Cohesion Policy will invest about EUR 28 600 million in Spain in 2014-20, and will help to implement the structural reforms needed for sound, sustainable development in the medium and long term. Three decades ago, on the signing of the Act of Accession of Spain to the then European Communities, few could imagine the major economic and social transformation the country would experience in the years to come. Economic growth in the second half of the 80s was mainly driven by intra-Commun
- 04 April 2016
Cohesion Policy will invest about EUR 28 600 million in Spain in 2014-20, and will help to implement the structural reforms needed for sound, sustainable development in the medium and long term.
Three decades ago, on the signing of the Act of Accession of Spain to the then European Communities, few could imagine the major economic and social transformation the country would experience in the years to come. Economic growth in the second half of the 80s was mainly driven by intra-Community trade and structural reforms. However, this cycle of prosperity could hardly be explained without the investment and stabilising effect of European Cohesion Policy. Furthermore, the policy has fostered a relatively equitable distribution of growth among the Autonomous Communities (ACs), contributing to economic, social and territorial cohesion, as stated in the Treaty of Lisbon. Spain, a key driver of Cohesion Policy, has been and continues to be a main beneficiary and player.
Cohesion Policy accounts for about a third of the EU budget and is its main instrument for promoting investment in Member States and their regions. In 2014-20, more than EUR 350 000 million of EU funds will be allocated to this policy which, together with national co-financing, will raise over half a trillion euros.
Spain has been the biggest recipient in absolute terms, set to receive almost EUR 200 000 million between 1989 and 2020. In relative terms, the largest contributions were received between 1993 and 2003, when Cohesion Policy was over 1 % of GDP per year and Spain received 25 % of the total funds. As the third largest recipient, Spain currently receives 8 % of the funds, with Cohesion Policy contributing around 0.3 % of GDP annually.
Nevertheless, its impact on public investment is much greater. It not only supports investment in financial terms but also at the strategic level, with greater potential to promote smart, sustainable and inclusive growth. Its contribution in Spain was even more crucial during the recent economic crisis, rising from 9 % of public investment in 2010 to almost 27 % in 2013.
Bearing fruit
Both Spain and its ACs converged significantly with the European average from the mid-90s until 2007. The collapse of the real estate bubble and the resulting crisis revealed weaknesses in the Spanish growth model, anchored in low-added-value activities and stagnant productivity below the European average. As a result, the convergence process was reversed not only in GDP per capita, but also at other levels (R&D, people with higher education qualifications, etc.). The relatively favourable trend in labour productivity early in the crisis is mainly explained by the move away from manual labour and less-productive activities.
Figure 1: GDP per capita in PPP (purchasing power parities), R&D expenditure as a % of GDP, people with higher education, labour productivity (Source: Eurostat)
Cohesion Policy was key to convergence in the growth years and limited damage during the crisis. The main macroeconomic models to simulate its impact estimate that Spanish GDP was 0.9 % higher thanks to 2000-06 programmes and 0.5 % higher as a result of funds received in 2007-13. In 2014-20, Cohesion Policy is expected to increase Spanish GDP by 0.4 %, with greater impact in those ACs receiving more funds.
The policy has also proved timely in adapting investment to specific needs. The initial emphasis on major infrastructure has gradually shifted towards R&D and innovation, ICT, SME competitiveness and low-carbon energy. These areas receive more than 46 % of the ERDF and ESF, while investments in employment, education and social inclusion represent almost a third of the total.
Figure 2: Distribution of the total allocation for Cohesion Policy in Spain by thematic objectives in % (2014-20 vs. 2007-13) (Source: European Commission, DG Regio)
Co-financing priorities for 2014-20
The main priority is investing in human capital, with greater labour productivity and access to jobs, and improving education, training and social inclusion, particularly for youth and vulnerable groups. The educational and training system must be adapted to give young people proper support – implementation of the Youth Employment Initiative will help. With Cohesion Policy support, the employment rate is expected to rise from 59 % in 2012 to 74 % in 2020, the school drop-out rate should fall from 25 % in 2012 to about 15 % by 2020, and 1.5 million people could be rescued from social exclusion or the risk of poverty.
Secondly, the production system should evolve towards more added-value activities by stimulating SME competitiveness, encouraging entrepreneurship and start-ups, improving productivity levels, and grow their presence in international markets. Companies must have access to finance through guarantees, venture capital, repayable loans, etc. Spain will pioneer implementation of the SME Initiative. Cohesion Policy is expected to help the entire population access 30 Mbps internet speed in 2020, and the number of exporting companies will rise significantly. Selected transport investments are also foreseen when needed to overcome bottlenecks for economic activity.
A favourable business environment for innovation and smart specialisation (RIS3) will be encouraged and R&D strengthened. It is estimated that Cohesion Policy will help increase private participation in R&D activities from 45 % in 2012 to 60 % in 2020, and that 25 % of firms with over 10 employees will incorporate technological innovation (13 % in 2012).
Finally, a more sustainable use of natural resources will be encouraged, renewable energies supported and energy efficiency improved in public buildings, housing, SMEs, etc. Sustainable urban transport and biodiversity will also be promoted, and targeted environmental investments made in order to meet EU requirements.
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