The Achilles heel of the Valencian economy is productivity, with poor results that justify the fact that the Valencian economy is still far from that of other regions that lead the ranking, such as the Basque Country, Madrid or Navarra. And it is that the structural problem of low productivity of the economy of the Valencian Community explains why its income per inhabitant is lower than the Spanish average. This is explained by the economist and Ivie researcher, Joaquín Maudos, in reference to the Bank of Spain report, collected by La Vanguardia, which explains how the 2008 financial crisis slowed down the economic convergence of the Spanish regions. The Valencian is anchored in position number 12 in the ranking by regions of GDP per capita since 2008, "another indicator that there is no economic convergence," insists Maudos.
In this report, the Bank of Spain points out that until 2008 there was a decrease in the economic differences between regions, so that the poorest grew more intensely. Analyzing the entire period from 1980 to 2019, the poorest regions generally show higher cumulative growth. In general, the values of the Valencian Community are below the average. In detail, the average growth of GDP per capita in the Valencian Community in the period 1980-1992 was 1.5%, 1.1% between 1992-2008 and 0.2% between 2008-2019, in line with the rest of the territories.
The Bank of Spain explains that labor productivity is the most important factor in explaining the evolution of convergence between Spanish regions since 1980, which would largely explain Valencia's position in the ranking.
Maudos argues that productivity is "the great source of economic convergence", and here the obstacle to progress in the Valencian Community: "It has not been able to reduce the distance to the average in productivity, and therefore, it has not managed to converge to average per capita income in Spain”, he argues.
The reading in a Valencian key of the report "Recent changes in the pattern of convergence between regions" perseveres in the structural low Valencian productivity, which the Ivie already reported a few months ago when analyzing the situation and challenges of the Valencian economy in a global way .
“Low productivity is widespread in a large number of productive sectors and is the responsibility of both the private and public sectors. In both cases, there are weaknesses that must be corrected to close the productivity gap”, defended the Ivie in a text signed by both Joaquín Maudos and Carlos Albert, who is also a researcher at the Ivie and UV.
Reversing that gap is complex, experts warn. “The problem of being poor is being unproductive, but why are we unproductive? Because we invest little in factors that improve productivity, ”she replies in the form of a Maudos reflection.
The size of the Valencian company, specialized in SMEs and micro-SMEs, the low training for employment or the reduced investment in RD and other intangibles explain this low productivity in which, in addition, the Valencian public sector has little room for maneuver to intervene because the practice All of its resources are allocated to health and education in a context of regional underfunding. The fish that bites its tail, in short.
Therefore, to reverse the productivity data, a greater investment effort is needed in the determining variables of productivity, such as human, technological, intangible or ICT capital, mainly. A change that is already taking place in a general way in the Spanish economy after the financial crisis, as reflected in the new update of the capital stock database analyzed by the BBVA Foundation and the Ivie and published yesterday.
There is a trend that has been clearly changing since 2007, since in 2022 the weight of real estate assets represents half of the total investment in Spain, while in the last years of the real estate boom, between 2004 and 2007, they reached 68 %. In the case of the Valencian Community, investment in construction was 11.2% up to 2008, and in the period 2009-2021 it stands at 4.2%. Now is the turn to increase investment in ICT, RD and other intangible assets, whose weight in the State has almost doubled since the Great Recession, from 12% to 21%.
