This document analyzes the evolution and regional distribution of the intangible economy in Spain from 1995 to 2014, emphasizing the impact of information and communication technologies (ICT) on productivity and investment in intangible assets. It provides unique disaggregated data across Spain's autonomous communities and sectors, comparing Spain's performance with that of other advanced economies. The findings highlight the importance of intangible investments for economic growth and the disparities in regional investments and productivity levels.

1. THE INTANGIBLE ECONOMY IN SPAIN
EVOLUTION AND DISTRIBUTION BY REGIONS AND SECTORS
(1995-2014)
Matilde Mas and Javier Quesada (Dirs.)
Award-winning project of the Cotec Foundation for Innovation’s 2016 PIA Program
MADRID, 25 APRIL 2017

2. The New Information and Communication Technologies (ICT):
Have transformed the production process of many existing economic sectors as they
promote robotisation and automation
Have led to the creation of new sectors and new ways of doing things
Are one of the reasons behind the phenomenon of globalization
And the fragmentation of production processes in different phases (global value chains)
These changes are generally known as Knowledge Economy
Knowledge economy and intangibles

3. The new ways to produce as a result of ICT demand:
Changes (often drastic) in the organisational structure of firms:
 Organisational chart and work methods,
 More horizontal decision making,
 Dominated by teamwork and multicultural and multidisciplinary environment
Increase sophistication with the design of new products (customise)
Create a brand image which sets it apart from simple commodities;
Win the loyalty of clients/customers;
Having skilled and on-the-job trained workers
In other words, to invest in intangible assets
Knowledge economy and intangibles

4. Classification of intangible assets
Note: The colour indicates the group it belongs to (grey = IAGDP; blue = IABGDP).
Source: Own elaboration.
“Any use of resources that reduces current
consumption in order to increase it in the future
qualifies as an investment”
- Corrado, Hulten y Sichel (2005, 2009).
The largest change is that spending on intangibles
has the same status as the purchase of new
machinery, equipment, or the construction of
factories, now considered investment goods
instead of intermediate consumption.
Distinction between IAGDP and IABGDP
The inclusion of intangibles in the National
Accounts would raise Spain’s GDP level by
3,5%
1. Computerised information (software and databases)
2. Innovative property
2a. R&D
2b. Mineral exploration and entertainment and artistic originals
2c. Design and other new products/systems
3. Economic competencies
3a. Advertising
3b. Market research
3c. Firm-specific resources (employer-provided training)
3d. Organizational structure
3d.i. Acquired organizational structure
3d.ii. Own organizational structure
Total intangible assets included in GDP = IAGDP (1+2a+2b)
Total intangible assets “beyond GDP”B = IABGDP (2c+3)
Total intangible assets = IA = IAGDP + IABGDP (1+2+3)
What are intangibles assets?

5. The empirical evidence available leads to the following conclusions:
1. Intangible investment is an important source of productivity growth: between one-
fifth and one-third in the US economy (Corrado, Hulten and Sichel, 2009) and the European
Union (Corrado, Haskel, Jona-Lasinio and Iommi, 2012 and 2014)
2. ICT and intangible assets are complementary: productivity growth is higher when
used jointly (Basu et al., 2004; Acharya and Basu, 2010)
3. Intangibles generate spillover effects: increasing not only the productivity of the sectors
directly invested in, but also that of other sectors of the economy (Corrado, Haskel and Jona-
Lasinio, 2014).
The information currently available on intangible investment is limited mainly to highly
developed countries and always at national level.
Intangibles and productivity growth

6. This is the first study that offers disaggregated information by regions for Spain’s
17 autonomous communities and 2 autonomous cities in an international context. Additionally,
it includes a broad sectoral breakdown (27 sectors), making it unique in the European
Union, not only at regional but also national level due to its detail by industry.
The database included in the study allows:
To position Spain and its region in relation to other EU countries and the US
To analyse Spain’s trajectory in the 1995-2014 period, during its expansion phase and
subsequent crisis and emerging economic recovery
To observe the differences/similarities in intangible endowments in Spain’s
autonomous communities as well as the convergence/divergence among them.
To compare the impact of intangibles on national/regional productivity at the same level as
tangible capital, ICT and human capital already available.
Intangibles and productivity growth

7. Tangible and intangible investment over extended GDP: TAGDP,
IAGDP and IABGDP. Private sector. Mean 1995-2010 (percentage))
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie, INE, Mas and Quesada (2014), INTAN-
Invest and own elaboration.
Spain in an international context
 Spain is at the same level as other
advanced countries in tangible assets
 However, it lags behind, along with
Italy, in intangible assets
 The problem is the quantity,
not its composition
 US investment in intangibles surpasses
that of tangibles, while UK investment in
intangibles and tangibles is practically the
same
Spain

8. Investment included in GDP and “beyond GDP”: TAGDP,
IAGDP and IABGDP, 1995-2014 (percentage)
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
Real investment: TAGDP, IAGDP and IABGDP, 1995-2014
(1995=100)
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
The impact of the crisis
The economic crisis has affected more severely investments in tangible assets than in intangible

9. Composition of investment in IAGDP by assets, 2010
(percentage)
Source: BBVA Foundation-Ivie, INTAN-Invest and own elaboration.
The problem with IAGDP is the quantity
(less invested) and not so much the
composition (the structure is similar to that
of other countries)
Composition of intangible assets. IAGDP
Spain

10. Composition of investment in IABGDP by assets, 2010
(percentage)
Fuente: Fundación Cotec-Ivie, Mas y Quesada (2014), INTAN-Invest y elaboración propia.
Composition of intangible assets. IABGDP
However, regarding IABGDP, the
problem is both with quantity and
composition.
Spain invests 50% in advertising and
design, while the other countries invest
up to 50% only on improving firms’
organizational structure

11. Investment in intangible assets (IA) over extended GDP. Spain’s autonomous
communities. 2013 (Spain = 100)
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
β-Convergence among Spain’s autonomous communities. IA
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
Inequality and β-Convergence. IA
Madrid is in the lead, followed by Catalonia and Navarre. More intensive investment in intangible assets
in the periphery.
Tendency to convergence among regions (those with less intangible endowments in 1995 have
experienced greater growth rates)

12. Investment in IABGDP over extended GDP. Spain’s autonomous communities. 2014
(Spain = 100, porcentaje)
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
β-Convergence among Spain’s autonomous communities.
IABGDP
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
Inequality and β-Convergence. IABGDP
Madrid is in a prominent position. Greater gap between the “two Spains” (less intensive ring in the
centre).
Tendency to converge

13. Investment in IAGDP over extended GDP. Spain’s autonomous communities. 2013
(Spain = 100, percentage)
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
β-Convergence among Spain’s autonomous communities. IAGDP
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
Inequality and β-Convergence. IAGDP
Madrid stays in the lead. Fewer differences in IAGDP than in IABGDP.
The tendency to converge is less intense

14. Dispersion of tangible and intangible investment over expanded GDP. Spain’s autonomous
communities, 1995-2013 (variation coefficient)
Note: Excluding Ceuta and Melilla.
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie, INE and own elaboration.
 Greater interregional differences in intangibles
than tangibles
 Greater differences in IABGDP than IAGDP
(and also IA)
Evolution over time:
 Reduction in the interregional differences in
IA and IAGDP during the expansion
 Increase in the differences during the crisis,
both in intangibles and tangibles
Inequality and σ-Convergence in Spain’s regions

15. a) IA
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
b) IABGDP
c) IAGDP d) TA
Taxonomy by regions according to their investment activity
Investment /extended GDP deviation (1995) and variation rate (mean 1995-2013) in relation to the
national average. Spain’s autonomous communities (percentage)

16. Investment /extended GDP deviation (1995) and variation rate (mean 1995-2013) in relation to the national average. Spain’s autonomous communities (percentage)
a) IA
b) IABGDP
Taxonomy by regions according to their investment activity
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.

17. c) IAGDP d) TA
Taxonomy by regions according to their investment activity
Investment /extended GDP deviation (1995) and variation rate (mean 1995-2013) in relation to the national average.
Spain’s autonomous communities (percentage)
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.

18. Classification of Spain’s autonomous communities according
to their position in relation to national average
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie, INE and own elaboration.
Intangible assets:
Only Madrid displays leadership
Initial leadership by Catalonia and Navarre
stagnates
Converging autonomous communities:
Andalusia, Valencian Community, Murcia and
Ceuta and Melilla
Diverging autonomous communities:
Aragón, Asturias, Castile and Leon,
Extremadura, Basque Country and La Rioja
Tangible assets:
More balanced distribution among regions in
the 4 categories
No clear leadership
IA IABGDP IAGDP TA
Andalusia converging converging converging diverging
Aragón diverging diverging diverging reinforced leader
Asturias diverging diverging diverging converging
Balearic Islands converging diverging converging reinforced leader
Canary Islands diverging diverging losing momentum losing momentum
Cantabria diverging losing momentum diverging losing momentum
Catalonia losing momentum losing momentum losing momentum losing momentum
Castile-La Mancha converging diverging converging converging
Castile and Leon diverging diverging diverging diverging
Valencian Community converging converging converging losing momentum
Extremadura diverging diverging diverging losing momentum
Galicia converging converging diverging losing momentum
C. of Madrid reinforced leader reinforced leader reinforced leader converging
R. of Murcia converging converging converging reinforced leader
Navarre losing momentum losing momentum losing momentum losing momentum
Basque Country diverging diverging diverging diverging
La Rioja diverging diverging diverging losing momentum
Ceuta and Melilla converging converging converging diverging
Taxonomy by regions according to their investment activity

19. Tangible and intangible investment by sectors: TAGDP, IAGDP and IABGDP.
Average 1995-2014 (percentage)
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie and INE.
Sectoral differences in intangible
assets:
Highly intensive sectors:
Financial and insurance activities,
Transport equipment, Machinery
and equipment n.e.c. and Electrical
and optical equipment.
Less intensive sectors:
Agriculture, forestry and fisheries,
Transportation and Public
administration and defence.
Very different weights of
investment in each of the 5
IABGDP components by
sectors.
Intangible assets by sectors

20. Sector classification according to their position in relation to the
total
Source: Cotec Foundation-Ivie, BBVA Foundation-Ivie, INE and own elaboration.
Sectors IA IABGDP IAGDP TA
01. Agriculture, forestry and fisheries diverging diverging converging reinforced leader
02. Mining and quarrying converging converging diverging reinforced leader
03. Food products, beverages and tobacco losing momentum losing momentum converging converging
04. Textiles, wearing apparel, leather and related products losing momentum losing momentum converging diverging
05. Wood and paper products; printing and reproduction of recorded media losing momentum losing momentum diverging diverging
06. Coke and refined petroleum products; chemicals and chemical products losing momentum losing momentum reinforced leader converging
07. Rubber and plastics products, and other non-metallic mineral products diverging losing momentum converging diverging
08. Basic metals and fabricated metal products, except machinery and equipment diverging losing momentum converging diverging
09. Electrical and optical equipment losing momentum losing momentum losing momentum diverging
10. Machinery and equipment n.e.c. losing momentum reinforced leader losing momentum diverging
11. Transport equipment losing momentum losing momentum losing momentum diverging
12. Other manufacturing; repair and installation of machinery and equipment losing momentum losing momentum diverging diverging
13. Electricity, gas and water supply converging converging converging reinforced leader
14. Construction diverging reinforced leader diverging diverging
15. Wholesale and retail trade; repair of motor vehicles and motorcycles reinforced leader reinforced leader converging converging
16. Transportation and storage converging diverging converging reinforced leader
17. Accommodation and food service activities converging converging diverging losing momentum
18. Information and communication reinforced leader converging reinforced leader reinforced leader
19. Financial and insurance activities losing momentum losing momentum losing momentum diverging
20. Real estate activities diverging losing momentum converging converging
21. Professional, scientific, technical, administrative and support service activities reinforced leader reinforced leader losing momentum converging
22. Public administration and defence; compulsory social security diverging diverging diverging losing momentum
23. Market education reinforced leader converging reinforced leader diverging
24. Non-market education losing momentum diverging losing momentum reinforced leader
25. Market health and social activities reinforced leader reinforced leader converging converging
26. Non-market health and social activities diverging converging diverging losing momentum
27. Arts, entertainment and recreation; other services diverging converging losing momentum losing momentum
Intangible assets by sectors

21. • Financial and insurance activities (most IA intensive ): losing momentum. Leading sector in investment to
improve firm organisation and advertising; third in training workers
• Electrical and optical equipment (ICT producer): losing momentum. Bias towards IABGDP; third in
investment to improve firm organisation
• Professional services (ICT-intensive user): Also IA-intensive user (complementarity ICT/IA). Leadership.
Significant weight of investment in design, training workers and firm organisation.
• Transport equipment (significant regarding exports): IA intensive. Losing momentum. Bias towards IABGDP, in
design, advertising and training workers.
• Construction (traditional and relatively most important weight in Spain): Low weight of investment in ICT and
IA. Greater weight in IABGDP than IAGDP due to its investment in design.
• Accommodation (traditional and relatively most important weight in Spain): Low weight of investment in ICT
and IA. Divergent in IA and IAGDP and convergent in IABGDP.
The most dynamic sectors invest more in ICT and intangibles (especially to improve firms’
organisational structure).
Intangible assets. Some outstanding sectors

22. Final comments
 IA (IAGDP and IABGDP) is a reflection of the productive structure of the Spanish economy and it is also
its driver of transformation.
 A policy, either private or public, that aims to adapt the structure to competition needs quantitative
information to establish and follow up some goals.
 The Cotec Foundation-Ivie database provides experts, institutions, the government and firms with an
immediate tool to diagnose and design strategies to change, innovate and improve society’s living standards.
 The wealth of information at regional and sectoral level that it contains is internationally unique. This
enables the detailed analysis of key issues regarding growth strategies of regions and industries in Spain.
 As said by the British Mathematician Lord Kelvin “what is not defined, cannot be measured” and, along that line,
according to P. Drucker “if you can’t measure it, you can’t improve it”.
 Certainly, the information provided will help narrow the gap that still separates Spain from other developed
countries regarding investment in assets that play a crucial role in the long-term growth of economies.

23. WWW.COTEC.ES@Cotec_Innova
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