“crisis” and Crisis

José María O´Kean. Professor. IE Business School

11 September 2008

Except for the odd diehard, nobody is denying that we are facing a credit crisis that is affecting the mainstream economy. The question is: Where do we go from here?

In the end, Zapatero condescended to say the dreaded word. I think it was rather hasty of him. During his tie-wearing stage at the President´s Office, Miguel Sebastián probably taught him that an economic "crisis" occurs when the quarterly growth figures for the GDP are negative for two quarters in a row; this can happen, but it hasn´t so far. The Spanish economy is not yet immersed in a “crisis”, but it is immersed in a serious "Crisis" with a capital C. Because a Crisis occurs when an economy that was growing in a certain way, with a model, as we say today, suddenly has to change as a result of events. This happened in the 1970s, when energy was cheap; and it is happening now, especially to us, with an oversized construction sector and financial restrictions that affect the expansion we have enjoyed during these golden years: the State has not been the one to get itself in debt to boost demand, but rather families and companies that have lived on credit.

On Tuesday, listening to Miguel Sebastián, now without his tie, during the breakfasts of the Network Society Forum in the presence of a large group of entrepreneurs and financiers, the Minister spelled out his ministry´s policies and the actions that are to be taken to counter the Crisis; since, when all is said and done, the ministry is responsible for laying down the rules on how money can be earned in the Spanish economy. Besides the messages on "digital enlightenment" and the odd clue on mobile telephony and the energy policy, he said that he did not like the "shutdown" idea at all and he pointed to what he sees as a way out of the Crisis: we are going to offset the failing construction sector, which has a direct and induced weight of 15% of the GDP (his words), by boosting the tourist sector and providing support for exports. It was disappointing, but logical. The balance of the balance of payments current account needs an impossible adjustment since the trade policy depends on Brussels. Increasing exports is the only option available. And tourism is a sector with a good number of factors in our economy’s favour and it is capable of offering employment without any particular training in technology, which will play a big role in the increase in unemployment waiting for us around the corner. "Exports and tourism"... It was like going back in time. 40 or 50 years back in time. All this effort only to discover that our future is stuck in the same old rut.

I sincerely hoped that, after the digital revolution and the gap between the Spanish economy and the consequent vision of how to do and understand business, the policy on technology would go further than cheap connections, subsidies for innovation projects and the creation of a commission for the deployment of the fibre-optic network. It is true that changing the productive fabric by assuming the challenge of technology is a mid-term concept and that tourism and exports may help alleviate the crisis immediately, but I think that we are moving from one low-productivity model to another and, really, in today´s world we will not improve competitiveness or reduce the foreign trade deficit without increasing the value of what we produce. And that is productivity: value created by factor unity. And that is what information systems provide in the new strategic vision of the value chain of business.

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