The economy has been suffering for decades a silent disease: loss of productivity. The economic literature repeats that it is the main deficiency of our productive system, the reason that prevents greater efficiency in the economy and one of the factors behind the weak growth of Spanish GDP per capita. It is one of the indicators that most worries the academic world and that clearly distances us from our competitors in Europe.
The second report of the Spanish Productivity and Competitiveness Observatory prepared by the BBVA Foundation and the Valencian Institute of Economic Research (IVIE) recalls that, despite the improvements achieved in the last two years in productivity – in 2022 it grew by 2.7% and 1% in 2023 -, Spain has not managed to converge to the productivity levels of the main economies, like the Netherlands, GermanySweden, France or Finland. They assure that economic efficiency has stagnated in the last decade, with the same level in 2023 as in 2013.
Contribution of total factor productivity (TFP) to the growth of gross value added (GVA) in Spain
2020-2023
Sector comparison
As a percentage of the total
Water supply; act. sanitation,
waste management and decontamination
Fab. of rubber and plastic products and
of other non-metallic mineral products
Information and communications
Fab. of computer, electronic and
optics; fab. of machinery and equipment nec
Various manufacturing industries
Fab. of transport material
Professional, scientific and technical activities and others
Textile industry, clothing manufacturing
and leather and footwear industry
Financial and insurance acts
Artistic, recreational and other services
Wood and cork industry, industry
paper and graphic arts
Health and social services
Metallurgy and manufacturing of metal products
Food, beverage and tobacco industry
Agriculture, livestock, forestry and fishing
Supply of electricity, gas, steam and
air-conditioning
Fountain: BBVA / Ivie Foundation
Contribution of total factor productivity (TFP)
to the growth of gross value added (GVA) in Spain
2020-2023
Sectoral comparison / As a percentage of the total
Water supply; act. sanitation,
waste management and decontamination
Fab. of rubber and plastic products
and other non-metallic mineral products
Information and communications
Fab. of computer, electronic products
and opticians; fab. of machinery and equipment nec
Various manufacturing industries
Fab. of transport material
Professional, scientific and technical activities and others
Textile industry, garment manufacturing
clothing and leather and footwear industry
Financial and insurance acts
Artistic, recreational and other services
Wood and cork industry,
paper and graphic arts industry
Health and social services
Metallurgy and manufacturing of metal products
Food, beverage and tobacco industry
Agriculture, livestock, forestry and fishing
Supply of electricity, gas,
steam and air conditioning
Fountain: BBVA / Ivie Foundation
The authors of the work explain that to understand this stagnation in productivity, it is necessary to analyze the evolution of the branches or sectors of activity. The study differentiates 23 sectorsand highlights that in 11 productivity fell between 2013 and 2023, but that in the other 12 its variations were positive. Data from recent years (2020-2023) are more favorable, with positive contributions to the growth of gross value added (GVA) predominating in a majority of sectors (16 out of 23).
The monograph highlights that the sectors with the most weight in the economy are not always the most productive, a fact that also hampers productivity, they say. Thus, of the five sectors with the greatest weight in GDPthree register a positive contribution to productivity (trade and repair, professional and scientific activities, and public administration), while in the other two they are negative and slow down productivity (real estate activities, and health and social services).
«Lagging companies»
The authors of the report explain that if it were possible to boost the productivity of companies that are among the 40% of the least productive, which they call “laggards”, the effect would be notable on productivity. They estimate that this would increase by 4.9% if those companies increased theirs to the median value of their sector.
They explain that by sector, the greatest productivity gains would occur in energy and services (6.4% and 5.8%, respectively) and that in manufacturing, the primary sector and construction, productivity gains would be would be between 3% and 3.7%. They point out that, in general, in the most digitalized sectors The greater distance to the border is less common, so the productivity problem in “lagging companies” is smaller and the potential productivity gains (4.5%) are, therefore, smaller than in the less digitalized branches. (5.6%). In the ICT producing sector the gain would be only 3.8%, according to the study.
Measures
Among the measures they recommend to increase productivity are expanding the number of exporting companies, improving training, especially in digital skillspromote investment in intangible assets and that public policies provide stimuli to business dynamism. They also propose more collaboration with leading companies in nearby environments and the attraction of foreign direct investment with carryover capacity.
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