Why Spain needs to restructure its services industry

¿Por qué es necesaria la reforma del sector servicios? (Why is it necessary to restructure the services sector?), by Juan Delgado

Cuadernos de Información Económica: Crisis Borrascosas, no. 209, pags. 29-33, marzo/abril 2009.

Europe has made in recent decades a great effort to liberalize its product markets. The flagships of this initiative were the Single Market Program launched in the eighties with the aim of eliminating barriers to free movement of capital, people, goods and services, and the recent Services Directive focussed in the liberalization of services. Despite these initiatives, the growth of EU economies, and in particular, the contribution of the services sector, has been generally lower than in the US. In the last decade, productivity in the US has grown faster than in the EU, mainly driven by the productivity of the services industry.

In Spain, productivity barely increased in the last decade and the services sector contribution to productivity growth has been close to nothing. The reform of the services industy in order to remove barriers to entry and restrictions that prevent its proper functioning is necessary to improve the competitiveness of the Spanish economy.

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