Have we really lost ground compared to Europe?
One of the words economists use most is “it depends.” Perhaps we like to sound interesting or to split hairs, but mostly it’s because reality is complex and the questions we ask are difficult to answer with a simple yes or no. This is what I believe is happening with the question in the title: it depends on how we look at it.
At first glance, the data seems clear: our gross domestic product (GDP) per capita – which is the value of goods and services we produce divided by the total population – has gone from being 6% above the European Union level in 2000 to 6% below last year. This does not mean that GDP per capita has not grown, but it has grown less intensely in Catalonia than in the European Union (EU). As a result, we have gone from a level equivalent to 106% of the EU to 94%, a relative loss of 12 points.
But is the group of EU countries the best benchmark for assessing the performance of the Catalan economy? We must take into account that EU data reflects its current composition of twenty-seven member states and, among these countries, there were several that, 25 years ago, had income levels much lower than those of Catalonia or the EU as a whole. The GDP per capita of Poland, for example, did not reach 30% of the EU level, and that of Romania was below 10%. Now they are approaching 60% and 50%, respectively. The strong growth of these countries, along with others that also started from very disadvantaged positions such as the Baltic states, the Czech Republic, Slovakia, or Hungary, explains a large part of the EU’s improvement in relation to Catalonia.
When we compare Catalonia with a group of more similar countries, the conclusion is that we are, in relative terms, where we were in 2000. For example, we can compare ourselves with the group of eleven countries that formed the euro area at the beginning (let's call them Euro11): Austria, Belgium, Germany, Spain, Finland, France, Ireland, Luxembourg, the Netherlands, and Portugal. Compared to the Euro11, Catalonia's GDP per capita was equivalent to 84% in 2000 and remained at 84% last year. The fact that we have not converged is bad news, but it is not as bad as the reading we could have made from the comparison with the EU27.
The lack of convergence in GDP per capita in relative terms can have, initially, two possible explanations: the evolution of productivity in Catalonia with respect to the Euro11 has not been favorable enough or the proportion of employed people over the total population has not grown more in Catalonia. After all, GDP per capita can grow because the percentage of the population employed in producing goods and services increases or because those dedicated to producing them have improved their productivity (GDP per employed person). Well, although it may seem surprising, relative productivity has not been to blame: in fact, the productivity of employed people in Catalonia has gone from being at a level of 77% of the Euro11 in the year 2000 to 83% in the year 2025, an improvement in relative terms. But this improvement is not reflected in GDP per capita because we have not generated as much employment relative to population growth as the Euro11 group has generated. This reminds us that we must pay close attention to how we train people who are to enter the labor market and how we support and incentivize those who are unemployed to look for, find, and accept a job.
All this does not detract from the fact that we have a big problem with productivity. In the long term, productivity is the main determinant of a country's standard of living. The increase in the proportion of employed people or the number of hours we work has an evident limit. On the other hand, productivity has no limits: it can always continue to improve. That we have done slightly better than the Euro11 is little consolation. Firstly, because we started from lower levels and, although we have come a little closer, we are still far away: the productivity difference exceeds 15%. But secondly, and even more importantly, because the evolution of productivity in the Euro11, and in the EU in general, has been quite mediocre so far this century. Both we and they must aspire to much more.
It has often been argued that the sectoral composition of our economy has been a burden for the improvement of relative productivity compared to the EU. But the data do not confirm this thesis. The productivity problem is transversal. The changes in sectoral composition have been quantitatively too limited to have a material effect on its evolution. The problem is not what we produce, but how we produce it.
