4. 11. 2019 digitalisation and investment in intangible capital : the spanish case within the eu banco de espana - european investment bank pablo hernandez de cos governor ladies and gentlemen, let me start by welcoming you to banco de espana for the conference digitalisation and investment in intangible capital : the spanish case within the eu, jointly organised with the european investment bank. for the banco de espana it is a great pleasure to collaborate with the european investment bank in co - organising a conference for the second time. before going any further with my intervention, i would like to thank all of you for your attendance here today. the topic of this conference is very timely and appropriate. digitalisation is a key development that is increasingly affecting all the sectors of the economy with the ability to significantly transform the functioning of companies and markets and the structure of the economy more generally. however, the final impact of digitalisation on various dimensions is highly uncertain. digitalisation digitalisation refers to the adoption of digital technologies such as big data, cloud computing, e - commerce, artificial intelligence, robotics, the internet of things and 3d printing. the impact of digitalisation on firms and the general economy comes through various factors. first, digitalisation reduces search, transportation and verification costs1. second, it leads to increased automation of routine operations. third, it enables new ways of organising production. fourth, it may change the structure of the market, potentially affecting competitive pressures in some sectors. there is an overall consensus that digitalisation can potentially boost firms ’ productivity through several channels. first, technical progress in the production of digital products leads to new, better and cheaper products generating productivity gains in the sectors producing these products. second, other sectors may benefit from cheaper inputs encouraging a higher use of those inputs as investment goods, resulting in productivity gains for the firms in these sectors. third, digital technologies enhance product and process innovations leading to new production and organisational processes, new business models and new or superior products. finally, information and communication technologies ( ict ) are seen as reducing the cost of sharing and acquiring knowledge, potentially increasing the diffusion of innovation and new knowledge. however, digitalisation may also entail some challenges. first, while some argue that digitalisation leads to more intense competition, others fear increasing market concentration in some sectors on the back of digitalisation2. second, some studies find evidence that ict and automation are related to labour market polarisation3, where mid - skilled jobs either lose value or disappear,

r & d, mineral exploration and entertainment, literary or artistic originals. nevertheless, some authors7 claim that a broader range of assets should be included in the definition of intangible assets. in this regard, it is worth mentioning that cotec foundation for innovation and the valencian institute of economic research ( ivie, by its spanish abbreviation8 ) provide estimates of the gross fixed capital formation in intangible assets in spain for a broader range of assets than those included in the national accounts. data are available since 1995 with a regional and sectorial breakdown. these data are very helpful to improve our understanding of the role played by intangible assets in the spanish economy. investment in innovation is widely recognised as a key driver of firm productivity. but financing intangible assets can be more challenging than financing tangible assets. in particular, the specific nature of intangible assets makes them less easy to be used as collateral. in addition, returns from innovation are generally riskier. all these elements made debt financing less suitable to finance innovation. hence, innovative firms tend to rely more on internal sources to finance investment, as well as equity and, in particular, venture capital9. this can be particularly challenging in countries such as those of the european union, including spain, in which these markets are relatively less developed than in the united states. the public sector often plays an important role in supporting innovation through various ways such as directly investing, granting subsides or tax credit and financing projects. in this regard it is worth mentioning the activities of the instituto de credito 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 for recent evidence in the euro aera, see ecb ( 2018 ) : “ investment in intangible assets in the euro area ”. ecb economic bulletin, issue 7 / 2018 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. cotec foundation for innovation - ivie ( instituto valenciano de investigaciones economicas ). intang