- Assets: An economy's capital stock wealth is made up of different assets which present a great degree of heterogeneity both in their lifespan and in their capacity to provide capital services. Capital is therefore classified according to a disaggregation of assets, which are grouped according to similar features. This classification can be established on different levels. For example, two large aggregates can be considered -construction / machinery and equipment-. The disaggregation can go down to 6 types of assets -housing / public infrastructure / other constructions / transport equipment / information and communication technology (ICT) / machinery equipment material and other products-, or even be disaggregated into 18 assets.
In addition to constantly updating the database developed by the BBVA Foundation and the Ivie, nine assets are currently being evaluated, such as land value.
- Autonomous Community Funding: There are two types of Autonomous Community financing in Spain: the common system and the autonomous system (which respects the historical rights of certain territories). The common financing system came into effect in January 2002. It is particularly significant given that once the transfer process has taken place it will remain over time, as well as integrating most of the pre-existent financial systems. Among the characteristics of this system are stability, its integrating nature, and expansion of the principle of fiscal co-responsibility (partially transfer VAT and special taxes). In addition, supplementary allocations are included to guarantee that the provision of education and health services are similar in the various regional territories, as well as attributing the autonomous communities with greater legislative jurisdiction over some of the transferred taxes. It also intends to raise the visibility of the principle of solidarity by providing the different regions with an equivalent level of services.
The Ivie's work in this area of research analyses the current autonomous community financing system model. The study addresses issues such as the effect of population increase, and the advantages and disadvantages of this current model for the each region. It also explores how this financing model can influence the indebtedness of certain autonomous communities.
- Banking system: According to Spain's current legislation, a credit entity is any firm whose habitual activity is receiving funds from clients in the form of deposits, loans, temporary transfers of financial assets, and other forms which imply the obligation of their refund, and then invests these funds in their own account in the form of loans or similar operations. There are also firms different from those mentioned above, which emit electronic means of payment.
The Ivie has various research areas on banking systems in Spain, as well as on an international scale. Among the aspects analysed are the efficiency of banking entities, the link between globalization and the financial system, the level of competition and financial development, and their impact on economic growth.
- Competitiveness: The term competitiveness has two meanings. First, firms' competiveness determines whether they can survive in a given market by having lower production costs than those of their sector or by marketing different products. A broader sense of the term refers to the competitiveness of countries or regions. That is to say, the average productivity of workers, export capacity, indebtedness, and level of prices.
The BBVA Foundation-Ivie study Competividad, crecimiento y capitalización de las regiones españolas classifies regions according to their population's prosperity and well-being.
- Convergence: When inequality decreases over time in the income level of countries or regions it is known as the convergence process. Convergence analysis has become particularly relevant over the last few years with new tools contrasting the convergence process, such as absolute or conditioned β-convergence, being added to the old measurement tools, such as the study of income dispersion (σ-convergence). Results of the above mentioned analysis usually depend on the group of territories studied. When countries or regions of similar ranking or with similar institutions are examined, the results usually show clear convergence processes, where the territories which were poorer at the beginning of the period are those which grow more, decreasing the initial inequality. By contrast, when countries or regions with different conditions and institutions are compared, the results are not so conclusive: convergence is less obvious and at times there is divergence.
The study of the convergence process of Spain's regions is part of the volume Competividad, crecimiento y capitalización de las regiones españolas that was carried out within the BBVA Foundation-Ivie research programme.
- Dependent: Dependent is a recent term referring to the social recognition of one who requires permanent assistance in certain situations because of health problems. In some forums, it is considered the fourth developed area of the welfare state along with the existing ones (education, health and pensions).
The Ivie has carried out a study for the Cajas de Ahorros Foundation (FUNCAS) about disability in Spain. The study focuses on demographic aspects and the labour market (disabled persons of a working age and services for the disabled, among other aspects).
- Economic growth: Economic growth means the increase in goods and services over time (GDP) that a given territory is capable of producing. Although economic growth has traditionally been related to the process of accumulating both physical and human capital, other less tangible aspects such as social capital or the quality of institutions have recently been given special emphasis.
- Economic impact: The estimation of economic impact, which all types of activities or investments represent, measures the effect expenditure has on production, income and employment linked with the expenditure for this purpose. To calculate this impact the input-output methodology is used, which allows the increase in demand of sectors that develop projects (direct impact) to be quantified, as well as the effects this has on other sectors that, for example, have to buy more from their suppliers to meet their greater production needs (indirect impact). Also quantified is the multiplying effect which is caused by families (induced impacts). For example, when expenditure remunerates factors of primary production (work and capital), and generates income which later leads to an increase in consumption.
The Ivie has carried out numerous studies of this kind. It has estimated the economic impact of various sporting and cultural events, as well as that of public expenditure and investment (Valencia and Alicante airports, the State Infrastructure Program, the 32nd America's Cup, the City of Arts and Sciences, Ciudad de la Luz, and different universities.)
- Economic integration: Economic integration refers to the process of strengthening relations between economic areas, and abolishing barriers between territories so that the circulation of goods and services, capital and workers is possible. The more integrated various economies are, the greater the exchange between them will be and thus, the greater their foreign sector will be (the proportion of imports and exports regarding the total production of a country).
Within this area of research, the Ivie is developing indicators which will allow international economic integration to be measured.
- Efficiency of the banking sector: Banking efficiency is the capacity that entities have to obtain the highest level of production given a certain level of productive factors. In other words, to reduce the level of essential costs to achieve a certain level of production.
The Ivie's research in this area quantifies the efficiency of the banking sector by using different techniques (parametric and non-parametric).
- Financial integration: The ECB defines a financial market as being fully integrated when it is subject to a single set of rules, has access to the same instruments and financial services, and all participants are treated equally when they operate in the market, regardless of their country of origin. In recent years, European financial markets have undergone intense changes such as the implementation of the First and Second Banking Directive, the introduction of the Euro, and the measures included in the Financial Services Action Plan (FSAP) by the European Commission. In the broadest sense, these measures aim to increase the level of financial markets integration in Europe. The intention being that, by means of integration, competition will increase in markets and efficiency will improve in the financial intermediation process. These objectives set out to strengthen the key role of financial intermediaries in the economy, which is to favour the efficient connection between savings and investment in a way which fosters economic growth. The Ivie has developed a system of indicators which allows the advance of financial markets in Europe to be valuated, with an analysis of Spain's financial system in a European context. The Observatory of Financial Integration in Europe has constructed a system of integration, competition and efficiency indicators to valuate the advance of financial integration in Europe. The latest results in the research area on integration have analyzed the Spanish banking sector in an international context, its recent evolution and future challenges.
- Globalization: Globalization is a worldwide process of economic and cultural integration. The level of economic integration varies depending on the area and the market considered. Currently, the most integrated markets are financial and capital ones. The goods market is generally at an intermediate level of integration, where free trade coexists with different barriers to exportation and importation. The services market is on another scale, as up until the arrival of ICT some services had not been able to trade outside the territory where they were produced. Finally, although internal integration is complete in economic areas such as the European Union, in the rest of the world there are still barriers in the labour market. The freedom that people and workers have to move is limited (particularly between under-developed and developed countries), and this causes integration to be much lower in this aspect.
- Gross domestic product: Gross Domestic Product (GDP) is the total value of the goods and services produced in a territory over a given period. It is the macroeconomic dimension most widely used to measure an economy's productive capacity. It is different from Gross National Product (GNP) in that it takes into account the goods and services produced in a given territory, regardless of the nationality of those which produce the goods and services.
Nominal GDP refers to the current prices of each product in a period of time. In contrast, real GDP corrects for the effect of changes in prices, thus making comparisons between different periods homogeneous. In general, economic growth refers to real GDP growth.
- Gross Domestic Product per capita: The Gross Domestic Product per capita (GDP pc) in a given territory over a period of time is obtained by dividing the territory's GDP between its population. As an indicator it is more suitable than GDP to measure income level as it takes into account population size. The GDP pc therefore provides a good estimation of the average citizen's income in a given territory. In order to compare different countries' income, GDP pc is usually weighted by Purchasing Power Parity (GDP pc PPP), which adjusts the indicator according to the differences found between countries in the price level of goods and services.
GDP pc does not take into account inequality in income distribution. To have a more complete picture of the population's well-being as a whole, the data above should be complimented with income inequality analysis and indicators of the access to basic services, such as education and health.
- Human capital: Human capital is a set of productive skills that an individual acquires by accumulating knowledge. In order to estimate its value, indicators are used on the knowledge acquired (level of studies, average years of study) or the salary paid by the firm for the services of each worker (salaries throughout one's working life).
The Ivie and Bancaja Foundation human capital project has developed databases with human capital measurements, as well as different research on the link between economic growth and regional development, labour transition and welfare. The latest studies analyze how the human capital available in Spain's labour market is used, the benefits obtained from it and the relation between human capital and the activities of entrepreneurs in Spain.
The Human Capital database provides a wealth of information on the evolution of the Spanish population's level of education.
- Income inequality: Income inequality indexes measure the inequality in the distribution of available income per person in a given territory. Although a country or region's Gross Domestic Product per capita (GDP pc) provides a general picture of its citizens' living standard, it is clear that two territories with identical GDP pc but with a very different distribution of income will not offer the same welfare to all its citizens. In countries or regions where income distribution is more uniform, there are greater equal opportunities and chances of social mobility, with the population as a whole participating to a greater degree in the income produced. Some of the most frequently used indexes to calculate income inequality are Lorenz, Gini and Theil.
One of the Ivie's areas of work is to measure inequality and study its properties and relation with well-being indexes. The objective is to generate improvements in the measurements used and apply these measurements to characterize various types of inequality. On the basis of these data the cohesion problems in Spain as well as on an international scale are analyzed.
The Ivie has built a database within the project sponsored by the Caixa Galicia Foundation on the evolution of the inequality of personal income distribution in the various autonomous communities. The database currently covers the period 1973-74 until 2005, with annual intervals from 1998 to 2005. Among the data provided is in-depth information on the autonomous communities regarding their total expenditure per person and per household according to the social class or studies of the main breadwinner. Various inequality indexes by autonomous community are also included.
- Input-output tables: Input-output tables are a statistical tools which breakdown the production in a given territory, depicting how the output of one industry goes to another industry. Input-output tables show each productive sector's total output and the destination of this product, differentiating between the proportion destined for final consumption and the proportion used as input (resources) by the remaining economic sectors. The input-output tables therefore provide a complete picture of the supplies used by each sector and the sector which produced them, and the corresponding primary inputs (capital and work).
- Intangibles: The majority of developed countries have recognized the importance of intangible assets as a source of growth. The most accepted classification of intangible capital includes: information stored in digital databases and software; the value of innovation, research and development, design and advertising and brand value; and the improvements in economic competencies within a firm as a result of investing in the training of employees, and organizational improvements introduced by firm managers.
The Ivie coordinates the SPINTAN European project (2013-2016), promoted and funded by the European Union within the Seventh Framework Programme, which aims to analyze the impact of public intangible policies on innovation, well-being and “smart” growth (including education, R&D and innovation, and the construction of a digital society).
Also, the Ivie has developed for the Fundación Telefónica the forthcoming report Activos intangibles: Una inversión necesaria para el crecimiento económico en España which measures for the first time the value of intangible assets in Spain for 24 sectors.
- Interest rate: The interest rate indicates the price that a borrower (be it an individual, a firm or a public entity) will have to pay over a given period of time in order to have an amount of money at their disposal. There are a multitude of interest rates in the economy for public debt, public entity loans, interbank markets, etc. For example, the European Central Bank (ECB) establishes its intervention interest rate in public tenders with banks to set its monetary policy guidelines. Loans between bank entities (interbank market) for different maturities are other significant interest rates. The most well-known of these interbank interest rates is the one-year-Euribor (Euro Interbank Offered Rate), the interest that financial entities charge to lend money to another bank for the period of one year. For the interbank market there are other maturities, for example, the Eonia is an equivalent rate for a day.
- Investment: The production of a territory can be used either for consumption or investment. Consumption is the part of production destined to satisfy the needs of the population, while investment is devoted to improving the capacity of future production. It is made up of the production of long- term, tangible or intangible goods dedicated to forming capital. An economy's investor effort is the percentage of production used for investment.
- Labour force, unemployment and employment rates: The labour force of a territory is made up of everyone who is of a working age (between 16 and 64), and available for work. The labour force rate measures the proportion of the above mentioned population regarding the total amount of people of a working age. The unemployment rate measures the proportion of people from the labour force without work. The employment rate measures the percentage of employed people regarding the total labour force.
- Labour transition: Overqualified young people at work, labour flexibility and its profiles are some of the key factors which influence the degree of labour transition.
As part of the Bancaja Foundation-Ivie Human Capital project, the Observatory of the Transition of Young people to the Labour Market database has been created. The fifth survey in the study was presented in 2009 along with the study Análisis de la sobrecualificación y la flexibilidad laboral. The results are provided in the Human Capital series of notes.
- Migration: Migration means the displacement of a significant group of the population from their place or country of residence to another. Intense migration processes are usually in accordance with social, political or economic situations. That is to say, when a given territory offers opportunities which are clearly superior to that of another, a migration process from the latter to the previous usually takes place.
- Migratory balance: When migration happens within the same territory, this process is known as internal migration. The total migratory balance of a given region is determined by the internal migratory balance (immigrants from other regions less those emigrating to other regions), plus the external migratory balance (immigrants from abroad less those emigrating abroad).
The Ivie develops the Migration in the Valencia Region database annually for the CeiMigra Foundation. The aim of this extensive database is to provide a holistic perspective of the migration phenomenon, while facilitating access to statistical material. A series of documents analyzing the data Immigration at a glance was published until 2008. The access that foreigners have to employment, and family re-grouping are some of the themes analyzed in this project.
- Natural growth: Natural growth of a territory measures the changes that its population undergoes as a consequence of births and death. Developing countries or regions usually experience positive and high growth, with birth rates being much higher than mortality rates. By contrast, natural growth rates are frequently much lower and even negative in developed countries, caused by the fall in birth rates and the increase in mortality rates due to the population aging being higher.
- Productivity: Labour productivity is the value added produced by each hour of work. The total-factor productivity (TFP) measures the link between value added and the total of capital and employed work. There is a direct connection between productivity and economic well-being, as an economy's productivity has positive repercussions on workers' wages.
The Ivie participates in the EU KLEMS project, whose purpose is to analyze productivity in the European Union (EU-25), the United States, Japan, South Korea and Australia. The project is part of the European Commission's 6th Framework Programme, with 18 research institutions having worked on it. A database has been created within the project containing information on productivity, economic growth, employment creation, capital formation and technological changes in the productive sectors of the 30 countries analyzed.
This database is a useful tool for evaluating public policies, and in particular for monitoring the targets of productivity and economic growth proposed at the Lisbon Strategy and the Consejo of Barcelona. The WORLD KLEMS project is currently being set in motion. It aims to expand its coverage to Latin America (LA KLEMS), and Asia (ASIA KLEMS) in a relatively short time span. LA KLEMS counts on the participation of the four largest countries in that area: Mexico, Brazil, Argentina and Chile. China and India are present in ASIA KLEMS, as well as Japan and South Korea which have previously intervened as observers. Russia has also shown an interest in participating in a future WORLD KLEMS.
- Quality of life indicators: GDP per capita is the most relevant indicator to measure the economic well-being of a given territory. This information, however, does not give us the full picture of global well-being, which depends as much on income per capita as it does on its distribution. There are also other key factors, such as access to basic services and other areas which are not commercialized and/or are difficult to measure (climate, safety, etc). The UNO Human Development Index and the Quality of Life Index developed by The Economist are some of the important indexes to measure the quality of life.
The Ivie has developed an indicator of human development for regions in Spain within its collaboration projects with Bancaja Foundation.
- Sectors and branches of the economy: Production in an economy is made up heterogeneous goods and services. For this reason, disaggregation of the total production in various sectors and branches is common. The basic sectorial classification (agriculture and fishery, industry, energy, construction, and services) is also insufficient for a detailed analysis. The National Classification of Economic Activities (NCEA) differentiates between 94 basic branches, each one of which is susceptible to disaggregation.
- Social capital: The term social capital refers to the importance of social relationships, cooperation and trust for different social and economic results. The level of trust obtained in social and economic relationships is an asset which reduces transaction costs, improves efficiency and increases work productivity and other productive assets, such as physical and human capital.
Over the last few years, the BBVA Foundation and the Ivie have conducted research into the role trust plays in obtaining high levels of economic efficiency. A methodology has been developed to measure social capital and a data bank has been built to study its effect on growth over the last few decades in OECD countries, and in Spain's autonomous communities and regions. The importance of social capital in the banking sector is also explored in a study on relationship banking. This type of banking is characterized by long-term relationships between banking entities and their customers, where trust plays a very significant role. Trust as a multi-dimensional concept has also been analyzed: direct trust between people, and trust in institutions and professions, as well as its impact on certain areas such as economic life, mutual help and public safety.
- Stock or capital wealth: An economy's physical capital stock is made up of a set of assets which have been accumulated through investment. Capital accumulation is crucial for an economy as improvements in production, income per person and productivity all depend on it. The data on an economy's available capital endowments show the main features of this investment process and the structure of capital accumulated.
Capital stock and the services which come from it have been estimated in the BBVA Foundation-Ivie research programme, providing regional and provincial detail, by assets. The database El stock y los servicios del capital en España y su distribución territorial was updated in December 2010, with data on more than four decades of accumulated capital. Currently, the database covers the period 1964-2009 and provides data by autonomous region and province until 2008.
The presentation of the database Series históricas de capital público en España y su distribución territorial (1900-2005) was held in June 2009. The database includes information on the public sector's investment strategy and is detailed according to autonomous community and province, as well as examining functions such as infrastructures, health, and education.
The database Capital stock in housing in Spain and its territorial distribution (1990-2007) includes the capital stock in housing series for the period 1990-2007. Presented in October 2009, the data bank provides information on the value of housing and its prices according to autonomous community, province, municipality size and location in relation to the coast. In addition, land value has also been added, thus completing the calculations of residential capital, which until now had only provided the value of residential buildings.
- Stock or productive capital: Productive capital stock differs from capital wealth in that it takes into account the ability that various types of assets have to generate capital services. It is therefore an indicator which is more relevant than capital wealth in the study of the processes which generate income and the sources of growth.
- University funding: Universities are key institutions in our current society because of the fundamental role they play producing and disseminating knowledge through education, research and collaboration with firms in activities of technological development and innovation.
The Ivie has done numerous studies on university funding, and the socioeconomic contribution made by these institutions specialized in the production and transmission of knowledge. In addition to identifying their contribution, the objective is also to evaluate the resources which are used and measure the impact that their activities have on society and growth.
- Wage inequality: Differences in education, the sector of employment, age, gender or nationality can all determine an individual's wage. And therefore wage inequality among inhabitants of a given territory can be caused by different factors.
The Ivie has carried out research on equal opportunities and gender discrimination in its line of study on capitalization, growth and welfare. Within its research area on immigration, studies have been undertaken on the wage discrimination suffered by immigrants.