Growing like Spain: 1995-2007

Manuel Garcia-Santana, Josep Pijoan-Mas, Enrique Moral-Benito and Roberto Ramos

No 1609, Working Papers from Banco de España

Abstract: Spanish GDP grew at an average rate of 3.5% per year during the 1995-2007 expansion, well above the EU average of 2.2%. However, this growth was based on factor accumulation rather than productivity gains as TFP fell at an annual rate of 0.7%. Using firm-level administrative data for all sectors we show that deterioration in the allocative efficiency of productive factors across firms was at the root of the low TFP growth in Spain, while misallocation across sectors played only a minor role. We show that within-industry misallocation of production factors increased substantially over the period in all industries. Absent such deterioration, average TFP growth would have been around 0.8% per year, in line with the growth of the technological frontier. Cross-industry variation reveals that the increase in misallocation was more severe in sectors where the incidence of regulations is greater. In contrast, sectoral differences in financial dependence, skill intensity, innovative content, tradability and the intensity of capital structures appear to be unrelated to changes in allocative efficiency. All in all, the observed high output growth together with increasing firm-level misallocation in all sectors is consistent with an expansion driven by a demand boom rather than by structural reforms

Keywords: TFP; misallocation; Spain. (search for similar items in EconPapers)
JEL-codes: D24 O11 O47 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2016-05
New Economics Papers: this item is included in nep-bec, nep-eec and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Related works:
Journal Article: GROWING LIKE SPAIN: 1995–2007 (2020)
Working Paper: Growing like Spain: 1995-2007 (2016)
Working Paper: Growing like Spain: 1995-2007 (2016)
Working Paper: Growing like Spain: 1995-2007 (2016)
Working Paper: Growing like Spain: 1995-2007 (2016)
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