J.L.M. Campuzano (Spanish Banking Association) | Investment by companies is fundamental for today´s economic growth, but even more for the capacity for growth tomorrow.
The increase in company investment is key to productivity. And greater productivity, the evolution of the ratio between production and the resources it requires, beyond economic benefits also has social connotations we should not forget, like improving the quality of life.
In a recent note the Bank of Spain analyses the recent performance of company investment in Spain, distinguishing between tangible and intangible.
As it must be, its evolution in recent years fits with the economic cycle:
But the ration between fixed capital formation and the stock of productive capital has been declining since 2002, a decline which accelerated with the crisis. Despite the slight recent recovery, it remains well below 2007 levels.
In a modern world ever more dominated by technology and the growing digitalisation, the performance and weight of investment in intangible assets draws attention. We are talking about software and R&D, but also about data and whatever activity that generates property rights and economic competences, including publicity and staff training. 85% of productive investment in Spain remains in tangible assets.
We have often said that the banks are fundamental in the process of digitising the economy. Their role naturally is key in financing projects. The willingness of society to adopt new technologies, with the banking sector in the lead, and very favourable financial conditions are necessary preconditions for companies to embark on their own process of digital transformation as the key piece in their entrepreneurship.