The weight of trade and the low technological intensity of the industry limit the response of the economy to Covid

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He strong weight of trade and low technological intensity of the industry of the Valencian Community limit the response of the region’s economy to Covid-19, according to the latest report of the Observatory on Government, Strategy and Competitiveness of Companies (GECE), promoted by Bankia and the Valencian Institute of Economic Research (Ivie), in which the capacity of the Spanish regions is analyzed and compared waves to resist the economic crisis generated by the coronavirus.

The Valencian Community is “strongly” conditioned by a deficit of highly competitive companies, with 1.7% less than the national average, which represents “a gap that shows no signs of going back”, according to the study.

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The highly competitive companies in the region, moreover, are strongly concentrated in the commerce sector, one of the most affected by the restrictions imposed by Covid-19 and do not stand out in sectors that are intensive in technology and knowledge .

In addition, the weight of wealth generated and employment produced by these companies, which are the most resilient to difficult economic situations, has fallen three percentage points in the last five years at the national level, but in the Community Valenciana, this decline has been “much more pronounced”, with 7.4 points less in value added and 5.5 points less in employment.

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The Ivie researcher and professor at the Universitat de ValÚncia who directed the report, Alejandro will write has indicated that “the crisis caused by Covid-19 is a great challenge that has highlighted the strengths and weaknesses of companies in each region.”

Change of model

“In the case of the Valencian economy, relative scarcity of highly competitive firms, the strong weight of trade (partially offset by the strength of the agri-food trade), the low technological and knowledge intensity, and the insufficient business size They are pending subjects that weigh down the response capacity. These weaknesses have persisted for years, and this crisis constitutes a new opportunity to confront decisively a change of sectoral model and to bet on business growth “, Escribá stressed.

The report collects that the autonomous communities that have a higher percentage of companies with high levels of competitiveness and that, in addition, have a diversified business fabric and with companies of greater size and technological intensity are the ones that can best respond to the Covid-19 crisis.

The rest of Spain

In Spain, seven regions are above the average in terms of the percentage of highly competitive companies. The Canary Islands stand out, with 11.3% more competitive firms, followed by Navarra, Baleares, PaÃs Vasco, La Rioja, Catalonia and Madrid.

In the whole of Spain, Navarra and the Basque Country, these are the communities in a more favorable position to face the current situation, since, on the one hand, they are among the regions with the highest percentage of highly competitive companies (8 , 3% and 5.9% above the average, respectively), and on the other hand, these highly competitive companies have a diversified sectoral specialization, with a strong weight of technology and knowledge.

At an intermediate point to face the crisis are Madrid and Catalonia, with global levels of business competitiveness slightly above the average. In addition, its most competitive companies also belong to sectors with high knowledge intensity or high technology intensity industries.

On the contrary, the Canary Islands and the Balearic Islands stand out for having a percentage of companies classified as highly competitive, much higher than the average (11.3% and 7.2% more, respectively). However, these companies are strongly concentrated in the tourism sector, with the hotel industry as the main generator of added value. This specialization places them in a more fragile position in the face of mobility restrictions and activity limitations imposed by the pandemic.

In this case, the short-term impact of Covid-19 will be more intenseBut if the crisis is not prolonged excessively, many companies are well positioned to resist and recover their activity when the health alarm is resolved.

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