BARCELONA PRESENTATIONIndustry and services in the Balearic Islands 1950-2015 copia

(1)

Industry and services in the

Balearic Islands 1950-2015:

regional deindustrialisation in a

service economy

International Congress

Societat Catalana d’Economia, Barcelona, May 2017

Carles Manera and Elisabeth Valle Department of Applied Economics

(2)

Outline of our research

 _{1. Introduction}

 _{2. Redefining manufacture}

 _{3. The Balearic Islands: from agribusiness to}

diversified services

 _{4. Resilient industry, “new” industry and services}  _{4.1. Input-output table}

 4.2. Sectorisation

 4.3. Key, Strategic and Pull sectors  4.4. Manufacturing and imports  _{4.5. Investment sectors}

 _{5. Conclusions}

(3)

Outline of this exposition

 _{1. The Balearic Islands: from agribusiness to}

diversified services.

 _{2. Resilient industry, “new” industry and}

services

 2.1. Input-output table

 2.2. Key, Strategic and Pull sectors

 2.3. Manufacturing and imports

 2.4. Investment sectors

(4)

1. The Balearic Islands: from agribusiness to

diversified services

 _{Industrialisation arrived late to the Balearics}

and deindustrialisation came early

 _{The industrialisation of Balearic Islands was}

clear from 1870 onwards and led by non-leading sectors in industrial growth (activities where the human factor was much more decisive than technology)

 _{The situation changed from the second half of}

the 1950 onwards, with the development of

(5)

1. The Balearic Islands: from agribusiness to

diversified services

 _{The competitiveness of the Balearic model}

rests on labour using production supported by labour intensification. In this setting, low salaries, labour intensity and the exchange rate (euro/pound sterling) comprise the core levers to overcome loss of productivity.

 _{This means the growth model since 1985 has}

(6)

1. The Balearic Islands: from agribusiness to

diversified services

0.0 0.1 0.2 0.3 0.4 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 0.00 0.05 0.10 0.15 0.20 0.25

Agriculture, 1955-2008 Manufacturing, 1955-2008

Construction, 1955-2008 _{Services, 1955-2008}

(7)

1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 0.00

0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90

Sector performance of the Balearic Islands’s economy, 1955-2007

AGRICULTURA INDUSTRIA CONSTRUCCIÓN SERVICIOS

Po

rc

en

ta

je

sX

10

0

(8)

1. The Balearic Islands: from agribusiness to

diversified services

 _{Deindustrialisation took hold in a relatively short}

space of time and a radical change in the archipielago’s production activity took shape.

 _{What industry, in the open sense mentioned above,}

remains in the economic structure?

(9)

2. Resilient industry, “new” industry and

services

 _{2.1. Input-Output Table}

An input-output table provides detailed information on the productive activities undertaken in an economic territory, both in terms of supply and demand.

The input-output table for the Balearic economy 1983

(10)

2. Resilient industry, “new” industry and

services

 _{2.2. Key, Strategic and Pull sectors}

Rasmussen (1957) proposes indicators that enable the key sectors of an economy to be detected based on the elements of the inverse Leontief matrix

Manera&Valle 10

 

_             



 j ij i i ij i ij j m N m N U U 2 1

1

 

(11)

2. Resilient industry, “new” industry and

services

 _{2.3. Manufacturing and imports}

(12)

2. Resilient industry, “new” industry and

services

 _{2.3. Manufacturing and imports}

1983 2004 Variation Agriculture 4.26 1.32 Decline 2.94%

Energy 3.00 2.14 Decline 0.86%

Industry 18.14 7.62 Decline 10.52%

Construction 9.07 14.02 Increase 4.95%

Services 65.53 74.89 Increase 9.36% 100.00 100.00

Production

1983 2004 Variation Agriculture 7.93 1.77 Decline 6.16%

Energy 12.97 0.00 Decline 12.97%

Industry 76.01 62.14 Decline 13.87%

Construction 0.00 0.00

-Services 3.09 36.09 Increase 33% 100.00 100.00

Imports from rest of Spain

(13)

2. Resilient industry, “new” industry and

services

 _{2.4. Investment sectors}

The effects generated by investment activity in the Balearic Islands on production can be calculated by the product of the inverse matrix of regional coefficients and the investment vector

(14)

2. Resilient industry, “new” industry and

services

 _{2.4. Investment sectors}

1983 2004

Construction 55.54 Construction 64.09

Non-metal Mineral Products 7.63 Cement, Lime and Gypsum 1.77

Business Services 7.13 Other Business Services 4.87

Metal Products 6.89 Basic Metallurgy Products 3.02

Wholesale Trade 2.79 Wholesale and Commission Trade,

except Motor Vehicles 3.18

Wood Industry (except furniture) 2.65

External Transport 2.49 Sea Freight Transport Services 1.17

Internal Transport 2.38

Retail Trade 1.80 Retail Trade except Motor Vehicles 1.78

Vehicle Trade and Repair Services 1.42

Energy 1.49 Electricity, Water and Gas 1.05

Footwear Industry 1.31

Banking and Insurance 1.20

Real Estate Services (property sales

and purchases) 5.91

Real Estate Services (property

rental) 1.95

Percentage of total

production necessary to satisfy

Gross Capital Formation in the Balearic Islands

(15)

3. Conclusions

Many service sectors work to directly and indirectly meet tourism demand, with transport services playing a key role in the Balearic economy and increasing their pull capacity compared to other sectors.

(16)

3. Conclusions

IT and research and development should be strengthened in the service sector, with knowledge-intensive, high value added jobs that continue to lack an important role in the inlands' economy.

Nevertheless, the telecommunications, financial brokerage and other business services sectors have become strategic in the Balearic Islands.

Future research

The input-output table for the Balearic economy 2014 World input-output database

(17)