Spain’s global position in terms of innovation and digitalisation Now let me give you some figures on Spain’s relative position in terms of innovation and digitalisation. According to Eurostat10, R&D expenditure as a percentage of GDP stood at 2% in the EU in 2017, below the target of 3% of GDP set at “Europe 2020 strategy” and also below US levels (2.8%). Spain’s investment in R&D was lower than the EU average. It only accounted for 1.2% of its GDP in 2017 despite having been growing for the previous three years. According to COTEC11, Spanish companies fund the majority of their investment in R&D, around two thirds, with internally generated resources. Regarding external funding sources, venture capital and private equity are the most relevant ones. Another key element for innovation is the supply of human capital, i.e., the availability of high-skilled workers such as researchers. In this dimension, there is also an important gap between Spain and the EU average. In particular, according to Eurostat12, in 2017 Spain had 0.27 researchers per 100 employees in the private sector, while the EU average was 0.45. Regarding digitalisation, Spain is gradually improving its global position. According to the Digital Economy and Society Index, published by the European Commission13, that tracks the evolution of EU member states in digital competitiveness, Spain ranks 11th among the 28 countries of the European Union. The index comprises five indicators: connectivity, human capital, use of Internet services, integration of digital technology and digital public services.

In this regard it is worth mentioning the activities of the Instituto de Crédito Oficial (ICO) in Spain as a key provider of venture capital, either directly or indirectly, through FOND-ICO Global, a “fund of funds” whose goal is to promote the creation of private venture capital funds that invest in Spanish companies. At the European level, the European Investment 6  For recent evidence in the euro aera, see ECB (2018): “Investment in intangible assets in the euro area”. ECB Economic Bulletin, Issue 7/2018 7 C. Corrado, J. Haskel, C., Jona-Lasino and M. Iomni (2018), “Intangible investment in the EU and US before and since the Great Recession and its contribution to productivity growth”, Journal of Infrastructure, Policy and Development, Volume 2 Issue 1. 8 Cotec Foundation for Innovation-Ivie (Instituto Valenciano de Investigaciones Económicas). Intangible assets: database for Spain and its autonomous communities (1995-2014). April 2017. Database available at: http://informecotec.es/activos-intangibles/. 9  Brown, J. R., Fazzari, S. M. and B. C. Petersen (2009): “Financing Innovation and Growth: Cash Flow, External Equity, and the 1990x R&D Boom”, The Journal of Finance, Vol. LXIV, No. 1 4/6  Bank Group also supports innovation through different instruments such as guarantees, SME loan securitisation and venture capital. The public sector can also play a relevant role in supporting innovation through the education system since a key element of innovation is the supply of high-skilled workers. An improvement of the quality and functioning of the education system can therefore have a positive contribution to innovation.