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Spain improves its competitiveness despite political deadlock

Innovation & Industry

Spain improves its competitiveness despite political deadlock

While European economies continue to dominate the top ten, the US remain as the third most competitive nation.


Despite having an acting government for nearly a year, Spain is the only Southern European member state to have increased its competitiveness compared to 2015, the World Economic Forum said on Wednesday (28 September).

In the Global Competitiveness Report 2016-2017, Spain climbed one position to 32. Meanwhile, Italy fell one place to 44, Greece five positions to 86, and Portugal registered the biggest drop, dropping 8 positions to 46.

Following two inconclusive elections in December and in June, Spain is heading for a third round, as the largest parties, the Partido Popular (PP) and the Socialists, cannot gather enough support in parliament to nominate a prime minister.

Socialists seal Rajoy’s defeat, Spain skids into political limbo

Spain’s acting premier yesterday (31 August) lost a parliamentary confidence vote for a second term after he failed to win enough support from the opposition, bringing the country closer to a potential third election in a year.

Political uncertainty worsened after regional elections in Galicia and the Basque region on 25 September confirmed the decline of the Socialists, triggering an open war between its chief, Pedro Sanchez, and the party’s leadership.

If parties fail to forge a governing coalition by the end of October, new elections are expected to take place in December.

Sanchez announced that he would call for primaries to be confirmed next month to select candidates for the anticipated poll.

The WEF report measures countries according to 12 indicators, including institutions, infrastructure, macroeconomic environment, education, or innovation. The ranking is based on the latest data from institutions such as the IMF and the forum’s Executive Opinion Survey.

What political deadlock? Spain's economy forges ahead

For months, Spain been awash with warnings that the country’s long-lasting political deadlock threatens to harm a fragile recovery, but the economy is forging ahead… for now, analysts say.

Spain scores well on life expectancy (3), tertiary education enrollment rate (3), secondary education enrolment rate (6), and the quality of rail infrastructure (8).

However, the business elite listed tax rates, inefficient government bureaucracy and restrictive labour regulations as the main barriers to doing business.

Commission split on credibility of rules as Spain and Portugal get ‘pardon’

A strong group of commissioners was in favour on Wednesday (27 July) of imposing at least a symbolic fine on Spain and Portugal for breaching the Stability and Growth Pact, but Jean-Claude Juncker opted for a zero penalty – supported by German Finance Minister Wolfgang Schauble.

Switzerland leads the ranking

There are no changes at the top of the list in this year’s edition. Switzerland, Singapore and the US remain the most competitive economies.

Among the member states, Netherlands (4) surpassed Germany (5) to become the most competitive economy.

Both Sweden (6) and the UK (7) climbed three positions compared to last year.

In total, five member states are among the top 10 economies worldwide, including Finland (10).

Looking ahead, the report warned that global output faces the double challenges of slowing productivity growth and rising income inequality, often exacerbated by rapidly aging societies.

“Stagnating and unequally distributed income growth in turn has opened the door to more inward-looking policies, mounting protectionist pressures, and a general questioning of the premises underlying globalization in many economies—most visibly embodied in the recent Brexit vote,” the document said.

But countries could boost their productivity by embracing the “tremendous promise for higher economic growth and societal progress” brought by the fourth industrial revolution.

This year’s report also urged governments to adopt structural reforms, largely postponed because of the benign macroeconomic conditions brought by the monetary stimulus and the cheap oil.

The authors emphasised that monetary easing “has been more effective and growth has been higher in more competitive economies, regardless of fiscal policies followed, suggests that the constraints may be on the supply side”.

ECB launches corporate bond buy in attempt to revive inflation

The European Central Bank started buying corporate bonds on Wednesday, picking up utility, insurance and telecom papers, as part of its latest effort to revive rock-bottom inflation by getting companies to borrow and spend.


The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), which was introduced by the World Economic Forum in 2005. Defining competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country, GCI scores are calculated by drawing together country-level data covering 12 categories – the pillars of competitiveness – that collectively make up a comprehensive picture of a country’s competitiveness. The 12 pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

For the eighth consecutive year, Switzerland ranks as the most competitive economy in the world, narrowly ahead of Singapore and the United States.

Davos wrap-up: Instability becomes the 'new normal'

The 2016 World Economic Forum, which concluded on Saturday (23 January), looked at a 21st century economy led by robots and artificial intelligence, against the backdrop of a more unstable and unequal world.

Further Reading

  • World Economic Forum: The Global Competitiveness Report 2016–2017