Characteristic features of the economic context of the Comunitat Valenciana
The Comunitat Valenciana has a privileged location that, together with the good living conditions it offers, makes it a territory with a strong capacity to attract population and economic activity.
It showed a high capacity to grow in terms of GDP, population and employment between 1995 and 2007. Despite this, the pace of growth in regional productive activity has been lower than the national average, which together with the strong demographic dynamism has led to a process of divergence in terms of GDP per capita with respect to Spain and the European Union.
Over the last few years, it has been undergoing a process of convergence in terms of labour productivity, which is already very close to the national average levels. During the period of economic growth, the increase in the employed population was not accompanied by higher levels of production per hour worked due to a specialization in less productive sectors. Since 2008, productivity improvements have been caused by the significant destruction of jobs and labour. Despite this, the Valencian business fabric is being able to produce more per hour of work, thus improving its competitiveness abroad.
It has a productive structure that does not favour productivity improvements. Services (trade, hospitality, transport, etc.) and construction were the driving forces of the Valencian economy, and for this reason the impact of the economic crisis on the region was more intense. The progressive loss of the weight of industry in the regional economy requires a different strategy for the economic revival based on the promotion of technology-intensive industrial activities and the development of advanced and human capital-intensive services.
It has a long industrial tradition that is reflected in the greater weight of employment and the gross value added of industry than in Spain as a whole. The most important sectors are ceramics, chemicals, metallurgy and the automotive industry. On the other hand, footwear, textiles, tiles, toys and furniture are the most specialized products in the region.
- It must improve its productivity levels in the industrial sectors through two lines of action: one, to improve in sectors with a high weight in the regional economy and whose productivity is lower than the national average of the same sector (chemical, plastic, food and metallurgy); and two, to increase the presence in the region of more productive industrial activities (among others, the automobile industry, machinery and equipment manufacturing, and the beverage and tobacco industry).
- It is an important tourist centre on an international scale. Tourism is one of the main sources of wealth creation in the region. Despite the onset of the crisis, the volume of tourists has followed its growth trend and, at the same time, supply has diversified.
- It is located at the centre of the axis of world trade, in the middle of the trade flows coming from the East and the Atlantic. Its logistics network (balanced and intermodal) provides a high degree of national and international accessibility, defining it as a key point of logistics activity in the Mediterranean and Iberian axis and an attractive location for multinational companies.
- It is characterized by a highly fragmented business fabric, with a strong predominance of small companies, which negatively affects their ability to obtain financing, in order to develop R&D&I projects in their processes and products, and even in their propensity to export. Despite this, there is a strong entrepreneurial culture that, together with the high levels of training of company managers, is helping the emergence of new technology and global companies.
- It has a large base of highly qualified human resources available to the region's productive fabric. Since the beginning of the 21st century, more than 66,000 people have joined the Valencian labour market with higher education, a key aspect for incorporating knowledge into the productive fabric. The specialization in activities with low technological content means that the degree of utilization of this human capital is relatively low, causing a flight of talent to the outside in search of a job opportunity.
- It has an important network of knowledge-generating institutions that make up the technological map of the region (universities, technological institutes, research centres) that promote R&D&I and its application in the productive fabric. Likewise, the volume of innovative Valencian companies continues to grow considerably, and it is now necessary to increase the innovation effort of these companies, especially the large traction companies.
- It has suffered more sharply from the severity of the crisis, which has led to the loss of momentum in some of its engines, such as residential construction, public and private investment, industrial activity and domestic demand. However, the international trade balance of the Comunitat Valenciana is positive.
- It is the third largest Spanish region in terms of export volume, focusing its sales abroad on products manufactured by the automotive industry, the agri-food industry, footwear and ceramic products. New non-European destinations are emerging with an important level of development (China, Saudi Arabia, Algeria, India or Brazil).
- Despite the crisis, it still has significant growth potential, the realisation of which depends essentially on the overall recovery of the European Union as a whole.
- It has a number of key aspects for achieving sustainable and balanced long-term economic growth: sufficient quality human capital to meet the potential demand of companies for new activities linked to the knowledge economy; under-utilized entrepreneurship capacity that does not stand a chance of succeeding; installed capacity in many of the branches of activity that can facilitate a rapid recovery in production; and technological potential available to companies, both inside and outside of them, in platforms that can integrate science, technology and innovation.
- It has some tractive companies that mobilize the rest (including Ford, Mercadona...) and that allow the markets of their supplier companies to expand until they reach much more efficient production scales than those of SMEs. The Valencian companies must grow in number, size and level of professionalism, and it is urgent to raise the level of training of entrepreneurs to enhance their intrinsic qualities (leadership, risk taking, sacrificial capacity, etc.).
- It has industrial clusters, technologically powerful at the level corresponding to the branch of activity, and there is still considerable scope for cooperation actions in multiple directions: technological, commercial, purchasing, brand, marketing, etc.
- It has seen its public investment capacity reduced in response to the commitments it has made to reduce the public deficit. The region's financial recovery should allow it to relaunch those investments aimed at generating greater economic growth and improving the competitive advantages of companies based in the region, thus breaking the negative trend of recent years.
- It must take advantage of the growth of non-market services (health, social assistance and education) to boost the capacity of the regional productive fabric by incorporating R&D&I applied to hospitals, centres and public or private institutions involved in these activities.It has to develop green economy projects where the great social interest in energy efficiency and environmental sustainability problems is exploited economically.
- It can exploit its geographical location by achieving logistical advantages in national and European markets, offering a logistical service with lower costs and a high level of quality in its execution.