In recent years, emphasis has been placed on the need to reindustrialise the economy, not merely in order to create employment and activity, but thanks to its effect on the economy as a whole. On one hand, the crisis has made it clear that industrial economies have weathered the recession better than those less industrialised. Furthermore, countries with greater levels of industry tend to show more favourable trade balances, given that industry represents over 50% of exports generated by developed economies. Finally, industry creates more qualified, more stable and better remunerated jobs than those found in the economy as a whole.
The backbone of the Catalan economy
In Catalonia the industrial sector represents the backbone of the economy. This is not so much due to its economic weight, but arises out of the synergies it has with other sectors directly depending on it. Any debate on deindustrialisation should be qualified however because today many activities forming part of production related services are not considered industrial but they are actually closely linked to industry.
The widened perimeter of the so-called new industry
In fact, if one considers the widened perimeter of the so-called new industry (which includes internal services aimed at intermediate industrial consumption and the final demand of trade and freight transport sectors), this sector represents 50% of the Catalan GVA (Input-Output Tables 2011). In other words, half of the Catalan economy would have either a direct or indirect relationship with the industrial sector. Let’s explain that another way: 5 out of every 10 euros generated by the Catalan economy is created thanks to industrial activity.
The new industry as the sum of the industrial sector and the production related services sector
Another definition considers the sum of the industrial sector and the production related services sector (which includes services to companies, trade, transport and communications, financial services and electrical, gas and water services). According to this definition the “integrated sector” would have a weight of 68% of the GVA and 57% of total Catalan employment (Input-Output Tables 2011). One can see a rise in the economic weight of the production services sector, greatly compensating the fall in traditional industrial sector, and meaning that the “integrated sector” is increasing its weight in the Catalan economy. This macro sector generally shows higher average productivity and salaries than economy as a whole.
A greater interdependence on services and higher consumption of industrial inputs and local services
The study “The New Industry” which updates figures for the new industry based on the latest input-output tables in Catalonia gives us two main conclusions.
- Firstly, Catalonia has not undergone a process of deindustrialisation as serious as previously thought, and in fact the sector of industry services has shown exceptional growth which has helped to compensate the loss of traditional industrial sector.
- Secondly, the process of industrial externalisation is being intensified in Catalonia, while at the same time a new trend is appearing: the substitution of foreign industrial input suppliers for industrial suppliers located in Catalonia.
These trends together are creating a “new industry” characterised by a greater interdependence on services than in the past and higher consumption of industrial inputs and local services.
Summary of "The New Industry". Updated figures based on Catalan input-output tables, by Carme Poveda.