The Competitiveness of the Spanish Economy -- A Bird's-eye View on the Four Largest Euro Area Economies

The competitiveness of the Spanish economy has displayed an ambivalent evolution since 1999: its price-cost competitiveness has deteriorated and its external competitiveness has improved. This paper provides a bird's-eye view of several facts that may help explain this ambivalence, some quite idiosyncratic to Spain and some likely to be of more general relevance. In particular, we argue that the dual evolution of Spanish competitiveness is better understood if microeconomic elements, like firm size and product quality upgrading, are taken on board to accompany traditional macro indicators of competitiveness. The paper also addresses the policy implications of these findings, stressing the importance of structural economic policy reforms that have direct impact on firms' demography.