Productivity and the Silver Bullet

Productivity has become a hot topic, with discussions focusing on its stagnation in Catalonia and Spain. This lack of dynamism directly impacts GDP per capita growth, which is crucial for maintaining the welfare state. Productivity measures the efficiency of resource use in producing goods or services. Economic growth can occur by increasing resource input, such as labor, without necessarily improving efficiency, thus not always translating into perceptible improvements for the general population.

Spain faces a significant productivity challenge. The most comprehensive indicator, total factor productivity (TFP), shows that between Spain's entry into the EEC in 1986 and 2000, it lost 15% relative to Germany, France, Italy, and the Netherlands. This gap narrowed to 12% by 2013 but has since recovered to 8% in 2025. However, at the current pace of improvement since 2013, closing this relative gap would not occur until 2050. Furthermore, to recover the losses from 1986-2000, TFP would need to grow at double the rate seen between 2013 and 2025.

The recent positive trends since 2013 are attributed to the increased market share of the most productive companies within each sector, accounting for nearly half of the aggregate productivity gains. The productivity gap between Spanish and these four European countries has reduced across all company sizes, with SMEs showing the smallest difference. Reduced corporate debt and diversified financing have also contributed to this evolution.

Debate continues in Catalonia about whether productivity issues stem from a concentration in low-value-added sectors like retail and tourism or if the problem is more widespread. Evidence from the Bank of Spain and other studies suggests differences between companies are more significant than sectoral issues. Underlying factors for productivity include investment in R&D, innovation and organizational capacity, educational levels, adequate infrastructure, and public policies that support SME growth and overall development.