Reducing regional disparities for inclusive growth in Spain

Spain is a highly decentralised country, making the effective implementation of national reforms dependent on regional policies. Some regional disparities are high and need to be reduced. High regional dispersion in education and job outcomes, compounded by low inter-regional mobility, emerge as key drivers of regional inequalities in income and wellbeing. Lifelong learning programmes that take into account regional specific needs would help foster regional skills and attract firms to lagging regions. Ensuring full portability of social and housing benefits across regions, by providing temporary assistance either by the region of origin or the central government, would improve inter-regional mobility. At the same time, barriers to achieving a truly single market limit productivity growth of regions, including the most advanced. Reducing regulatory barriers and better innovation policies would boost productivity. Effective intergovernmental coordination bodies and a well designed interregional fiscal equalisation system will be key to ensuring that regions have the incentives to implement policies for inclusive growth.