Spain | Business size, productivity, and new digital technologies

Summary

This presentation examines Spain’s structural productivity gap, linked to the small average size of firms and to lower levels of investment and human capital. Under these conditions, artificial intelligence (AI) emerges as a key lever, provided complementary reforms and investments accompany it.

Key points

• Key points:
• A persistent productivity gap. Since the mid-1990s, there has been no convergence in GDP per hour worked with leading EU economies and the United States. Differences in employment and productivity explain the gap in per capita income and welfare, with marked regional disparities.
• Firm size and investment matter. Excessive firm fragmentation is associated with up to 75% of the productivity gap with Germany. Medium-sized and large firms are significantly more productive, invest more, innovate, export, and provide more stable employment.
• Efficient allocation and institutional framework. More productive firms have advantages that allow them to grow, but facilitating this growth requires improving the reallocation of resources toward more dynamic firms, with regulations that foster competition, a better business climate, legal certainty, and a more efficient public sector.
• AI as a general-purpose technology. AI has the potential to significantly raise productivity, with uneven effects across tasks and occupations. Europe must transform its digital base into leadership in the adoption and productive deployment of AI.
• Human capital and complementary policies. Harnessing AI requires more and better human capital, continuous training, reskilling, and public–private collaboration in R&D—especially for SMEs—while avoiding greater inequality.

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