Usually economic growth is accompanied by large structural transformations inside the economic system. Spain has been characterized by a relatively high GDP growth in the last decade. The aim of this paper is to provide evidence on the structural changes, if any, occurred in the Spanish economy during the period 1995-2008. In particular, our motivation is to understand which sectors have been expanding and those that have been shrinking. Our attention will then shift to one of these sectors, the manufacturing industry, whose dynamics will be investigated using both aggregate industry data and firm-level data.
The first part of this article will provide a brief comparative analysis of the Spanish economy with respect to other 4 countries (UK, Germany, France and Italy) belonging to the European Union. We compare employment and productivity across the five countries using EUROSTAT data for the period 1995-2008. We will show that the large increases in GDP and employment in Spain have not been coupled with a similar increase in productivity. On the contrary, the productivity gap between Spain and the major European countries has widened, with Italy being the only exception.
We then take a closer look at the Spanish economy in order to understand whether the growth process of the last decade induced a process of structural transformation. To this aim, we use aggregate data on value added and employment in manufacturing, construction and services published by the Spanish Institute of Statistics, INE. At this level of aggregation the major change of the Spanish economy is represented by the increase in the relative contribution of the construction sector to total value added (from 7% in 1995 to 12% in 2007) at the expenses of the manufacturing sector (from 22% to 7% during the same period). Looking inside the manufacturing sector, we find no particular structural change among the different industries we analyse, both in term of value added and employment. Only the textile industry shrinks sensibly in term of value added during this period. Employment lost in the textile is absorbed by the metallic product industry.
Finally, in order to better asses the dynamics of the manufacturing sector we use firm-level data retrieved from the ESEE dataset. We analyse exit, entry and growth in employment and productivity of the manufacturing sector during the period 1990-2006. Although the period covered by the ESEE does not include the recent economic recession, the analysis sheds some light on what characteristics make a Spanish firm more likely to survive and growth, or to shrink and exit. It also investigates whether firms that have been established are more productive than the firms that exit. The evidence is that there is a high persistence in productivity performance. More than half of high productive firms in the early 90s are still characterized by high productivity 15 years later. Newly established firms are usually characterized by low productivity, however those established between 1992 and 1998 have higher productivity in 2005 than those established after 1998. We find also that newly established firms are not better than the old ones in term of productivity even after ten years of their entrance in the market. The only dimension in which new firms do not differ from the old ones is profitability. We conjecture this is because new firms are mainly local business less exposed to competition.
The paper is organized as follows. Section 1 compares the relative performance of the Spanish economy with respect the other European economies. Section 2 focuses on the Spanish economy to understand if any structural change occurred in the analyzed period. Section 3 presents the firm-level analysis of the manufacturing sector. Finally, Section 4 concludes.
Download
PDF Ebook Dynamics in the Spanish Manufacturing Sector: Evidence from Aggregate and Firm-level Data
