Malaga, November 17, 2021

THE HISTORY OF CAPITALISM IS THE HISTORY OF THE INTRODUCTION OF DIFFERENT FORMS OF CAPITAL
Physical capital Human capital Technological capital Social capital Intangible capital
• They all began their industrial development at a late stage…
• … and have experienced a slow productivity growth over the last two
decades
• They have showed slower adaptation to recent technological changes in
general…
• ... and to intangibles in particular, as the Covid-19 pandemic has proven in
all its rawness
Italy
Portugal
Spain

ALL THREE COUNTRIES ARE EQUIVALENT WITH EUROPE IN TANGIBLES… BUT NOT INTANGIBLES
Ireland
Sweden
France
Netherlands
Denmark
Finland
Austria
Average
United Kingdom
Luxembourg
Portugal
Italy
Germany
Spain
Greece
0 4.5 9 13.5 18
10.5
14.0
12.4
11.4
13.0
12.4
10.3
12.1
15.7
13.1
12.5
12.1
11.8
14.0
13.7
4.2
5.5
6.5
6.7
6.8
7.0
8.2
8.3
8.7
9.6
9.6
10.1
10.4
14.6
16.4
Intangible
Tangible
* Expanded.
Note: The investment in tangible assets does not include residential investment.
Average of European countries: former EU-15 (including UK), except Belgium.
Source: EU KLEMS and own elaboration.
Graphic 7. Tangible and
intangible investment over
GDP*. Total economy. 2018
(percentage)

ONLY ITALY IS CLOSE TO THE EUROPEAN AVERAGE IN THE WEIGHT OF INTANGIBLE CAPITAL OVER TOTAL INVESTMENT
Ireland
Sweden
France
Netherlands
United Kingdom
Denmark
Finland
Average
Italy
Luxembourg
Austria
Germany
Portugal
Greece
Spain
0 25 50 75 100
71.6
71.5
65.6
65.4
64.4
63.8
62.8
59.4
57.7
56.5
55.8
54.6
53.3
48.9
45.5
28.4
28.5
34.4
34.6
35.6
36.2
37.2
40.6
42.3
43.5
44.2
45.4
46.7
51.1
54.5
Intangible
Tangible
* Expanded.
Note: The investment in tangible assets does not include residential investment
Average of European countries: former EU-15 (including UK), except Belgium.
Source: EU KLEMS and own elaboration.
Graph 8. Composition of non-residential investment*. Total economy. 2018 (percentage)

SPAIN AND PORTUGAL HAVE MAINTAINED A PATH OF CONVERGENCE WITH EUROPE
OVER THE PAST TWO DECADES IN INTANGIBLE INVESTMENT
0
4
8
12
16
Ireland
Luxembourg
Denmark
Austria
Sweden
Netherlands
Spain
France
Portugal
Average
Finland
Germany
United Kingdom
Italy
Greece
0.5
1.5
2.3
2.8
2.9
3.1
3.5
3.6
4.1
4.3
4.4
4.5
4.7
6.9
11.4
Average of European countries: former EU-15 (including UK), except Belgium.
Source: EU KLEMS and own elaboration.
Graph 11. Average annual rate of variation in real investment in intangible assets. Total economy. 1995-2018 (percentage)

INTANGIBLE INVESTMENT PROVED MORE RESILIENT DURING THE CRISIS
50
100
150
200
250
1995 1998 2001 2004 2007 2010 2013 2016 2018
a. Italy
139.3
107.6
* Expanded.
Note: The investment in tangible assets does not include residential investment.
Average of European countries: former EU-15 (including UK), except Belgium.
Source: EU KLEMS and own elaboration.
115.0
50
100
150
200
250
1995 1998 2001 2004 2007 2010 2013 2016 2018
b. Portugal
215.1
124.3
136.0
50
100
150
200
250
1995 1998 2001 2004 2007 2010 2013 2016 2018
c. Spain
248.5
163.4
164.0
50
100
150
200
250
1995 1998 2001 2004 2007 2010 2013 2016 2018
Expanded GDP
Tangible assets (without residential investment)
Intangible assets
d. Average of European countries
201.3
144.2
148.1
Graph 9. Dynamic of GDP. intangible and
tangible investment*. Total economy.
1995-2018 1995 =100

THE SLOW PACE OF INVESTMENT IN INTANGIBLES IS RESPONSIBLE FOR THE SLOW PROGRESS OF PRODUCTIVITY
Table 4. Contribution of sources of economic growth to the growth in labour productivity (GDP per hour worked). Italy, Portugal, Spain and EU-12 2009-2017. (percentage points and horizontal percentage).
Productivity per hour
worked
1
(=2+3+4+5)
TFP
2
Capital in intangible
assets per hour worked
3
Capital in tangible assets
per hour worked
4
Changes in the
composition of labour
5
2009-2016
Italy 0.51 0.24 0.02 0.05 0.20
Portugal 0.72 -0.61 0.02 -0.41 1.72
Spain 1.17 0.21 0.11 0.21 0.65
EU-12 0.96 1.18 0.07 -0.72 0.42
Note: EU-12: Austria, Belgium, Czech Republic, Germany, Denmark, Spain, Finland, France, Italy, Netherlands, Sweden and United Kingdom.
Source: EU KLEMS
• If Italy and Portugal had seen the same contribution from intangible assets as the EU, its productivity growth would
have been 8 basis points higher for Portugal, and 5 points higher for Italy
• Spain has suffered because it has failed to match its strong growth in tangible assets with parallel growth in intangibles
to compensate the initial backwardness, undermining the growth of TFP, which is a measure of efficiency

CONCLUSIONS
Although they are similar economies, Italy, Portugal and Spain have different
strengths and weaknesses. Their identification enables us to orient the policies
(public and private) financed with the Next Generation EU funds in the most
appropriate direction in order to emerge stronger from Covid-19.