Many observers view the large external current account deficit in Spain as a symptom of declining competitiveness. To check this hypothesis, this paper examines several indicators commonly used to evaluate external competitiveness. The first of them is the export quota in the world, which has declined in the 2000s, reversing a long term upward trend. Nevertheless, this decline has not been as significant as the one experienced by the EU-15 as a whole. Secondly, the paper assesses the price competitiveness of Spanish exports, which has deteriorated significantly as a result of the inflation differential with our main trading partners, low productivity growth and, more recently, the strengthening of the euro. Finally, the paper examines the technology content of exports and finds an important improvement in the case of services; in the case of goods, however, the technology content has remained at a medium-low level, which seems to suggest certain competitiveness problems. In short, Spain seems to have lost some external competitiveness over the last few years, although the analysis also reveals some areas of strength, specially in services exports. Improving competitiveness would require accelerating productivity growth, reducing the inflation differential; and establishing a business environment more conducive to innovation.
 

JEL Codes: F14, F10, 039

Keywords: Competitiveness, export quota, technology content

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