The creative and cultural industries have been growing faster than traditional industries over the last few decades. In Brazil, reports by the Brazilian Institute of Geography and Statistics show more a growth of gross output and value added greater than a 30% between 2003–2005 and 2007–2010. This paper aims to evaluate how three mechanisms, specialization, urbanization, and production structure externalities, impact the formal cultural employment growth rate in Brazilian municipalities between 2006 and 2016. We employ spatial econometric models to capture both the direct and indirect effects from these externalities. The main results show that specialization has mixed effects in explaining the growth of formal cultural employment in Brazil. Urbanization and diversification of production structure, in turn, are positive associated with formal cultural employment in Brazil. However, differently than the empirical literature for Europe and North America, we find no evidence of spatial spillover effects in the Brazilian case.
