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Technological Analysis of Spain

Paper Type: Free Essay Subject: Business Strategy
Wordcount: 1334 words Published: 26th Sep 2017

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Technological analysis

Spain has been slow to adopt technological advancements compared to the other European countries, even though Spain performs well in knowledge creation, the innovation climate in Spain has not been ready. The situation has occurred because of the larger role of the public sector with respect to R&D development. The private sector has limited participation in enhancing R&D levels in the country. Spain need to unified R&D policy across regions as the autonomy of regional governments with respect to the R&D policy which led to lack of innovative practices. The increase in the number of authorities and the diversity of funding programs in Spain has increased the innovative system. However, the level of coordination among different levels must improve.

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Spain ranks 16th on the European innovation index in a list of 27 nations. Spain total expenditure on R&D as a percentage of GDP stood at around 1.2 percent in 2007 to 2008. Spain has set a target to reach the R&D expenditure level of 2% of GDP by 2010, which is well below the 3% target fixed by Lisbon agreement for the European nations. It is expected that Spain government under the program of INGENIO 2010 will help in raising the private sector expenditure on R&D to 55% of total investment by 2010, as well as improving the overall innovation climate of Spain. Spain government has initiated measures to address the expected in innovation by revamping introducing new technologies and the educational system. The lack of innovation and entrepreneurship has emerged because of a low percentage of SMEs getting involved in innovation and co-operation, along with the low participation of the private sector and venture capitalists. Below show the analysis of Spain’s technology landscape according to Datamonitor.

Analysis of Spain’s technology landscape

Current strengths

Current challenges

  • Well-developed ICT sector
  • Well-developed infrastructure
  • Gross expenditure on R&D remains low
  • Involvement of the private sector

Future prospects

Future risks

  • Government policies promoting R&D
  • Significant opportunities in energy and ICT sectors
  • Lack of innovation and low number of patents

Current strengths

Well-developed ICT sector

Spain has a strong communications equipment market. The Spanish communications equipment market generated total among of revenues of $521.2 billion in 2008, it representing a compound annual growth rate (CAGR) of 9.7 percent for the period spanning 2004 to 2008. In 2013, the Spanish communications equipment market is forecast to have a value of $577 million, an increase of 10.7 percent since 2008. Electricals and electronics retailers proved the most cost-effective distributors for the Spanish communications equipment market in 2008, generating total among of revenues of $249.8 million, equivalent to 47.9 percent of the market’s overall value. The country’s strong communication equipment market is expected to post positive growth rates in the medium term.

Well-developed infrastructure

Spain has a well-developed infrastructure to facilitate development of technology-intensive industries. Besides, the railways system is one of the best in Western Europe. Base on the Datamonitor, in 2008, the Spanish railway system covered 15,288 km, and 8,847 km of the area which were electrified. Air and water transport are also well developed with around 55 state-owned general interest ports and 58 commercial airports.

Current challenges

Gross expenditure on R&D remains low

Spain total expenditure on R&D (as a percentage of GDP) stood at 1.2 percent in 2007, which is much less than that of other developed nations. In comparison, France’s expenditure was 2.13 percent of the GDP, 3.18 percent in Japan, 2.68 percent for the US, and 1.8 percent for Canada during the same year. The low expenditure on R&D has restricted related some activities in Spain. With the increase in the Spanish access to the European technology fund and innovation budget which aims at meeting the financing needs of research, the development and innovation of enterprises, it will be an improvement in the funding of R&D activities.

Involvement of the private sector

The R&D activities in Spain have been led by the public sector and with a little involvement from the private sector. The lack of innovation and entrepreneurship has emerged because of a low percentage of SMEs getting involved in cooperation, innovation, and the low participation of venture capitalists and the private sector. The government focused on more of the technological expansion of existing large firms rather than early stage investments for startups.

Future prospects

Government policies promoting R&D

Base on the Datamonitor, Spain government has taken several initiatives, which include the adoption of liberal policies to promote R&D activity in Spain country, and it has drawn up a new legislative framework for R&D. It has been taking measures to expand the R&D infrastructure and to improve the operations of all agencies involved in the system. Spain government has set a target to increase the R&D expenditure (as a percentage of GDP) to 2 percent by the end of 2010, from 1.2 percent in 2007. The private sector of Spain contribution to R&D expenditure is expected to be 55 percent of total expenditure by 2010.

Significant opportunities in energy and ICT sector

Spain presented significant opportunities in the ICT and emerging sectors of energy. The process of liberalization of the energy market was started in 1998 and by 2003 it brought major changes to the electricity sector and consumers were allowed to purchase power freely in the open market. Spain government has shifted its focus to renewable energy under the Promotion of Renewable Energy plan (2005 to 2010). Spain government also approved the Action Plan for the Spanish Strategy of Energy Efficiency to increase investment in renewable energy technology. Spain has achieved its 29.4 percent target for renewable energy in 2009, even though the target was set for 2010 by the European. Spain government’s energy plans include greater reliance on hydroelectricity and wind energy. In the telecoms segment, a number of IT sub sectors have been opened to private players. Mobile telephony, broadband services and broadcast equipment (such as Wi-Fi) are the growing segments, as the sector is being gradually opened up for competition.

Future risks

Lack of innovation and low number of patents

The low level of innovation in Spain is influenced by the low number of patents registered. Although the number of patents is increasing, it is still far behind the levels compare with other European nations. It compares poorly to some European and developed countries, as show in the table below. A continuation of the trend is likely to hamper the scientific prospects of the country. Spain was ranked 16th according to the European Innovation Scoreboard (EIS) 2008 among the list of 27 European countries. The private sector R&D expenditure lags behind the European average by 45 percent and the rate of patenting is below the European average by 20 percent.


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