Spain is still immerse in an economic recession due to the financial bubble created by the construction sector. In all the years previous to the crisis, growth was based on industrial and services sectors, rather than knowledge-intensive activities. It has long been argued by economists that innovation activities are the true force behind the knowledge economy, leading to growth. In this sense, Spain has largely overlooked the positive economic implications of technology transfer in pursuing innovation. With a productive basic research system (strong given the low financial efforts) Spain has ignored incentivising the private sector to use scientific results in favour of industrial activity, driving the country to the current hardships. In addition, austerity measures imposed by the EU enlarge the effort gap in R&D between European central and peripheral countries. In line with the work of M. Mazzucatto (2014) this work highlights the importance of the active role of the State in innovation, and argues why building a system of innovation rather than just investing or divesting on it is what ensures efficient technology transfer and co-innovation that leads to sustainable (and sustained) growth. Despite following European Commission guidelines and Strategies, this thesis identifies a lack of strategic vision in innovation in Spain as a problem that leads to poor design of taxation, lack of governance, low attractiveness to researchers and innovators and low knowledge intensity.

Innovation is not a straightforward process that whose output is directly proportional to the resources devoted to its development. In order to generate innovative growth, it is necessary to understand that there are a myriad of processes and stakeholders which are inter-connected and without the adequate linking activities, greater inputs will not signify higher returns. We have, however, analysed the relation between technology developments and growth and established a correlation in the first section of this chapter. It has also been shown how productivity is affected by the introduction of the newest developments, and how it contributes to growth. There is a need to connect the public and private sectors and accompany the process of innovation and technology transfer to foster productivity growth. The system of innovation must act as a single entity.

By analysing the current situation and benchmarking Spain’s developments with other European countries, Korea and the US, we have observed how only by developing functional basic research, the human capital devoted to the industry does not bring a competitive advantage nor a productivity increase. Financial benefits to investors, such as VC tax benefits and weakened regulations, which improve the attractiveness, do not necessarily bring innovative activity either. There is evidence (Massey, Quintas, & Wield, 1992), however, showing that, in order to increase chances of technological growth, it is properly run science parks and technology research clusters that do the trick not because of the intensity but due to the geographical allocation of resources. The current technological activity, productivity and growth shown above, are in concordance. Germany leads innovation, growth and technology transfer while having the most lucrative research hub in one of the productive areas in Europe, the Rhine Valley.

Spain has a clear lack of human capital productivity, probably doomed by the predominant industry sectors, but also by a lack of governance and clear ideas on how to stimulate innovators. We could argue the economic effort should be improved, but evidence shows that the basic science output, designed by an old but well-thought law (Ley, 2013) that created the biggest research institutes in Spain, back in the 80’s (CSIC, CDTI) generates a high-quality output, even when underfunded. At this point, it seems that, as supported by Mazzucato (2014), the idea of an administration that has an active role in innovation is more than valid. Despite this all, lack of governance could be the underlying problem.

Innovation Union Scoreboard

The Innovation Union is an initiative from the European Commission in order to evaluate the performance in innovation benchmarked by the EU 2020 Agenda. Its 2015 annual report from ranked Spain as a “Moderate Innovator” . Their assessment of the current innovation status of Spain places it far below the European Average, and the report mentions Spain as the country with the biggest decline on the index since 2007 along with Romania. The IUS measures the countries innovation based on three areas of indicators : Enablers, Firms activities and Outputs, similarly to the previous analysis, and it includes CIS surveys as well as economic data to benchmark each country. Spain is performs at a close level to the EU members in human resources and research systems, but the business-related activities rank the innovative activity far below the average performance (Hollanders, Es-Sadki, & Kanerva, 2015).

WIPO

The WIPO Global Innovation Index of 2015 placed Spain in the 27th position, right between other two European countries not comparable to Spain in size nor resources such as Malta (26th) and Slovenia (28th). The Index compiles a set of indicators that measure the performance of (1) Institutions, (2) Human Capital and Research, (3) Infrastructure, (4) Market Sophistication, (5) Business Sophistication, (6) Knowledge & Technology outputs and (7) Creative Outputs. Spain’s performance excels in Infrastructure (9th) and Market sophistication (10th) as well as in sub-indicators in Research and Outputs, such as tertiary education enrolment (8th) and citable documents index (12th). However, and once again, the Business Sophistication subset of indicators includes the worst in Innovation Linkages (87th), Knowledge absorption (79th) and Growth Rate as a Knowledge impact (58th) (WIPO, 2015). This yields similar conclusions to the ones previously attained: Spain’s innovation performance is due to poor technology transfer and global systems of innovation governance despite favourable public research