“A much more investment-friendly regulatory framework is needed”



Doctor in Economic and Business Sciences from the Autonomous University of Madrid, professor of Applied Economics at the Faculty of Economic and Business Sciences of the National University of Distance Education UNED and General Director of the Institute of Economic Studies, Gregorio Izquierdo CEOE contributes his experience in the economic-business field. And in the statistician (he was president of the National Institute of Statistics between 2011 and 2018, and representative of Spain in the Committee of the European Statistical System of Eurostat and the United Nations Statistical Commission).

How does Spain stand out when it comes to promoting business development?

Among the multiple strengths of the Spanish economy, I would like to highlight, without being exhaustive, the improvement in our foreign competitiveness; the availability of leading companies in multiple sectors (energy, finance, telecommunications, distribution, construction …); the strength of the financial sector to channel funds to business investment; the high endowments of adequate and modern infrastructures and, now, the possibility of channeling significant European funds to accelerate the energy transition and digitization. But above all the above, I would emphasize that Spain has always been characterized, throughout its history, by its ability to adapt and successfully overcome the multiple challenges that we have had to face over time.

And what is in the ‘must’ part?

Regarding the pending challenges, the main one may be to promote, through intelligent structural reforms, the improvement of our potential GDP, whose low level mortgages our future in a context of demographic aging. For this, it is required ensure the long-term sustainability of our public finances through a structural improvement in the efficiency of spending, which allows maintaining a tax system as competitive and efficient as possible. On the other hand, it is necessary to create a regulatory framework much more favorable to investment and business competitiveness as a way to improve our growth, reduce our unemployment and ensure productivity that guarantees our standard of living.

How do you overcome the barriers that prevent the percentage of large companies from increasing?

Given that economic dynamics sometimes leads to the destruction of the productive fabric, it is important to create a framework that favors the development of new business initiatives that compensate those that are inevitably lost, without prejudice to the fact that it is also necessary to favor the resilience of companies in the face of conjunctural situations such as those of the last crisis. The countries with the highest flow of new business creation tend to be those with the highest prosperity and standard of living.

Is there any characteristic of the Spanish economy in this sense?

A specific problem in Spain is that, when we compare our business fabric with that of Europe, we can clearly see the greater weight in Spain of small companies and the lower relative presence of both large and medium-sized companies. To correct this problem, business growth should be facilitated, making counterproductive institutional barriers more flexible, such as certain employment or billing thresholds, from which the burdens borne by companies increase.

In this context, innovation is increasingly consolidated as a growth vector. What are the keys to stand out in this regard?

Innovation is undoubtedly one of the main drivers of transformation and growth that requires an adequate framework of tax incentives to stimulate this type of activity. Although public spending can help, the determining factor is that companies of all sizes can directly develop an innovative activity similar to that carried out by companies in the countries with the greatest leadership in this field. In this regard, the investment effort in R & D & I of our companies is only 0.7% of GDP compared to 1.4% of GDP for the EU average.

To close this gap, it is necessary to increase the percentage of tax deductions for R & D & I and provide greater legal security and certainty to the current system. To do this, it should be simplified, streamlined and reduced its excessive requirements and administrative burdens that entail a significant deficit in the application of the incentive in relation to its theoretical potential.

Large Spanish companies stand out for their international expansion, what vectors influence them to continue doing so?

The Spanish economy already has, undoubtedly, a strong international expansion, with more than 50,000 companies that export regularly and with one in four jobs linked to internationalization. Even so, we must continue to invest in improving our position within global value chains, maintaining our ability to compete on prices, but at the same time positioning ourselves in activities with greater added value.

What actions stand out, in your opinion, to orient yourself to this desired increase in added value?

For this, it is necessary to increase the weight of exports of high technological intensity, which now only account for 40% of the total. Another great challenge is to increase the diversification of exports outside the EU environment, which still account for more than 70%.

To what extent can labor market reforms affect the macroeconomy?

The improvement of the labor framework involves continuing to support consensus within the framework of social dialogue and, in any case, trying to incorporate the best practices and recommendations that international organizations make us repeatedly.

The labor market has an unquestionable social dimension, but it also entails economic and business implications, no less important, that force us to contemplate it with an overall weighted vision and not with partial and, therefore, necessarily incomplete perspectives. In fact, the relevance of the labor context for economic growth and employment is increasingly visible, as was demonstrated after the last modernization of the labor market, when the sensitivity of employment to growth was doubled and the threshold for growth was reduced by half. growth needed to create jobs. Similarly, the last crisis has confirmed the functionality of the current framework insofar as it has been possible to maintain employment in a greater proportion than in previous crises, thus reducing both its scope and duration.

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