical arguments. The text was edited by Barbara Brewka, and Jennifer Bergamini designed the cover and the layout of this publication. Administrative and secretarial support was provided by Clisse Medeiros Ramos Perret from UNCTAD and Lourdes Hermosura- Chang and Ines Tofalo from the UNDP Special Unit for South-South Cooperation. The Creative Economy Report 2008 was financed by the UNDP Special Unit for South-South Cooperation. Acknowledgements vi

9 Contents Foreword...iii Acknowledgements...v Abbreviations and acronyms...xix PART 1. THE CREATIVE ECONOMY Overview...3 Chapter 1. Concept and context of the creative economy Evolving concepts and definitions Creativity Creative goods and services Cultural industries Cultural economics Creative industries The UNCTAD classification of the creative industries The creative economy The creative class and creative entrepreneurs Creative cities Creative clusters, networks and districts Major drivers of the creative economy worldwide Technology Demand Tourism The multiple dimensions of the creative economy Economic aspects Social aspects Cultural aspects Sustainable development The cross-cutting nature of creative industries Need for concerted interministerial policies Need for dialogue with multiple stakeholders Need for institutional mechanisms The creative economy in the developed world...28 Contents vii

10 2. The development dimension Policy implications: The Millennium Development Goals The creative economy: Linkages and development implications Multifaceted aspects of the creative economy Cultural and technological linkages Social interactions Interface between traditional knowledge, arts and the creative economy Obstacles to the expansion of the creative economy Shaping a model for enhancing the creative economy in developing countries The creative economy in the developing world and transition economies Africa The Asia-Pacific region Central Asia and the Middle East Latin America The Caribbean Eastern European economies in transition...56 PART 2. ASSESSING THE CREATIVE ECONOMY: ANALYSIS AND MEASUREMENT 3. Analysing the creative economy 61 Contents 3.1 The need for systematic analysis Organization of the creative economy Organizational structures Operational matters Locational issues Economic analysis of the creative industries Industrial organization analysis Value-chain analysis Inter-industry analysis Locational analysis Copyright and intellectual property Contract theory Structure of the creative industries Predominance of small and medium-sized enterprises Large-scale corporate enterprises Public or quasi-public cultural institutions Individual artists and producers Distribution and competition issues Changing consumption patterns Creative industries and regulation...77 viii

11 3.6 An application of production-chain analysis: The music industry in sub-saharan Africa Towards an evidence-based assessment of the creative economy Why we need a new information base and why it doesn t already exist Towards a reliable benchmark for the creative economy The challenge of building an operational model of the creative economy Measures: Their limitations and potential Employment Time use Trade and value added Copyright and IPR Public investment Implementation of a Culture Satellite Account Data sources and assessment tools: Why the current data are inadequate The case for a trade model for the creative industries using a product classification methodology Methodological basis for a unified measure of international trade of creative goods Main considerations...96 PART 3. INTERNATIONAL TRADE IN CREATIVE GOODS AND SERVICES 5. International trade in creative goods and services: Global trends and features Setting the scene Creative industries: A new dynamic sector in world trade Global trends in world trade of creative goods and services Global trends in world exports Global trends in world imports Key players in the global market for creative goods Regional economic groups in world markets Prospects for North-South and South-South trade in creative goods and services Global trends in international trade of creative industries, by subgroup Heritage Performing arts Visual arts Audiovisuals Publishing and printed media Design New media Creative services Contents ix

12 5.6.9 Royalties and licence fees Related industries PART 4. THE ROLE OF INTELLECTUAL PROPERTY AND TECHNOLOGY 6. The role of intellectual property in the creative economy Introduction What are intellectual property rights? Intellectual property and the creative industries Geographical indications and appellations of origin Copyright and the creative economy Exclusive rights Moral rights Related rights Exceptions and limitations to copyright Enforcement of copyright The economics of copyright Contribution of the creative industries to the economy Copyright, the creative industries and traditional cultural expressions Indigenous communities and new technologies Copyrights and new technologies Possible policy options Technology, connectivity and the creative economy Introduction Connectivity and its wider impact Measurement issues and creative content ICTs and their impact on the creative economy Digitization Convergence and new business models Impact across the production chain Looking into the future PART 5. PROMOTING THE CREATIVE ECONOMY FOR DEVELOPMENT 8. Policy strategies for the creative industries 173 Contents 8.1 Introduction The role of public policies x

13 8.3 The policy process Policy directions Provision of infrastructure Provision of finance and investment Creation of institutional mechanisms Development of export markets Protection of creators rights Establishment of creative clusters Institution of effective data-collection measures Target measures for enhancing creative capacities Non-formal sector Creative arts Small and medium-sized enterprises Public cultural institutions Corporate sector Tailoring policy action at the national level The international dimension of creative-industries policy The international policy framework UNCTAD: Creative industries on the economic and development agenda UNCTAD X: Audiovisual services Third United Nations Conference on the Least Developed Countries: Music UNCTAD XI: Creative industries A turning point UNCTAD XII: From the creative industries to the creative economy WTO multilateral negotiations and implications for creative industries General Agreement on Trade in Services Implications of multilateral and regional trade agreements for creative industries TRIPS Agreement UNESCO cultural-diversity perspective WIPO Development Agenda UNDP: Engaging developing countries in the creative economy for development ITC: Creating business opportunities for creative industries Lessons learned and policy options Lessons learned Major findings Definitions and concepts Cross-cutting linkages The creative economy in the developed world The creative economy in the developing world The value chain for creative products Contents xi

14 Data issues Trade Connectivity and ICTs Policy towards the creative economy International context Policy options Role of governments Role of creative entrepreneurs Role of civil society and the place of strategic alliances The way ahead Redefining priorities Role of international cooperation References LIST OF BOXES Contents 1.1 A creative entrepreneur: Transforming ideas into successful business The creative city Cultural and creative clusters in China Petra: A cultural trip Cirque du Soleil: A very simple dream Economics of the museum district of Paris South-South sharing of creative experiences Brazilian carnivals Africa Remix: Africa speaking loudly, brightly and colourfully Experience of the Shanghai Creative Industry Center Guatemala: The economic contribution of culture Brand Jamaica as the home of reggae The Bolshoi: A sublime gift to the world Creative clusters Broadcasting creativity blooms in South Africa Properties of creative industries Commercial practices and business models particular to the audiovisual and music industries Reality and numbers Lessons from Uruguay Design as a key ingredient for growth The Da Vinci Code case A collaborative approach to creativity and knowledge Jewellery: A magic marriage between tradition and contemporary design Collective management of copyright When ICTs give rise to new business models xii

15 7.2 Free and open-source software and the creative economy Eurovision The Egyptian film industry: The waning of the Hollywood of the East? Shanghai creative industries: The Chinese way Alphadi: The fashion caravan Cultural policy in action: The Nairobi Plan of Action Television and soap operas Puppet planet Cultural tourism: Impressions of the Peruvian experience Nollywood: A creative response The Biennale of Contemporary African Art of Dakar: A contribution to economic and cultural development in Africa Summary of key messages LIST OF TABLES 1.1 Classification systems for the creative industries derived from different models Estimates of culture employment in selected creative cities Creative Cities Network Workers in creative industries in the United States, Contribution of the European cultural and creative sector to the European national economies Contribution of the cultural industries to GDP or GVA for five countries, various years Contribution of the cultural sector to the national economies of eight European countries, various years Comparison of contribution of creative/cultural sector with contributions of other sectors for eight European countries (% of GDP) Estimates of the contribution of creative industries to GDP for five OECD countries Features of the African music industry Value chain in the cultural industries in Canada, Proposed categorization of creative goods Goods and services of creative industries Creative goods: Exports, by economic group, Creative goods: Exports, by economic group and region, 2000 and Creative goods: Imports, by economic group, 1996 and Creative goods: Imports, by economic group and region, 2000 and Creative goods: Top 20 exporters worldwide, 1996 and Creative goods: Top 10 exporters among developed economies, Creative goods: Top 10 exporters among developing economies, Creative goods: Exports, by regional economic group, 1996 and World exports of all creative-industry products (goods and services), by subgroup, 1996 and Arts and crafts: Exports, by economic group and region, 2000 and Arts and crafts: Top 10 exporters among developing economies, Music: Exports, by economic group and region, 2000 and Contents xiii

16 5.14 Music: Top 10 exporters among developed economies, Music: Top 10 exporters among developing economies, Visual arts: Top 10 exporters among developed economies, Visual arts: Top 10 exporters among developing economies, Publishing and printed media: Top 10 exporters among developed economies, Publishing materials: Top 10 exporters among developing economies, Design: Exports, by economic group and region, 2000 and Design: Top 10 exporters among developed economies, Design: Top 10 exporters among developing economies, New media: Exports, by economic group and region, 2000 and New media: Top 10 exporters among developed economies, New media: Top 10 exporters among developing economies, Reported exports of creative services, 1996, 2000 and Royalties and license fees: World exports and imports, 1996, 2000 and Some results of the surveys based on the WIPO Guide Contribution of segments of ICT industries to global GDP, ICT industries global market, by region, Internet penetration, by regional economic group, Mobile phone penetration, by regional economic group, Interconnected dimensions of digital life: Enablers, communications, content and transactions Partnership on Measuring ICT for Development: Core ICT indicators Top 20 audiovisual companies worldwide and their 2004 turnover Creative industries policy options LIST OF FIGURES 1.1 Creativity in today s economy Interplay of the 5Cs: Outcomes of creativity + 4 capitals UNCTAD classification of creative industries Development dimension of the creative economy The creative nexus: The C-ITET model Creative-industry value chain Simplified diagram of Porter s model for clusters Stages of a music production chain in sub-saharan Africa The creative chain Funding flows to the cultural sector LIST OF CHARTS Contents 5.1.a Creative industries: Exports of creative goods, by economic group, b Creative industries: Exports of creative services, by economic group, Evolution of world exports of creative goods and services, a Creative industries: Exports, by group, xiv

17 5.3.b Creative industries: Exports, by group, Share of economic groups in world exports of creative goods a Imports of creative goods, by economic group, 1996, 2000 and b Imports of creative goods, by group, Creative goods: Exports from all developing countries, 1996 and Heritage goods and services: Exports, by economic group, 1996 and Arts and crafts: Market and product diversification in world markets Arts and crafts: Market and product diversification of developing economies Music: Exports, by economic group, 1996 and Music: Market and product diversification of developing economies Visual arts: Exports, by economic group, 1996 and Visual arts: Market and product diversification worldwide Audiovisuals: Exports, by economic group, 1996 and Audiovisuals: Market and product diversification worldwide Publishing and printed media: Exports, by economic group, 1996 and Publishing and printed media: Market and product diversification of developing economies Design: Exports, by economic group, 1996 and Design: Market and product diversification worldwide Design: Market and product diversification of developing economies New media: Exports, by economic group, 1996 and New media: Market and product diversification worldwide Creative services: Exports, by economic group, Royalties and licence fees: World exports and imports, 1996, 2000 and Goods of related industries: Evolution of world exports, 1996 and Contribution of the creative industries to GDP Contribution of groups of copyright-based industries to total of creative industries Contribution of the creative industries to national employment STATISTICAL ANNEX General explanatory notes Distribution of developing economies by geographical region and economic grouping Distribution of developed economies and economies in transition by geographical region Distribution of economies by trade group Part 1. Creative goods Creative goods: Exports and imports, by economic group, region and country/territory, A Creative goods: Total world exports, by origin and product group, 1996, 2000 and B Creative goods: Total world imports, by origin and product group, 1996, 2000 and A Creative goods: Total world exports, by product group, 1996, 2000 and B Creative goods: Total world imports, by product group, 1996, 2000 and Contents xv

18 1.3.2.A Creative goods: Exports by developed economies, by product group, 1996, 2000 and B Creative goods: Imports by developed economies, by product group, 1996, 2000 and A Creative goods: Exports by developing economies, by product group, 1996, 2000 and B Creative goods: Imports by developing economies, by product group, 1996, 2000 and A Creative goods: Exports by economies in transition, by product group, 1996, 2000 and B Creative goods: Imports by economies in transition, by product group, 1996, 2000 and A Creative goods: Top 10 world exporters, by product group, B Creative goods: Top 10 world importers, by product group, A Creative goods: Top 10 exporters among developed economies, by product group, B Creative goods: Top 10 importers among developed economies, by product group, A Creative goods: Top 10 exporters among developing economies, by product group, B Creative goods: Top 10 importers among developing economies, by product group, A Creative goods: Top 10 exporters among economies in transition, by product group, B Creative goods: Top 10 importers among economies in transition, by product group, A1 Creative goods: Exports, by trade group, A2 Creative goods: Exports, by trade group, as % of total exports of creative groups by all trade groups, B1 Creative goods: Imports, by trade group, B2 Creative goods: Imports, by trade group, as % of total imports of creative goods by all trade groups, Contents Part 2. Creative services and royalties A Categories of services that include creative industries: Exports of all creative services, by country/territory, B Categories of services that include creative industries: Imports of all creative services, by country/territory, A Categories of services that include creative industries: Exports of advertising, market research and public opinion polling services, by economic group and country/territory, B Categories of services that include creative industries: Imports of advertising, market research and public opinion polling services, by economic group and country/territory, A Categories of services that include creative industries: Exports of architectural, engineering and other technical services, by economic group and country/territory, B Categories of services that include creative industries: Imports of architectural, engineering and other technical services, by economic group and country/territory, A Categories of services that include creative industries: Exports of audiovisual and related services, by economic group and country/territory, B Categories of services that include creative industries: Imports of audiovisual and related services, by economic group and country/territory, A Categories of services that include creative industries: Exports of research and development services, by economic group and country/territory, B Categories of services that include creative industries: Imports of research and development services, by economic group and country/territory, A Categories of services that include creative industries: Exports of personal, cultural and recreational services, by economic group and country/territory, B Categories of services that include creative industries: Imports of personal, cultural and xvi

19 2.7.A 2.7.B 2.8.A 2.8.B recreational services, by economic group and country/territory, Categories of services that include creative industries: Exports of other personal, cultural and recreational services, by economic group and country/territory, Categories of services that include creative industries: Imports of other personal, cultural and recreational services, by economic group and country/territory, Categories of services that include creative industries: Exports of royalties and licence fees, by economic group and country/territory, Categories of services that include creative industries: Imports of royalties and licence fees, by economic group and country/territory, Part 3. Related industries Related industries: World exports and imports, by economic group and country/territory, A Related industries: Exports, by origin and product group, 1996, 2000 and B Related industries: Imports, by origin and product group, 1996, 2000 and A Related industries: Total world exports, by product group, 1996, 2000 and B Related industries: Total world imports, by product group, 1996, 2000 and A Related industries: Exports of developed economies, by product group, 1996, 2000 and B Related industries: Imports of developed economies, by product group, 1996, 2000 and A Related industries: Exports of developing economies, by product group, 1996, 2000 and B Related industries: Imports of developing economies, by product group, 1996, 2000 and A Related industries: Exports of economies in transition, by product group, 1996, 2000 and B Related industries: Imports of economies in transition, by product group, 1996, 2000 and Contents xvii

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