December 5, 2020

Catalonia stagnates its competitiveness for the "procés" and Madrid repeats as the strongest region




The institutional upheaval in Catalonia by the "procés" is causing a deterioration of its competitiveness. This is reflected in the General Council of Economists, which presented this morning its III Edition of the Regional Competitiveness Report, which states that "the climate of institutional crisis and the growing uncertainty begin to make a dent in the competitiveness of Catalonia." Madrid lead the ranking again, followed by Navarra, Basque Country and the community governed by Quim Torra.

The report highlights that on average competitiveness grew in Spain during 2018. Catalonia, Basque Country, Murcia and The Rioja however they stagnated. When limiting the behavior of 2018, the report "does not reflect the possible impact of recent events in Catalonia following the ruling of the Supreme Court."

The ranking measures competitiveness through seven indicators that calibrate the economic environment, the rework market, human capital, the institutional environment, basic infrastructure, business efficiency and innovation. According to the report, uncertainty in Catalonia hit its economic environment and business efficiency more fiercely.

Less investment and companies

The variables that deteriorate most in the region are the evolution of GDP, foreign investment, savings rate, crimes, exporting companies, variation in productivity and number of female employers. Catalonia has not grown again above the Spanish average since 1-O, according to the Tax Authority series, and has seen it as foreign investment It has contracted below the average of recent years, in addition to suffering a deep business leak to other communities.

On the other hand, Catalonia improved unemployment, long-term unemployment and youth, employed in training, population with high educational level, public deficit, inequality and housing with broadband. The institutional environment is the factor that worst scores the community, being in position 13 of 17.

Competitiveness gap between Autonomous Communities

The best communities in the ranking are Extremadura and Castilla-La Mancha, followed by Balearics, Madrid, Aragon, Navarre, Galicia, Canary Islands and Andalusia. Despite this, the convergence is very small when observing the large gap between the four most competitive regions in front of the red lanterns, Estremadura, Andalusia, Canary Islands and Castilla-La Mancha. «Madrid has three times more competitiveness than Extremadura. The gap is very large, ”reflects the ranking coordinator, Patricio Rosas.

Navarra advances Basque Country

If a recovery in Madrid has happened to the stagnation of Catalonia, economists find something similar between the Basque Country and Navarra. “We see that there are cases in which the potential for growth of competitiveness is exhausted, with models such as Germany closely linked to industry. Saving the distances, something similar can happen with the Basque Country, ”says the study's technical director, José Carlos Sánchez de la Vega.

However, economists detect some «structural features»In the Catalan deterioration against the Basque. «I think the 2019 data will be worse. But this could have a negative drag effect on the rest of the communities, ”says Sánchez. The president of the Exporters Club, Antonio Bonet, considers that "the flight of companies" is taking its toll on the region.

Extremadura, the worst infrastructure

By vectors, Madrid is a leader in economic and institutional environment, in addition to basic infrastructure, indicators in which Extremadura is the last one along with the labor market and innovation that Navarra and the Basque Country respectively lead. The Valencian Community is the worst community in terms of its institutional environment –Influenced by its red numbers and its impressive public debt– while Navarre It is the leading region in this indicator.


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