87 %. expressed in euro, spain ’ s per capita income would now be €28, 000 per year, or €2, 000 more than the observed value ( 8 % in percentage terms ). and if the tfp had grown at a rate of 2 %, in line with the world technological frontier, the annual income of the average spanish citizen would be nearly €40, 000, or more than €1, 000 extra each month. there are two intimately related factors which would at least partly explain why productivity has behaved less dynamically in spain than in other euro area economies in the past two decades. the first is that the spanish business sector consists to a larger extent of small, less productive firms ; the second is that the inefficiency of the resource allocation mechanisms facilitates the survival and growth of less productive firms. the determinants of these two factors are many and diverse. allow me to focus on three particularly important ones in which the spanish economy is in a worryingly poorer position than our european partners : human capital, technological capital and the financing of innovation. according to the available evidence, the presence of human and technological capital shortfalls is the main reason for the low productivity of spanish firms. 3 and the difficulty in obtaining finance for highly productive business projects has shown itself to be a determinant of the inefficient allocation of resources to firms. 4 the need to correct the human and technological capital shortfalls is particularly urgent when viewed in the current context of technological change. the advances in digitalisation, automation and technological development are altering certain crucial aspects of the economy, such as consumption patterns, production processes or the provision of public and private services. thus, for example, the spread of new technologies has allowed the financial sector to provide services in more flexible ways not requiring customers to be physically present. as an example, the percentage of internet users in spain reporting that they use electronic banking services has increased by 30 pp from 2003 to 2018. 5 however, all sectors to a greater or lesser extent are caught up in the so - called “ digital revolution ”. see f. schivardi and t. schmitz ( 2019 ), “ the it revolution and southern europe ’ s two lost decades ”, journal of the european economic association, forthcoming. see chapter 4, “ business dynamics in spain : characteristics, determinants and implications ”, informe anual 2015, banco de espana. encuesta sobre equipamiento y

##6 https : / / www. imf. org / en / publications / policy - papers / issues / 2017 / 07 / 31 / pp073117 - collaboration - between - regionalfinancing - arrangements - and - the - imf 6 / 8 adhering to a plurilateral agreement in due course ( making the agreement multilateral in essence ), while maintaining peer pressure to avoid free riding. 9 furthermore, the new global governance system should recognise that both regionalism and multilateralism are compatible, as some problems are of a local nature and are better tackled locally. regionalism and multilateralism are not mutually exclusive. on the contrary, both approaches can support and complement each other, generating synergies that strengthen the global financial safety net. indeed, bilateral and regional agreements have in many cases brought about improvements in the multilateral trading system. e - commerce is a good example of this. 10 in this regard, the european union, for example, should maintain its proactive approach to preserve the rules - based global trade system. and indeed the european union is fully engaged in working, together with other members, on proposals to strengthen the wto in areas such as subsidies, e - commerce, property rights and ensuring enforceability of existing wto commitments with a well - functioning dispute settlement system that cannot be blocked by any single country. 11 at the same time, it is important that the european union should continue to negotiate trade agreements with other partners. although, as mentioned earlier, this is not a first best solution, it is time to recognise that regional and multilateral arrangements open to others can succeed where multilateral negotiations have failed to bring many countries into the international trading system. in the financial arena, the emergence of regional initiatives has generated a more robust and better resourced global financial safety net. however, coordination between the different layers should be strengthened, on the understanding that a regional system can complement, but not substitute, the role of the imf. in my view, the imf is still essential, for at least four reasons. first, it has unique expertise in crisis management. second, the participation of the imf in adjustment - programme design adds an objective view that regional institutions cannot provide, one that is respected both by domestic authorities and by the private sector. third, in cases of interconnected economies, the involvement of the imf can dissipate the potential regional concentration of risks. fourth, the imf is the only institution that can