Not Rocket Science: Spain's R&D

"R&D is an essential factor in improving competitiveness. If Spain wants to continue to grow and generate employment we have to be capable of generating our own knowledge."

These were the words of the then deputy prime minister of Spain in 2007. The new government, as part of its cutbacks, has announced a 7% reduction in expenditure on R&D (usually in Spain referred to as I+D for innovation and development).

At times of economic hardship it is common for businesses to cut back on expenditure that does not have an immediate positive impact on the bottom line; R&D being one of the first things to go as policies of short-termism come to dominate. Short-termism is about all that the Spanish Government is currently concerned with, but to reduce R&D investment is a massive mistake.

Successive governments, both nationally and regionally (in the case of the Balearics) have talked a good talk when it comes to R&D. But talk is about all they have done. A reason for a lack of competitiveness in Spain and the Balearics is that spend devoted to research is well below that of most European countries. In 2006, prior therefore to the words of Maria Teresa Fernandez de la Vega, the former deputy PM, Spain's investment was slightly more than 1% of GDP. Sweden, the European leader, devoted over 3.5%.

Things didn't really improve under the last government, despite a national plan, supported by thirteen national programmes of R&D and five strategic actions plus something called AVANZA2, itself divided into five areas, and umbrella projects suffixed Eureka this, Euro, Inno or Econ that. It is not, therefore, that there is a lack of intent. But intent is one thing, actually doing anything seems to be quite a different matter.

The consequences of the under-investment in research are clear enough. In addition to uncompetitiveness, it results in a lack of economic diversity and a lack of opportunity for those who have the requisite skills and who then decide to take them elsewhere. The Spanish "brain drain" takes talent abroad, and within the country itself it takes it to the traditional centres of industry - Madrid, Catalonia and the Basque Country - and away from regions that can ill afford to lose it, such as the Balearics.

While Spanish and regional governments can be blamed for spending too little, they can also be blamed for failing to address a general culture of innovation. Spain's main research body, the National Research Council, was established in 1939. Its origins are, in this respect, telling, as they come from a time when the government (i.e. Franco's) oversaw all business and economic activity. The country has never really comes to terms with not being led by government and being reliant upon it for both direction and funding.

The first and, as far as I am aware, still the only private business R&D centre in Spain is that of Telefónica. Think what you will about Telefónica, but it is just about Spain's only truly world-class company. When a German neighbour and I were once chatting about Spanish business, the question cropped up as to what "great" companies Spain had. We got as far as Telefónica, and that was it.

There is no comparison with Germany and its high levels of competitiveness. In addition to Germany's world-class companies like Siemens, the bedrock of the German economy is the Mittelstand, the medium-sized engineering business, often privately owned and one imbued with a culture of training and research. I had experience of one such company. It was a world leader in its field and its willingness to invest was impressive.

The culture is of course very different to Spain where, with the property and construction boom having imploded, tourism is, as always, looked to for salvation. And the new tourism secretary of state has pretty much said as much. When there isn't much else, it's hardly surprising though.

The national and regional obsession with tourism, as demonstrated by the amount of attention that is paid to tourism by the media, reflects the fact that there is so little else. The expectation is always that tourism will come good, and it usually does, but in so doing it reinforces the inertia that prevents real progress, as with R&D. Tourism, when you think about it, is, or certainly was, pretty easy. Stick a hotel and a few restaurants up, make the beach look nice and Bob was your uncle and hopefully still is. It isn't rocket science, which is just as well, because Spain and Mallorca simply don't do rocket science.


Any comments to andrew@thealcudiaguide.com please.