The document discusses the dynamics of the Spanish economy, highlighting both its strengths, such as high income and tourism activity, and weaknesses like high unemployment and low competitiveness. It details Spain's integration into the European Union, the impacts of migration, and employment trends, emphasizing the challenges posed by an aging population and labor market duality. Additionally, it addresses energy consumption, innovation, and the balance of payments, reflecting a complex economic landscape.

1. Francisco Liñán
Dept. Economia Aplicada I
Universidad de Sevilla

2.  The ‘Highs’ and ‘Lows’ of the Spanish
Economy
 Accession to the EU
 Population and migration
 Employment
 Tourism
 Energy resources
10 October 2011 2

3. ‘Highs’ and ‘Lows’ of
the Spanish Economy
10 October 2011 3

4.  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
10 October 2011 4

5.  High unemployment (> 20%)
 Lower competitiveness
 External deficit
 Weak Research & Development
 Low entrepreneurship
10 October 2011 5

6. Spain in the
European Union
10 October 2011 6

7.  Application in 1977
 Accession in 1986
 Change of reference framework
 Single Market implementation
 Project for a single currency
 Launch of the Euro (1999)
10 October 2011 7

8. European Funds paid to Spain (1986-2006): 1,8% GDP
A) 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

9. NET BALANCE BETWEEN SPAIN AND EU
(1996-2006):
1% of GDP
NET BALANCE BETWEEN SPAIN AND EU
(2007-2013):
0,2 % of GDP
10 October 2011 9

10. 10 October 2011 10

11. Population and
migration
10 October 2011 11

12.  Low population growth since early 1980s
 Ageing of the population
 Duality in the labour market
• High unemployment
• Positions not covered
 Immigration growing very quickly
10 October 2011 12

13. Population in Spain (2010) = 47.150.819 (93,4 inhab./Km2)
Large internal differences
EU-15 EU-25 EU-27
(2007)
120.9 117.3 114.8
10 October 2011 13

14. Older
Increased
labour Problems of
force expenditure
Population
ageing
Stagnated
Increased
Demand
dependency
Economic effects
•Supply: less flexibility
•Demand: Slower growth + increased expenditure
•Welfare state: increased dependency
10 October 2011 14

15. Foreign population in Spain
The opening of borders to an Year persons % total
1981 198 042 0.5%
integrated immigration has the
1986 241 971 0.6%
following benefits: 1991 360 655 0.9%
1996 542 314 1.4%
1. Increased birth rates 1998 637 085 1.6%
2000 923 879 2.3%
2. Pensions are guaranteed
2001 1 370 657 3.3%
3. Positions not-wanted by 2002 1 977 946 4.7%
2003 2 664 168 6.2%
Spanish workers may be 2004 3 034 326 7.0%
occupied 2005 3 730 610 8.5%
2006 4 144 166 9.3%
4. Increase in consumption and 2007 4 519 554 10.0%
trade and, therefore, general 2008 5 220 600 11.3%
economic growth 2009 5 598 691 12.0%
2010 5 747 734 12.2%
2011 5 730 667
10 October 2011 12.2%15

16. Employment
10 October 2011 16

17.  Increased participation of women
 Growth in tertiary sector employment
 Duality (permanent vs. fix-termed contracts)
 Low productivity
10 October 2011 17

18. Activity rate by gender
(% of population over 16)
80
70
60
50
40
30
20
10
0
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
Source: EPA
10 October 2011 18

19. 65.0
2005 12.4
17.3
5.3
61.0
1995 9.5
20.6
8.8
50.0
1985 7.3
24.4
18.3
41.8
1977 9.9
27.7
20.6
0 10 20 30 40 50 60 70
Services Construction Manufacturing Agrarian
Source: EPA 10 October 2011 19

20. 72.6
8.9
2010
14.1
4.3
71.1
10.0
2009
14.7
4.2
68.1
12.1
2008
15.8
4.0
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
Services Construction Manufacturing Agrarian
Source: EPA 10 October 2011 20

21. 80.0
70.0 74.6 75.1
70.7
68.3
66.7 66.0
60.0
50.0 Permanent
Fix-term
40.0
33.3 34.0
31.7
29.3
30.0 25.4 24.9
20.0
2005 2006 2007 2008 2009 2010
Source: EPA
10 October 2011 21

22. 10 October 2011 22

23. Tourism
10 October 2011 23

24. 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
10 October 2011 24

25. 10 October 2011 25

26. 10 October 2011 26

27. Energy
10 October 2011 27

28. Consumption of primary energy by type of energy
(ktep)
2000 2007 2009
Coal 21.635 20.236 10.353
Oil 64.663 70.848 63.673
Natural gas 15.223 31.602 31.104
Nuclear 16.211 14.360 13.750
Renewable energies 6.990 10.228 12.325
- Hidraulic 2.534 2.341 2.258
- Other renewable energies 4.456 7.887 10.067
Electricity balance (imp.-exp.) 382 -495 -687
Total 125.103 146.779 130.508
Source: MICT (2010): La energía en España 2009, Madrid: Ministerio de Industria, Turismo y Comercio.
10 October 2011 28

29.  Very low in fossil resources
 High potential in renewable energies
Self-
2009 Internal
production Imports
Total primary
energy
sufficiency
level
Coal 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
-697
balance (Imp.- Exp.)
TOTAL 29.972 100.536 130.508 23,0%
10 October 2011 29

30. Innovation and
technology
10 October 2011 30

31. 10 October 2011 31

32.  Universities and research centres:
• Generation and transfer of knowledge
 State:
• Incentives, regulation
 Businesses
• Application (+ self-generation)
 Lack of connection
• Triple helix model lacks efficiency
10 October 2011 32

33. Balance of
Payments
10 October 2011 33

34. Receipts Expenses Balnce
Current account 369.717 474.170 -104.454
Trade of goods 193.899 281.553 -87.654
Services 97.547 71.043 26.504
Income 60.928 94.982 -34.054
Transfers 17343 26592 -9.249
Capital account 6.996 1.440 5.556
NVP NVA NVP-NVA
Financial account 94.910
Direct investments -8.040
From Spain 52.783 -52.783
Intro Spain 44.742 44.742
Portfolio investment 4.268
Other investments 76.229
Financial derivatives -7.683
Bank of Spain (reserves & net assets) 30.137
Errors & Omissions --- --- 3.989

35. 10 October 2011 35

36. Inflation, Oil, technology, competitiveness, ….
Trade Balance (Million €)
5,000.0
-5,000.0
-15,000.0
-25,000.0
-35,000.0
-45,000.0
-55,000.0
-65,000.0
10 October 2011 36

37.  How to finance net borrowing requirements
(% of GDP)
1994 1996 1998 2000 2002 2006
Financal account 1.1 -0.7 0.0 3.5 2.3 8.3
Spanish investment abroad -1.2 -1.5 -10.6 -20.4 -7.2 -6.8
Direct -0.8 -0.9 -3.2 -9.7 -2.8 -7.3
Portfolio -0.4 -0.7 -7.4 -10.7 -4.4 0.5
Foreign investment in Spain -2.3 1.5 4.9 17.1 8.5 21.4
Direct 1.9 1.1 2.0 6.7 3.2 1.6
Portfolio -4.3 0.4 2.9 10.4 5.3 19.8
Other investment 4.7 3.5 3.4 7.7 0.4 -3.8
Bank of Spain 0.0 -4.2 2.2 -1.1 0.5 -2.6
10 October 2011 37

38. Thank you very much
Prof. Francisco Liñán
University of Seville
flinan@us.es
10 October 2011 38