1. INTRODUCTION

The economic growth and the industrialization are terms used with frecuency.

The work productivity, base in the income per capita, is higher in the industry and grow faster, susceptible to incorporate technical progress.

The industrial development need not only physical capital, human and technology, it needs a higher amount of quality services too.



2. delimitation and clasification

Industrial activities have the mission of transforming natural resources by physical or chemical processes.

The groups most common are the demand, that depends on the dynamism of the markets and the offer, attending to the factors that controls the production efficiency and the competitiveness.

We can distinguish between activities of higher, medium or weak demand. The incorporation of a type of activity in one of these groups is based on the income-elasticity of its demand.

Strong demand has a recent development or and need higher innovation.

The weak demand will have a less favorable market for their progress than other ones focused on a strong demand. That doesn’t means that it industry can’t reach a similar development, it will depend on the efficiency of the market.

It is useful to know the elements that determine the efficiency. Based on this are various classifications that can be made, one of them offered by the ODCE, which stands out from the other competitive factors technological effort designed to gain new and different products and more efficient production processes.

It is committed to a mixed classification, distinguishing between demand activities and hightechnological content, medium and low.




In the next chart you can see the caracterization of the Spanish manufactures by 2009



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In this chart, you can see the importance of the manufactures in the economy between 1985 and 2010.





You can see that the total VAB is higher in 1985 (current prices and constant prices) employment is higher in 1985, the total exports are higher in 1995 and the total imports in 1995 too.




3. SECTOR EVOLUTION

The comparison of the growth of the industry affirms that, since 1985 the contribution of the industry to the Spanish development has been reduced in terms of VAB and employee.

Progressive reduction of industrial activity has raised concerns about a possible de-industrialization of the economy. The concern has been increased by successive relocations during the last years.



The next graphic show the weight of the manufactures in the total VAB between 1985 and 2009. (%)

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In Spain, France, United Kingdom, Germany and Italy was a decrease of the manufactures weight since 1988. In 1995, Germany start to grow a little, but in 2007 decrease again.



Some causes of the deindustrialization are

The contraction in the participation of manufacturing in VAB is expressed in real terms substantially less than in VAB at current prices and employment.

The progressive internationalization of the services by the industrial companies.

The change in the competitive environment and the intensification of the competence from developing countries facing the manufacturing of advanced countries have assumed anincreasing share of domestic demand, satisfied with imports



The gradual internationalization of industrial companies that are expressed in both exports and manufactured imports had increased their weight in GDP.

This is a relative de-industrialization, the growth of industry in the reference period is high, although lower than the overall economy. It has a profile similar to this one since early 2000 when it displays a certain difficulty to grow.

Economy growth has arisen as a result of the reduction of the trade barriers, that some of the most frequent supply shocks, such as rising wages and price of services, the currency appreciation and the rising oil trade or financing restrictions, seem to influence more strongly in manufacturing.

The incorporation of Spain to the European community, progress in the European integration process, the integration of twelve countries with clear advantages in labor costs and increasing participation in world trade in emerging countries have generated a more demanding competitive environment in which Spanish manufactures have been able to cope.

In this graphic, you can see the growth of the Spanish manufactures between 1986 and 2010.



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In 2009 it was the bigger decrease of the Spanish manufactures growth.



This chart explain the compare growth of the Spanish manufactures between 1985 and 2009.



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4. PRODUCTIVE AND TRADE SPECIALIZATION



The Spanish industrial growth hasn´t achieved the same level in the three groups of manufacturing. In the last decades has taken place a change in the productive structure and in the intersectoral specialization,both of them focusing on the external commerce.

In the next chart you can see the VAB structure of the Spanish manufactures and community between 1986 and 2009.

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Traditional manufacturing retain their dominance in the industry, although in a less degree, since the intermediate participation have risen progressively.

The advanced ones increased their presence on the early mid of 1999 for a later reduction below the initial level.

Computers and electronic activities framed in the group of Research Technologies and Communications (ICT) are the backbone of the technological revolution.

If until the late twentieth century Spain industry structure tended to converge with the European average, thereafter appears to have started a process of divergence, which find its basis in that retreat from participation in advanced industries.

Spain is among the european economies with a specialization index lower in these activities, which are inferior in the case of large ICT manufacturing.

Advanced activities have been slowing their participation while intermediate have asserted their dominance in the commercial pattern.

The Spanish manufacturing specialization is not the most appropriate from the perspective of growth and external balance of the economy. Not only because the insufficient development of advanced manufacturing limit the possibilities of using the expansion of domestic demand. Also because traditional industries appear to be very close to the maximum of their competitive abroad, as evidenced by the shed since 1985 rates coverage of foreign trade significantly below.

In this chart you can see theparticipation of the advanced manufactures in the industrial mark-up in relation to the European Union, 1995-2008.



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In this one are the structure and the commercial coverage of the Spanish manufactures exports 1985-2010.

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Referring to foreign trade deficit, we find some characteristics

1. The difficulty of traditional activities intermediate resting in Spanish foreign trade.

2. The low level of coverage of foreign sales of advanced industries



To conclude this section, we can reflect on the key interests of Spanish industrialization in traditional manufacturing. The small dimension of some establishments, the intensity in natural resources and labor and standardized technologies seem to be accommodate to the Spanish economy, with more work and less abundant existence of physical, human and technological capital than in the communitarian average.

Also we should ask why it has remained the pattern when it seemed to be destined to disappear gradually.

1. The Single European Market has strengthened the competitive advantages of Spanish industry in traditional production and intermediate, more intensive in those resources in the Spanish economy get better relative endowment

2. The rapid development of high-tech manufacturing, especially ICT

3. Multinational companies’ relocation from Spain to these emerging industrial rivals.



5. PRODUCTION EFFICIENCY

The sustained growth of the industry must be based on the continuous increased of the efficiency that obtained the labor productivity. The progress, help to reduce the production costs and the products prices, increasingthe real labor remuneration.

During the first decade, the increase of the industrial mark-up derived almost exclusively to productivity gains.

Reasons of an increase in the worker perfomance

1. Capitalization of industries and the workers cualification.
2. Changes in the sectoral specialization of manufacturing.
3. Quality and usefulness of products.

Since the mid 1990's, labor productivity has scored a very slow rate of increase.
In 2002 there was a progress in the generation of employment due to the massive influx of immigrants.












This graphic show the VAB and the productivity of the Spanish manufactures.


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Since 2001 the productivity of Spanish manufactures keep almost the same.


This chart show the productivity, salaries and prices in the Spanish manufactures compare with the European Union (1995-2009



The salaries in Spain were higher in compare with other countries in the European Union. Also the unitary labor cost and the VAB deflactor. The productivity is higher in the European Union.

The slow pace of labor productivity since the mid-90s

Abundant supply of immigrant labor to a below average wage.
Low innovative effort of industrial enterprises.
Limited progress in the incorporation and diffusion.
Training deficiencies of some entrepreneurs.
Inadequacy between the skills of the workforce and the needs of the productive.
Insufficient development of ambitious strategies on an international basis.




The poor results of the Spanish industry in terms of relative efficiency in contrast to the increase of its share in the production and sales of EuropeanUnion foreign. Justifications

Big companies that exports, achieve high levels of productivity. They have leadership positions in international markets.
Productive and trade specialization of Spanish industry in segments. Low productivity. They must inserted into international production networks.
The advantage of lower wages was reinforced by the quality of the products that productivity measures do not adequately reflect. Analyses available about the quality of export of spanish products warn a decrease the percentage that represent the ones of low quality.



6. INDUSTRIAL POLITICS.

In the developed countries was a liberal policy conception that distrusted the viability of the public intervention to promote the sector development. The Industrial reconversion policy, whereby in the first half of the 1980s, was commited the reestructuration of the industrial activities most affected by the economic crisis.

The dominance of public enterprises in the sectors most affected by industrial decline explains that the conversion policy is accompanied by a reorganization of the public sector business.

The opportunity cost of spending huge public funds to the reconversion was the absence of an active industrial policy making reference to all industrial enterprises.
The performances of industrial development were attempted transfer to regional governments.

Reorientation of industrial policy

Spanish industrial policy efficient.
Coordination of the activities of the central and regional governments.
3. Establishing programs to assist small and medium enterprises and the development of technological research and innovation.