INDUSTRIAL POLICY IN SPAIN: PAST AND FUTURE
In recent decades, Spain has not deployed an industrial policy, understood as a long-term plan with actors and instruments aimed at strengthening Spanish manufacturing industry. On the other hand, important initiatives have been developed in the field of energy, a minor but relevant component of Spanish industry, fundamentally in the development of renewable energies.
The influence of the liberal theories of the so-called Washington Consensus, whose most significant exponent has been the IMF (International Monetary Fund), and certain requirements demanded of Spain for its entry and permanence in the EU in 1986, has meant that Spanish manufacturing industry has been losing relevance in the Spanish economy. Proof of this is that the current Industry Law dates from 1992.
The influence of the liberal theories of the so-called Washington Consensus, whose most significant exponent has been the IMF (International Monetary Fund), and certain requirements demanded of Spain for its entry and permanence in the EU in 1986, has meant that Spanish manufacturing industry has been losing relevance in the Spanish economy. Proof of this is that the current Industry Law dates from 1992.
In some isolated cases, such as the automobile industry, for what it represents in terms of employment and exports, the aeronautics industry and, to a certain extent, renewable energies, Spain has been able to maintain a certain relative position with respect to EU manufacturing industry.
The "Manufacturing industry in figures" tab presents several graphs showing both its loss of relative importance with respect to GDP in recent years, as well as the stagnation of the technological intensity of manufactured products in Spain. The only branch of industrial activity that has maintained significant growth is the food industry.
The "Manufacturing industry in figures" tab presents several graphs showing both its loss of relative importance with respect to GDP in recent years, as well as the stagnation of the technological intensity of manufactured products in Spain. The only branch of industrial activity that has maintained significant growth is the food industry.
Most of the investment in industrial matters by successive Spanish governments has gone, paradoxically, to mitigate the effects of the successive reconversions of declining industries such as coal, steel and shipyards. Economic support to existing or new industries has been focused on promoting R&D projects and activities, with a more or less equal distribution criterion between them.
In December 2010, the Ministry of Industry launched an Integral Plan for Industrial Policy 2020 (PIN 2020), whose objectives were to address the structural weaknesses of Spanish industry in order to relaunch it. A quantitative objective was set for Spanish industry's added value to reach 18% of the total in five years. Naturally, innovation policy occupied the most prominent place in the Plan.
The orientation of this new Plan had two fundamental parameters: first, that industry should recover its role as an engine of growth and a generator of employment; and second, that the approach should be global and transversal, as demonstrated by the expression "Industrial policy is everything that is relevant to promoting and facilitating industrial activity".
The change of government in December 2011 meant that this Plan was left out of the new government's economic policy priorities. However, over the years, the Ministry of Industry, in its various configurations and powers, has made numerous instruments available to companies through different plans.
The change of government in December 2011 meant that this Plan was left out of the new government's economic policy priorities. However, over the years, the Ministry of Industry, in its various configurations and powers, has made numerous instruments available to companies through different plans.
In 2021, the European Union approved the Next Generation EU funds, which for Spain represent a total amount of €140 million, divided approximately 50/50 between grants and loans on favourable terms. The main objective of these funds is to promote the recovery of the economic fabric of the different member countries of the European Union. Based on this initiative, the Spanish government has approved the so-called Recovery, Transformation and Resilience Plan (PRTR) which, among several components related to industry, presents a specific one, number 12, called Spain Industrial Policy 2030, with a total planned investment of close to €4,000 million.
Main actors in the Spanish industry
The Ministry of Industry and Tourism, in its various forms, has been the main actor in industrial policy. However, for several years now, it has lost its responsibilities for R&D activities, key to the development of industrial policy, which were transferred to a new Ministry of Science and Innovation created in 2008. On the other hand, certain industrial policy powers have been transferred to the Autonomous Communities.
There are also other responsibilities close to industry that are spread across other ministries, such as business support, digitalisation and artificial intelligence, and telecommunications and digital infrastructure.
There are also other responsibilities close to industry that are spread across other ministries, such as business support, digitalisation and artificial intelligence, and telecommunications and digital infrastructure.
As a result of this division of responsibilities, the activity of the Ministry of Industry as a promoter of industrial policy has been significantly reduced, and has been limited in recent years mainly to the management of competitiveness and support programmes for industry of a generally horizontal nature, through subsidies and loans on favourable terms.
For its part, the Ministry of Science, Innovation and Universities currently has the following responsibilities: "It is the department in charge of executing the Government's policy on scientific and technical research, technological development and innovation in all sectors, including the management of international relations in this area and the representation of Spain in programmes, forums and organisations of the European Union and international organisations within its competence".
Other relevant actors are the Departments of Industry or equivalent in the Autonomous Communities, employers' organisations and trade union organisations.
Other relevant actors are the Departments of Industry or equivalent in the Autonomous Communities, employers' organisations and trade union organisations.
The future of industrial policy in Spain
In recent years, there has been a substantial shift in the perception of the importance of industry in Western countries. The reasons are varied, but all point to the need to promote their respective industries through the development of industrial policies, both horizontal and vertical. Among these reasons are the following:
The empirical finding that countries with a high share of industrial GDP perform better in terms of economic growth, job creation and trade balance than those more dependent on services.
The success of China's economic development model which, in clear opposition to the traditional growth models applied in other developing countries and based on liberal recipes, has turned China into an industrial power.
The realisation during the pandemic that Western countries lacked the capacity to manufacture basic supplies such as medicines and medical equipment on their own, resulting in severe shortages and dependence on other countries manufacturing these supplies.
The realisation that Western countries are highly dependent on certain Asian countries for the supply of key components used in many products, such as semiconductors.
The realisation that the political decisions of certain countries supplying raw materials and key components can condition the economic development and even the security of Western countries.
As a result of the pandemic, the EU temporarily relaxed certain competition rules to allow state aid to companies in difficulties. It also launched a financial support programme for member states, called Next Generation EU, whose objectives include strengthening industry, both energy industry through the promotion of renewable energies and manufacturing industry through the promotion of digital transformation.
Spain is channelling these funds through various initiatives, framed within the Recovery, Transformation and Resilience Plan (PRTR), one of which, the so-called Strategic Projects for Economic Recovery, addresses support for specific sectors of Spanish manufacturing industry, such as automobile, agri-food, shipbuilding and aeronautics, among others.
Spain is channelling these funds through various initiatives, framed within the Recovery, Transformation and Resilience Plan (PRTR), one of which, the so-called Strategic Projects for Economic Recovery, addresses support for specific sectors of Spanish manufacturing industry, such as automobile, agri-food, shipbuilding and aeronautics, among others.
The aim of this Chair is to promote a Reindustrialisation Plan that goes beyond specific actions resulting from temporary circumstances and that is a long-term plan with a broad political and social consensus. The ultimate goal is for Spain to have an industrial sector comparable in size to that of the EU-26, diversified and technologically advanced.