The Spanish Economy
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Transcript of The Spanish Economy
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The Spanish Economy
Francisco Liñán
Dept. Economia Aplicada I
Universidad de Sevilla
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Outline
10 October 2011 2
The ‘Highs’ and ‘Lows’ of the Spanish
Economy
Accession to the EU
Population and migration
Employment
Tourism
Energy resources
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10 October 2011 3
‘Highs’ and ‘Lows’ of the Spanish Economy
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High-income country (US$ 30475, PPP 2008)
High Human Development Level (0.863,
#20)• Especially high in Health (0.970)• Life-expectancy at birth = 81.3 years
Universal Social Security system
Tourism attraction (2nd Internat. destination)
Green technologies
The ‘Highs’
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High unemployment (> 20%)
Lower competitiveness
External deficit
Weak Research & Development
Low entrepreneurship
The ‘Lows’
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10 October 2011 6
Spain in the European Union
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Application in 1977
Accession in 1986
Change of reference framework
Single Market implementation
Project for a single currency
Launch of the Euro (1999)
Accession to the EU
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Financial supportEuropean Funds paid to Spain (1986-2006):
1,8% GDPA)EAGGF-Guarantee and others (45% of total)B)Structural Funds (55% of total)
1. ERDF (50% of structural funds)2. ESF (22%)3. EAGGF-Guidance & Fisheries (15%)4. Cohesion Fund (13%)
Net balance between Spain & EU (1996-2996): 1% GDP
Estimated effect of European Funds on Spanish growth and income
Without funds
With funds
Annual growth of GDP 1988-2006
2,37% 2,75%
GDP per capita 2006 (EU-15=100)
83,61% 89,39%10 October 2011 8
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NET BALANCE BETWEEN SPAIN AND EU (1996-2006):
1% of GDP
NET BALANCE BETWEEN SPAIN AND EU (2007-2013):
0,2 % of GDP
Net balance
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Main economic indicators
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10 October 2011 11
Population and migration
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Low population growth since early 1980s
Ageing of the population
Duality in the labour market
• High unemployment
• Positions not covered
Immigration growing very quickly
Population and migration
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Population in Spain (2010) = 47.150.819 (93,4 inhab./Km2)
Large internal differencesEU-15 EU-25 EU-27
(2007)
120.9 117.3 114.8
Spain’s population
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Economic effects•Supply: less flexibility•Demand: Slower growth + increased expenditure•Welfare state: increased dependency
Problems of Population
ageing
Increased expenditure
Stagnated Demand
Older labour force
Increased dependency
Population ageing
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The opening of borders to an integrated immigration has the following benefits:
1. Increased birth rates
2. Pensions are guaranteed
3. Positions not-wanted by Spanish workers may be occupied
4. Increase in consumption and trade and, therefore, general economic growth
Immigration
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Foreign population in Spain
Year persons % total1981 198 042 0.5%1986 241 971 0.6%1991 360 655 0.9%1996 542 314 1.4%1998 637 085 1.6%2000 923 879 2.3%2001 1 370 657 3.3%2002 1 977 946 4.7%2003 2 664 168 6.2%2004 3 034 326 7.0%2005 3 730 610 8.5%2006 4 144 166 9.3%2007 4 519 554 10.0%2008 5 220 600 11.3%2009 5 598 691 12.0%2010 5 747 734 12.2%2011 5 730 667 12.2%
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10 October 2011 16
Employment
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Increased participation of women
Growth in tertiary sector employment
Duality (permanent vs. fix-termed contracts)
Low productivity
Changes in labour market
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Activity rate by gender(% of population over 16)
1977 1980 1985 1990 1995 1999 2007 2010
Total 50,3 48,7 47,5 49,4 49,0 50,2 58,9 60,0
Male 75,2 72,1 67,3 66,7 62,7 63,1 69,3 68,1
Female 27,5 27,1 27,8 33,4 36,2 38,4 48,9 52,3
01020304050607080
Source: EPA
Participation of women
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1977
1985
1995
2005
0 10 20 30 40 50 60 70
20.6
18.3
8.8
5.3
27.7
24.4
20.6
17.3
9.9
7.3
9.5
12.4
41.8
50.0
61.0
65.0
Services Construction Manufacturing Agrarian
Source: EPA
Employment by sector
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Source: EPA
Employment by sector
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2008
2009
2010
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
4.0
4.2
4.3
15.8
14.7
14.1
12.1
10.0
8.9
68.1
71.1
72.6
Services Construction Manufacturing Agrarian
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Duality in labour market
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2005 2006 2007 2008 2009 201020.0
30.0
40.0
50.0
60.0
70.0
80.0
66.7 66.068.3 70.7
74.6 75.1
33.3 34.031.7
29.325.4 24.9
Permanent
Fix-term
Source: EPA
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Low productivity
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Tourism
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Several different activities included
Approximation by Hostelry (% of total economy):• Direct Effect: > 7% of GDP and employment• Total Effect (direct + indirect): > 10% of GDP and
employment
Contribution to the Balance of Payments• Surplus in tourism activities• Partly compensates the trade deficit
• From a low of 33% to a high of 150%• 2010: 59% of the trade deficit
Importance of tourism
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Spain’s international position
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Spain’s international position
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Energy
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Recent evolution
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Consumption of primary energy by type of energy(ktep)
2000 2007 2009CoalOilNatural gasNuclearRenewable energies- Hidraulic- Other renewable
energiesElectricity balance (imp.-exp.)
21.63564.66315.22316.2116.9902.5344.456
382
20.23670.84831.60214.36010.2282.3417.887-495
10.35363.67331.10413.75012.3252.258
10.067-687
Total 125.103 146.779 130.508Source: MICT (2010): La energía en España 2009, Madrid: Ministerio de Industria, Turismo y Comercio.
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Very low in fossil resources High potential in renewable energies
Self-suffiency level
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2009 Internal production Imports
Total primary energy
Self-sufficiency
levelCoal 3.778 6.575 10.353 36,5%Oil 107 63.566 63.673 0,2%Natural gas 12 31.092 31.104 0,0%Nuclear 13.750 13.750 100,0%Hidraulic 2.258 2.258 100,0%
Rest of renewable 10.067 10.067 100,0%
External electricity balance (Imp.- Exp.) -697
TOTAL 29.972 100.536 130.508 23,0%
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Innovation and technology
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R+D intensity
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Universities and research centres:• Generation and transfer of knowledge
State: • Incentives, regulation
Businesses• Application (+ self-generation)
Lack of connection• Triple helix model lacks efficiency
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Spanish innovation system
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10 October 2011 33
Balance of Payments
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Receipts
Expenses
Balnce
369.717193.89997.54760.928173436.996
474.170281.55371.04394.982265921.440
-104.454
-87.65426.504
-34.054-9.2495.556
NVP NVA NVP-NVA
44.74252.783
94.910-8.040-52.78344.7424.268
76.229-7.68330.137
--- --- 3.989
Balance of Payments, 2008
Current accountTrade of goodsServicesIncomeTransfers
Capital account
Financial accountDirect investments
From SpainIntro Spain
Portfolio investmentOther investmentsFinancial derivativesBank of Spain (reserves & net assets)Errors & Omissions
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Net borrowing requirement
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-65,000.0
-55,000.0
-45,000.0
-35,000.0
-25,000.0
-15,000.0
-5,000.0
5,000.0
Trade Balance (Million €)
Inflation, Oil, technology, competitiveness, ….
Permanent trade deficit
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Financial account
(% of GDP)
Financal accountSpanish investment abroad
DirectPortfolio
Foreign investment in Spain
DirectPortfolio
Other investment
Bank of Spain
1994 1996 1998 2000 2002 2006
1.1 -0.7 0.0 3.5 2.3 8.3
-1.2-0.8-0.4
-1.5-0.9-0.7
-10.6-3.2-7.4
-20.4-9.7
-10.7
-7.2-2.8-4.4
-6.8-7.30.5
-2.31.9
-4.3
1.51.10.4
4.92.02.9
17.16.7
10.4
8.53.25.3
21.41.6
19.8
4.7 3.5 3.4 7.7 0.4 -3.8
0.0 -4.2 2.2 -1.1 0.5 -2.6
How to finance net borrowing requirements
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10 October 2011 38
Thank you very much
Prof. Francisco LiñánUniversity of Seville