6
Nov

Can Spain change its economic model?

Escrito el 6 noviembre 2009 por Rafael Pampillón en Economía española

The economic crisis that is unfortunately affecting Spain requires a collective effort aimed at changing the economic model. This change consists of moving over from a production apparatus, such as the present one, which is focused on sectors that are not highly exposed to international competition, such as certain services and construction, to another that is designed to produce more goods and services for exports. In short, the aim would be to increase the competitiveness of our economy; in other words, to give more importance to the sectors and businesses that export and also to those that presently compete with imports in our country. Consequently, Spanish enterprise is at a decisive moment for its future.

This is due to the fact that the peculiarities of the Spanish economic crisis can be found in the current Spanish production model, which is based on low-productivity services and industry and on the construction sector, which now threatens with high unemployment due to a reduction in activity. It would be absurd to attribute responsibility to international competition (imports) and to the globalisation of our businesses’ lack of competition or the internal malfunctioning of our economy. That responsibility must be attributed to the inflexibility of the employment market, the absence of competition in certain key economic sectors, the presence of a collective subsidy culture and, therefore, one of public spending, the shortage of technological innovation, the problems that affect the financial system, the deficient education model and the low-level adoption of modern, more efficient management systems.

Is it possible to change the model? Under these circumstances, the possibility of changing the economic model will depend on our capacity for solving the problems that affect the financial system and making our economy and employment market more flexible, as well as our capacity for increasing our technological capital. Consequently, it is a question of improving production and the competitive structure to increase exports and Spanish investment abroad.

Unfortunately, during the last three years for which information is available, Spanish exports of high-tech products have fallen in absolute terms by almost 20%. Improved technology, the restructuring of production, the promotion of national saving and increased competition must be the stepping-stones along the road towards this new economic model. The main players in the model must be the old and new businesses that invest in R&D and innovation; in other words, those that supply innovation, but also those that demand innovation.

Consequently, the public sector must aim its spending at increasing the productivity and, consequently, the competitiveness of our products, such as the reform of the educational model to promote excellence and effort, motivate activities that generate R&D and innovation and speed up the construction of infrastructures. In short, we must continue our commitment to an economic model that is open to the exterior and avoid protectionism in the Spanish economy. The solution to our problems does not lie in protecting our economy from foreign competition, but rather in increasing the quantity and quality of our exports.

Comentarios

Nestor 6 noviembre 2009 - 17:18

Dear Mr. Pampillon,

As your seem to refrain of actually answering the question in the blogpost title, I’ll gladly do it for you: NO. Not now, and perhaps not in the following 10 years. You’ve given a good explanation about what to do, but looking at the circumstances and the nature of the average Spaniard (I am one, but perhaps not “average”), do you honestly believe this can be solved? There are just too many things that make us lag behind. Too many. Changing all of them looks so unfeasible to me that I can’t help being pesimistic.

I wished I was wrong…

Rgds

Francisco Grela 8 noviembre 2009 - 13:55

At least the Spanish Minister of Economy (Mrs. Elena Salgado) has commented recently that Spain has to change the Economic Model:

“…Vamos a seguir tomando medidas destinadas al cambio de patrón de crecimiento. A diferencia de Alemania, no podemos salir de la crisis con el mismo modelo económico con el que entramos porque el sector de la construcción no va a recuperarse al mismo nivel. Vamos a potenciar sectores de futuro y que permitan que la economía española se recupere …”

But unfortunately, she did not give more details how the current Goverment wants to chain the Spanish economic model.

Rafael, do you know if the Goverment has already given more details how to move to what they call Sustainable Economic Model?

Regards,
Francisco Grela.

APAC 9 noviembre 2009 - 07:15

No with current Government, no with current Trade Unions.

In fact, Government is slave of Trade Unions. And Trade Unions in Spain are still behaving like radicals from the 30,s that do not want to change a simple word in current status quo to continue a live of luxury coming from Government subsidiaries.

An end to end vicious circle made by poorly prepared people. Also in the economics side, of course, as they still believe in Marx.

David Espadas 10 noviembre 2009 - 13:08

Estimado Rafael,

Respecto al cambio de modelo de desarrollo español, parece que hay consenso en que debe evolucionar en los puntos que tú planteas en el post, dejando de lado consideraciones de posicionamiento político, e intentando que el debate sea lo más agnóstico y técnico posible.
Sin embargo, echo de menos en los comentarios de los responsables políticos y económicos en estos tiempos planes concretos que vayan más allá de conceptos generales como “inversión en I+D” (que en buena parte termina financiando compras del ejército), o “modelo educativo que fomente la excelencia”.
¿Existe alguna estimación de cuánto cuesta, en dinero, cambiar el modelo productivo?

Fernando Peral 10 noviembre 2009 - 16:09

Changing an economic model is not something you can get overnight. It requires first a clear idea of where the economy should go – which entails an ample political consensus, second a realistic estimation of the cost of initiating a change of model, third a business community sufficiently confident and motivated to reorient its activities, a workforce sufficiently educated to be able to evolve towards new activities/professions; fourth, an integrated system of financing and incentives, and last but not least, generating sufficient confidence so as to attract foreign investors.

As anyone can see today, none of these factors exist in Spain, and if things were done right, it would take between 7 and 10 years to meet the basic requirements allowing to envisage the possibility of a change of economic model.

For the next 5 to 10 years, spanish economy will have to rely again mainly on the construction sector, banking services, agriculture and tourism, as well as in the economic recovery of its main foreign customers

Rafael Pampillon 17 noviembre 2009 - 21:28

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