Pablo Hernández de Cos: Productivity, sustainable growth and prosperity

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the 45th anniversary of Cinco Días, Madrid, 13 June 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and gentlemen,

I would like to begin by thanking Amanda Mars, the Managing Editor of Cinco Días, for inviting me to take part in this event to mark the newspaper's 45th anniversary. Since 1978, a year that also saw the approval of the Spanish constitution, this newspaper has daily reported on and appraised the most important issues for our economy.

It has thus been able to testify to the changes that have swept through the country, which have yielded very marked improvements in its citizens' well-being. Over the past 45 years Spain has witnessed cumulative growth in gross domestic product (GDP) and in consumption, both expressed per capita and in real terms, of 83% and 60%, respectively.

This should not come as a surprise. The economic literature highlights the positive impact democratic institutions can have on economic growth, thanks, among other factors, to improvements in the business climate, private investment and the opening up of trade, as well as to greater fiscal capacity and spending on essential public goods, such as education and health. In the case of Spain, these changes have been further enhanced by the European integration process.

For instance, the economy's degree of external openness, measured in terms of the weight of exports and imports in GDP, has increased by almost 50 percentage points (pp). The stock of private productive capital (relative to employment) has increased by 40%, and much the same can be said of the stock of residential capital (relative to the population). The stock of public capital, essentially comprising transport, health, educational and other infrastructure, has almost tripled in real per capita terms over this period. Government spending on education and health has risen twofold. The percentage of the adult population with intermediate and higher studies has increased by 28 pp and 20 pp, respectively. Moreover, since 1978, the Spanish population has grown by over 10 million, and the number of people in work has risen by more than 8 million, including over 6 million women. This has raised the female participation rate from a mere 28% to 54%.