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Regional development in Spain 1989-2010: capital widening and productivity stagnation

Montes-Solla, Paulino and Faiña Medín, J. Andres and Lopez-Rodriguez, Jesus (2015): Regional development in Spain 1989-2010: capital widening and productivity stagnation.

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Abstract

This paper analyses the different factors that explain the pattern of economic growth in Spain along the 1989-2010 period. The results of our analysis provide strong evidence of stagnation in productivity throughout most of the period under study. The large investments and the strong growth in capital stocks were practically absorbed by an intense process of job creation. As a consequence, the capital/labour ratio and labour productivity levels had a very low growth, whereas total factor productivity (TFP) decreased over the period of analysis. Therefore unlike other European countries, Spain did not experience a phenomenon of capital deepening with an increase in productivity. The intense GDP pc growth in Spain was of a rather "extensive" type, mainly based on a capital widening process.

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