An article appeared in Eleconomista.es, under the headline,’ Spain overtakes Japan in GDP per capita’, about the amazing success of the Spanish economy. But underlying this is a significant shift in the global economy – from goods to services.
The growing consumer preference for services in much of the world is generating the situation in which traditionally manufacturing economies, which are highly intensive in capital, technology, and investment (eg Japan, South Korea, Germany) are struggling, whereas countries where services represent a larger share of GDP are beginning to take off. Not only are goods no longer so fashionable, but China is able to do produce them at half the price of more established manufacturing economies.
So much of the Spain/Japan comparison relates to the very poor performance of the Japanese economy over the last decade. Alongside a lack of economic growth, there is rising inflation, turbulence in what was once a model debt market, an aging population, and a productive structure controlled by giant conglomerates, as well as the slowdown in international trade in goods.
Meanwhile, Spain’s service-intensive economy, has managed to grow fairly strongly in recent years. In 2012, according to the article, the difference in GDP per capita between the two countries was $21,000, with Japan the higher. 12 years later, Spain has a GDP per capita at current prices exceeding $35,000, while in Japan the figure is $33,000.
The bigger picture is summed up by the World Trade Organization: “The contribution of services to economies around the world has increased significantly over time. The share of the services sector in global GDP rose from 53% to 67% between 1970 and the present.” In Spain, the share has reached some 70% and the country has entered the top 12 of the world’s largest economies this year.
Read the story, in Spanish, here.