The territorial puzzle of the Spanish economy | Business

The turbulence that has occurred over the past five years, as well as the expansionary cycle that followed, has redrawn the economic map of the country, foreshadowing a bifurcation in the growth dynamic. Some communities like Asturias or Galicia, struggling with the aging of their populations, have managed to reverse the decline. Others, and unsurprisingly, like Madrid, Catalonia and the Basque Country, have consolidated themselves thanks to the presence of a powerful productive fabric and their growing openness to the outside world.

In all territories, material well-being, or GDP per capitahas improved compared to the situation before the health crisis – and this is good news which differentiates us from other large economies in our environment -, based mainly on two parameters. First, the existence of a competitive productive fabric based on the industries and services most in demand, whether on the internal market, supported by European funds, or on the international market.

Secondly, in a complementary manner, the growth of the active population: the incorporation of a new workforce, particularly that from immigration, has enabled businesses to respond to the growing demand for goods and services, also facilitating the mobility of qualified workers towards sectors with higher added value. It is a fact that communities that combine a competitive productive fabric and a strong influx of goods have experienced above-average growth. The south of the peninsula has not been the most favored by this growth pattern, although its GDP per capita has also increased thanks to job creation. In short, despite the disparities, the cycle of expansion has extended to the entire country, essentially thanks to the existence of productive capacities available and quickly mobilized.

Today, this room for maneuver is disappearing in the most prosperous territories in the center and north of the peninsula, where the unemployment rate is close to both the minimum of the historical series and the community average. The lack of local labor could be alleviated by internal mobility or through immigration, but in practice these compensation mechanisms come up against a serious situation of housing shortage. Raising productivity is another possible resource for increasing productive capacity, although this would require unlocking business investment and strengthening human capital, which takes time. In the immediate future, a slowdown is therefore predictable, but the emerging rebound in productivity in these communities opens up new prospects.

The southern communities, for their part, have more margin, that is to say unused supply, since their unemployment rate remains in double digits, in some cases doubling the European average. In theory therefore, its future growth will depend on the evolution of demand in the sectors which have the most weight in these territories such as tourism, agri-food, chemicals or defense. In practice, the mobilization of productive potential depends on the activation of the unemployed, an old unanswered question.

These disparities highlight the need for a change in approach. Investment in infrastructure remains important, but it is not enough to accelerate the convergence of disadvantaged areas: the strategy must be anchored in the existing productive fabric, moving away from the love of large projects disconnected from local reality.

In short, there is a bifurcation of priorities between the north and the south. But the objective of greater territorial balance must be common, because the cohesion effort not only obeys a logic of equal opportunities, but it also brings economic benefits: excessive geographic concentration of growth would lead to an increase in congestion costs and a general deterioration in the quality of life. The territorial pieces of the economic puzzle must come together.