For years, I have been beating the drum for the need for greater economic diversification in Mallorca. I have also been critical of a lack of competitiveness. I take no credit for having drawn attention to either as they are obvious.
Over the weekend, there was a gathering of the great and good (sic) of various business bodies and the regional government. They called on Brussels to recognise problems caused by the insularity of the Balearics. They referred to problems for competitiveness created by elevated transportation costs. They cried out for major investment in research and development. They insisted that there had to be diversification away from a reliance upon tourism.
It makes you want to scream. None of these issues are new, especially calling on Brussels to put its hands in its pockets. Apart from previous aid from Brussels, the other issues have either been handled badly or simply not been handled at all. What really makes you want to scream is the fact that Josep Aguiló, the government's finance and business minister, was there, trotting out mantras that would not now need to be trotted out if any meaningful action had been taken in the past to address the lack of competitiveness, R&D and diversification.
It would be instructive to learn from Aguiló what he actually believes competitiveness to mean. Perhaps he concurs with Air Berlin's Álvaro Middelmann, who implied that Balearic taxpayers were being ripped off by paying for mainland infrastructure and that transport (and transportation) systems in and for the Balearics are inadequate.
The greater costs of both import and export because of higher transportation costs are a further obvious factor. So why are the great and good only talking about it now? And what are they going to do about it? The answer is probably nothing, other than to hope that Brussels might come calling.
Balearic taxpayers were paid an inadvertent insult by President Bauzá when he made such a thing of bigging up the high-speed rail link from Algeciras to the French border. It will help to lower transportation costs to the Balearics, he said. Well, let's hope he's right because a conclusion one can draw from Middelmann is that he appears to think that it won't benefit the Balearics, and if you were to choose between a businessman who regularly speaks common sense and an ambitious politician only too willing to be seen allying himself with fellow PP leaders on the mainland, then I would suggest you choose the former.
While lending his support to the AVE train, what is Bauzá doing for Mallorca's transport system? He took a ride on the inaugural electrified train to Inca and gloried in the celebration of something set in motion by a previous government. Other than this?
He will argue that his hands are tied by the man with the money box, namely Aguiló. And to the question as to what Aguiló believes competitiveness to mean, the answer will be the same as his masters in Madrid. Lower wages. Reduce the pay packets of those already receiving a pittance for performing mainly McJobs in the tourism industry, and tourism will receive a boost and Mallorca's troubles will be over.
Except of course, he is wrong. Price competition isn't the same as competitiveness. Not competitiveness as it applies to a country or to a region or to an island. Competitiveness comprises among other things - and I borrow from Harvard professor Michael Porter here - good education, good roads, sound economic policies, trusted institutions (to include the legal system), privatisation and, perhaps above all, the right mentality for economic progress engrained in the local culture.
How many of these elements exist in Mallorca? The public education system is lousy, some roads are good, but many are not, economic policies have been anything but sound, the legal system is way too politicised, there is privatisation but could be more, the mentality is one of so long as there's enough to pay for a good fiesta, then the rest can go hang.
Lowering wages will achieve nothing in terms of improved competitiveness. The opposite is the case, because they do not contribute to higher living standards. Competitiveness equals productivity and maximising returns on all products and services and on human resources. And where the latter are concerned, the best are getting the hell out of the Balearics.
It's the same old story. Tourism is all there really is. The private sector might be able to do something about diversification and R&D, but if it comes up against a mentality that seems incapable of looking beyond a Brussels sugar daddy and that for years has failed to address these issues, then it won't.
Any comments to andrew@thealcudiaguide.com please.
Showing posts with label Research and development. Show all posts
Showing posts with label Research and development. Show all posts
Tuesday, February 21, 2012
Thursday, January 05, 2012
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.
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.
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