Catalonia, Madrid, Balearic Islands: which model to choose?
If we look at the latest Eurostat data on per capita income for 2023, the best figure is for the autonomous community of Madrid at €47,000, while Catalonia's is €39,400, and the Balearic Islands at €38,300. This higher per capita income in Madrid is often explained by its higher labor productivity. In terms of the EU-27 regional labor productivity ranking, Madrid ranks 117th; the Balearic Islands, 119th; and Catalonia, 120th.
A first observation that can be made is that greater industrial specialization does not always guarantee a higher level of productivity. In Catalonia, the manufacturing industry represents 15.8% of employment (two-tenths above the EU average), while in Madrid it represents 7.8% and in the Balearic Islands, only 5.4%. In contrast, services in Catalonia generate 75% of employment, well below what they represent in Madrid (85%) and in the Balearic Islands (83%). Indeed, in the study by Manera, Navinés, Franconetti, Pérez Montiel and Quetglàs, cited in the latest annual report of the Bank of Spain, it can be seen how the differential growth in labor productivity in Catalonia compared to Spain, during the recovery period from the Great Recession of 2014-2019, depended solely on the industrial sector, with a positive differential of 2.9 points. In Madrid and the Balearic Islands, these differential contributions from their industrial sectors were -5.4. The same pattern is repeated for the COVID recovery period of 2020-2022: 3.3 points for Catalonia, -5.7 points for Madrid, and -9.6 for the Balearic Islands.
Now, in the report Regional Innovation Scoreboard 2025 The EU highlights that this greater industrial specialization in Catalonia determines the autonomous community's best performance in terms of innovation. In fact, Catalonia leads the state's innovation ranking with 110.7 points, followed by the Basque Country, also with strong industrial specialization, with 108.1 points. Madrid remains at 106.1 points, and the Balearic Islands, at 72.7 points, only above Castilla-La Mancha and the Canary Islands. This uniqueness of Madrid in terms of its good innovation results, in a region with the highest tertiarization in the state, is explained by its greater relative specialization in high value-added services, such as financial services. In fact, it is the only autonomous community that shows a positive contribution to its differential growth in regional productivity thanks to financial services, which have a labor productivity almost double that of industrial productivity. Hence, Madrid's higher levels of productivity and per capita income compared to Catalonia.
Two final considerations. Per capita income and productivity levels are indicators of the results of ex ante investments. Innovation indicators provide clues as to how economic development may unfold in the medium and long term, and this, as we have seen, is more favorable in Catalonia than in Madrid and the Balearic Islands.
On the other hand, the Balearic Islands present substantial differences with Catalonia in terms of its lower industrial specialization, and with respect to Madrid, in terms of its lower specialization in high value-added services, such as financial services. However, in terms of productive specialization and productivity performance, it presents the best regional performance in terms of commerce, hospitality, transport and communications, and other services. It is in these areas that the Balearic Islands must continue to focus their efforts to improve their regional innovation rankings.