elpais.com
Lagging Firms Hamper Spain's Post-Pandemic Productivity Growth
Spain's total factor productivity grew slightly after the pandemic (2.71% in 2022, 1.05% in 2023), but lagging firms (40% of the least productive in each sector) hinder overall growth. If these firms reached their sector median, aggregate productivity would rise by 4.9%.
- What are the most significant factors hindering Spain's overall productivity growth, and what is their immediate impact?
- Spain's total factor productivity (TFP) saw a slight post-pandemic increase, reaching 2.71% in 2022 and 1.05% in 2023. However, this masks significant differences between sectors and companies; while some companies outperform even European averages, others lag, hindering overall productivity. If lagging firms (40% with lowest productivity in each sector) reached their sector's median productivity, Spain's aggregate productivity would increase by 4.9%.
- What policy recommendations could effectively address the challenges of lagging firms and promote sustainable productivity growth in Spain?
- To boost productivity, Spain needs policies to reduce administrative, regulatory, and financial barriers. This includes supporting firm growth, facilitating exits for unviable firms (e.g., improving the 'second chance' law), and streamlining debt restructuring. Further strategies involve increasing regular exporters (including SMEs), improving worker training, boosting intangible asset investment, enhancing digitization, and disseminating best practices through collaboration with leading firms and attracting foreign direct investment.
- How do differences in productivity between leading and lagging firms and across various sectors affect Spain's overall economic performance?
- The study highlights that despite recent improvements, Spain lags behind the EU and leading European economies (Netherlands, Germany, Sweden, France, Finland). High-impact sectors don't always correlate with high productivity; three of the five largest GDP sectors positively contribute (trade, professional/scientific activities, public administration), while two negatively impact aggregate productivity (real estate, health/social services). The 10% least productive firms face financial issues; over 40% cannot cover financial costs, and almost 15% (around 4,000 firms employing 90,000 workers) are economically unviable 'zombie' companies, negatively impacting productivity.
Cognitive Concepts
Framing Bias
The framing emphasizes the negative impact of lagging firms on overall productivity, which is valid. However, the headline and introduction could benefit from a more balanced approach by mentioning the positive growth in productivity, albeit slower than the EU average, to avoid a solely negative portrayal of Spain's economic situation.
Language Bias
The language used is largely neutral and objective, presenting data and expert opinions without overtly charged language. However, phrases like "lastran la productividad" (hamper productivity) and "empresas zombis" (zombie companies) carry a slightly negative connotation, although they are accurate descriptions. More neutral alternatives could be used in places for a more balanced tone.
Bias by Omission
The analysis focuses primarily on the productivity gap between leading and lagging firms, potentially overlooking other factors contributing to Spain's overall productivity. While acknowledging sector-specific differences, it doesn't delve into the specific reasons for underperformance in each sector beyond mentioning digitalization. The role of government spending and regulation beyond general mentions of administrative burdens is also not extensively discussed.
False Dichotomy
The report presents a somewhat false dichotomy by focusing heavily on the need for lagging firms to improve or exit the market. While this is a significant factor, it simplifies the complexities of the Spanish economy and ignores potential solutions that don't involve firm exits, such as workforce retraining or sector-specific support programs.
Sustainable Development Goals
The article highlights a slight increase in total factor productivity (TFP) in Spain, indicating progress in economic growth. However, it also emphasizes the need to address the issue of lagging companies, which hinder overall productivity. Improving the productivity of these companies would significantly boost economic growth and create more decent work opportunities. The recommendations for reducing administrative barriers, stimulating entrepreneurship, and supporting company restructuring contribute directly to this SDG.