The Sources of Economic Growth in the Basque Country, Navarre and Spain during the period 1986-2004

This paper studies the sources of economic growth in the Basque Country and its three historic territories (Araba,Bizkaia, and Gipuzkoa), Navarre, and Spain during 1986-2004, emphasizing the role of infrastructures andInformation and Communication Technologies (ICT) on growth, and comparing the results with those of the EU andthe US. Labor and capital were the main engines of output growth during 1986-2004. The growth in TFP was residualand even declining in the period 1995-2004 due to the increasing contribution of labor. The performance in the mostrecent period 2000-2004 is even gloomier due to the negative growth rates of TFP. Those results contrast with thepattern for the US specially, where growth in TFP remained substantial. Infrastructures contributed to around 0,10% ofoutput growth. The contribution of ICT capital to output growth in the Spanish territories was around 0,35% and itincreased in the period 1995-2004, but it declined substantially in the most recent period 2000-2004. It is still far fromthe levels for the EU and specially the US. The growth rate of output per hour was below that for the EU or the US inthe period 1986-2004, specially in the Basque Country. Growth in capital intensity was the main source of growth.While the contribution of infrastructures to the growth rate of output per hour declined in the period 1995-2004, that ofICT capital increased. In contrast, ICT contributed less to the growth rate of output per hour in the most recent period2000-2004. The contribution of ICT capital to the growth rate of output per hour remains behind that for the EU andthe US