Fostering innovative business investment in Spain

Spain has chronically low productivity growth, which undermines its ability to generate higher living standards. Important contributors to low productivity growth are the misallocation of capital to low productivity firms and under-investment in knowledge-based capital. To foster a better allocation...

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Bibliographic Details
Published in:OECD Economic Department Working Papers 2017-05 (1387), p.0_1
Main Authors: Haugh, David, Adalet McGowan, Müge, Andrews, Dan, Caldera Sánchez, Aida, Fulop, Gabor, Garcia Perea, Pilar
Format: Article
Language:English
Subjects:
Business community
Capital markets
Capital stock
Economic development
Economic growth
Economic policy
Employment
GDP
Gross Domestic Product
Innovations
Insolvency
International taxation
Investment policy
Investments
Legislation
Neutrality
Productivity
R&D
Research & development
Small & medium sized enterprises-SME
Standard of living
Stock exchanges
Studies
Working papers
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Summary:Spain has chronically low productivity growth, which undermines its ability to generate higher living standards. Important contributors to low productivity growth are the misallocation of capital to low productivity firms and under-investment in knowledge-based capital. To foster a better allocation of capital a first priority is to better tune bank, capital market and government financing to the needs of new innovative firms. This could be done through better small and medium-sized enterprises (SMEs) bond and loan securitisation tools, reallocating public financing to early stage finance and making it easier for firms to access public innovation funding by shifting some funding from loans to grants for research and development (R&D) projects. Attracting more foreign capital and improving the regulatory framework to increase the return on investment would also help. This could be done by reducing regulatory barriers that hold back competition, improving the neutrality of the tax system, improving pricing signals and reforming insolvency laws.
ISSN:1815-1973
DOI:10.1787/f957c2cc-en