The Economic Power of Culture
How Global Cultural Habits Influence GDP Growth
India being a country of festivals, starting the year with Pongal/Makar Sankranti and ending it with Christmas, it automatically becomes the economic driver, spread across the year!
Culture as an Economic Engine
Culture is often viewed through the lens of tradition, belief, and identity. However, it is also an economic force—one that shapes consumer behaviour, drives industry growth, and influences GDP expansion. Across the world, cultural habits, mass gatherings, and festivals fuel economic activity, generating employment and sustaining Micro, Small, and Medium Enterprises (MSMEs). These traditions do not just preserve heritage; they create billion-dollar industries in tourism, retail, hospitality, and infrastructure.
India’s Mahakumbh, China’s Chunyun, the U.S. holiday shopping season, and Germany’s Oktoberfest—these are not just social or religious events but economic phenomena that impact entire sectors. Recognising and strategically leveraging cultural habits can lead to sustainable economic policies, benefiting both the formal and informal economies.
Sadhu at MahaKumbh
The Mahakumbh Effect: A Case Study in Economic Growth
Take India’s Mahakumbh, one of the largest human gatherings in the world. The dips in Triveni Sangam have vanished, but the sheer number of people visiting this year’s Mahakumbh, whether its 400 million or 600 million, but not matter what, it has been the topmost human mass movement ever in the history of mankind and probably an event with the highest density of population in a small area of just 4000 hectares. Beyond its spiritual significance, Mahakumbh drives massive economic activity:
- Tourism Boom: This awareness of Praygraj, Varanasi and Ayodhaya, is here to stay for ever and they have now a sustainable tourism model
- MSME Growth: Small vendors, artisans, and local businesses see windfall profits from increased footfall. We already heard about the 130 boats making more than Rs.300 million in 45 days!
- Infrastructure Development: Short term or long term, each infrastructure is here to stay. Right from the airport terminal to railway tracks.
- Employment Creation: Street vendors, security personnel, hospitality staff, and transport workers and a whole gamut to mass worker migration to Praygraj
All estimated economic impact of the 2025 Mahakumbh, whether its Rs. 2 or 3 lakh crores, eventually is an investment for future revenue to come across the year, demonstrating the tangible economic benefits of cultural traditions. Such events not only stimulate short-term spending but also leave lasting infrastructure improvements that contribute to future growth.
Cultural Festivals as Global Economic Catalysts
Mahakumbh is not an isolated case. Across the world, cultural habits are powerful economic drivers:
- China’s Chunyun (Spring Festival Travel Rush): The world’s largest annual migration sees hundreds of millions of Chinese citizens traveling home, creating a peak season for transportation, retail, and hospitality sectors. This year itself more than 9 billion trips have been recorded
- Thanksgiving & Black Friday in the U.S.: What began as a family holiday has morphed into the biggest shopping event of the year, generating billions in retail sales and boosting employment in logistics and e-commerce.
- Nowruz in Iran and the Persian World: The Persian New Year sparks increased spending on gifts, food, and travel, directly benefiting small businesses and artisans.
- Oktoberfest in Germany: Munich’s beer festival generates billions in tourism revenue, sustaining MSMEs in brewing, hospitality, and entertainment.
- Carnival in Brazil: A global spectacle that fuels tourism, hospitality, and the creative arts sector, supporting thousands of small enterprises.
Each of these traditions represents a unique economic opportunity. The list does not end here, this is just the starting. Each culture will have its economy driving habits!
This also opens a cross border travel opportunities, which has a further ripple effect.
Influence of western culture down to Bharat in Mahakumbh
The Larger Economic Impact of Cultural Traditions
Beyond immediate consumption, cultural habits contribute to economic resilience in several ways.
Cultural events play a crucial role in driving economic expansion by boosting tourism, infrastructure, and local businesses. The surge in demand during such events often leads to long-term infrastructure improvements, with governments investing in better roads, sanitation, and public transport to accommodate large crowds, ultimately enhancing overall economic efficiency.
Due to the nature of these events, with more human touch required, MSMEs are most equipped to not encash these short-term opportunities but also create long term sustainable businesses based on the pilots being done here.
Balancing Growth and Cultural Integrity
While cultural traditions generate immense economic value, their commercialization poses risks. Over-tourism, environmental degradation, and excessive consumerism can erode the very essence of these traditions. The challenge lies in fostering economic benefits while preserving cultural integrity.
The Role of Family Bonding in Economic and Cultural Growth
At the heart of these cultural traditions lies the deeply ingrained practice of family gatherings. Whether it is Mahakumbh in India, Chunyun in China, Thanksgiving in the U.S., or Nowruz in Iran, these events emphasize the importance of homecoming, familial ties, and shared experiences. This tradition of family reunions fuels significant economic activity—spurring travel, hospitality, retail, and dining industries. As families come together, they contribute to local economies by purchasing gifts, booking travel, and supporting small businesses that cater to festive needs. Beyond immediate financial gains, these cultural practices reinforce social structures, ensuring continuity in traditions that sustain economic ecosystems over generations.
Souvenir shopping in Mahakumbh
The Role of Family Bonding in Economic and Cultural Growth
As economies become more globalised, cultural traditions remain crucial economic pillars. The challenge for nations is not merely to leverage these traditions for GDP growth but to do so while safeguarding their authenticity. If harnessed thoughtfully, cultural habits can sustain small businesses, create jobs, and drive innovation. However, if economic growth erodes cultural identity, we risk losing the very heritage that fuels prosperity.
Let us not allow economic progress to diminish cultural traditions. Instead, we must integrate cultural preservation into economic policy, ensuring that future generations continue to benefit from the rich intersection of tradition and commerce.
The true measure of economic success is not just in numbers but in the continuity of cultural legacies that shape societies and economies alike.
Let us all thrive to preserve our cultural habits, if we want to preserve the color on our currencies!
Dr. Ravi Modani
Founder & CEO, 121 Finance
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