How Can Spain Achieve Sustainable Growth?


Ángel de la Fuente | If Spain wants to continue to be one of the leaders in the global economy, it has to persevere with reforms in areas such as the labour market, education, and the university system. For example, in the last 40 years, Spain has had an average jobless rate of 16%, some 10 percentage points higher than that of our main partners.

In the case of economic growth, as with most almost everything else in life,  there are no real substitutes for continued hard work.  Many years of investigation into the key factors for growth have served to reaffirm a series of basic lessons in economic literature. One of these is the importance of the quality of institutions, political stability, judicial security and economic openness. Another one is that there is no possible growth without efficient investment. And here,  factors like human capital and technology are playing a much more important part. A third lesson, which is certainly more open to debate, points to the advantages of prudent fiscal and monetary policy.

During the last half century, our country has performed reasonably well on all these fronts. This has fuelled sustained growth which, with some ups and downs, has placed us amongst the leaders of the global economy. But we still have a lot of pending issues in the three areas which we need to recover if we want to improve, or at least maintain, our position in an increasingly competitive world.

Important reforms implemented by the last few governments have already begun to deal with some of the challenges. These include the various reforms of the labour market and the pensions system, as well as the considerable efforts made in the matter of fiscal consolidation over the last few years. At a time when the economy is beginning to grow again with a certain amount of dynamism, although there is still considerable social malaise after such a long crisis, the fundamental risk we run is taking our foot off the accelerator ahead of time. In other words, reversing necessary reforms or returning to the times of budget delights which we cannot allow ourselves to do.

On the institutional front, the main priority has to be the fight against the rigidity and duality of our labour market.  The consequences of the dreadful way in which this market works can be seen in this data: in the last 40 years, Spain has had an average jobless rate of 16%, some 10 percentage points higher than that of our main partners. This intolerable employment gap has created a social tragedy, to which an end must be found as soon as possible.

Education should be the other major priority. We need to extend and improve child education to ensure equal opportunities and avoid accumulating deficits in abilities from an early age. We must ensure that our young people acquire the necessary know-how, skills and aptitudes to be able to function in society and in the labour market. We need to develop more attractive and flexible professional training programmes which are more integrated into the business world. And lastly, we need to redesign our university system, beginning with a radical change in its governance and financing models.



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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.