A comprehensive model for Sustainable Human Development “The Basque case ” J.J. Ibarretxe Markuartu 

Starting Autonomy Entrance in Europe Year Year 1980 1986 1998 2008 1. GDP per capita 3.132 6.132 17.108 31.712 2. Income convergence (EU=100) 89 90 108.9 136.0 3. Labour market Active working population 803.100 805.000 928.300 1.063.900 Employment 702.400 607.200 771.400 995.400 Unemployment - Number of people 100.700 197.800 156.900 68.600 - Rate (%) 12.54 24.57 16.9 6.4 4. R&D as a % of GDP 0.07 0.5 1.11 1.96 5. Quality certifications --- 468 (1996) 2.142 (2000) 4.915 (2007) 6. Internet access (%) --- --- 2.5% (1997) 55.6% The “Basque case”: a comprehensive model of Social, Political and Economic transformation 1980 - 2008 

GDP per capita by country and year 1998 2008 Variation EU 27 100 % 100 % Luxembourg 217 271 46 Basque Country 108 136 28 Eire 121 136 15 Spain 95 103 8 Sweden 122 122 0 Holland 129 135 6 United Kingdom 116 117 1 France 115 111 - 4 United States 160 155 - 5 Japan 121 114 - 7 Germany 122 116 - 6 Italy 120 101 - 19 Source : EUROSTAT and EUSTAT 2010 100 % 274 133 127 101 123 133 114 107 149 107 118 100 …at the forefront of Europe 

The Basque Country… at heart of Europe Bizkaia Gipuzkoa Araba Álava Lapurdi Zuberoa Baja Navarra Nafarroa Navarra 

The Basque Country: an age-old people… “This involves a very old people, the direct descendants of the prehistoric men and women who populated the Basque Country between 35.000 and 40.000 years ago” Luigi Cavalli-Sforza University of Stanford 

The Basque language… Euskera “…therefore by the end of the 21st century the 5.000 languages that exist today will be reduced to only 500, one of which will be the Basque language” Merrit Ruhlen Linguist 

The Basque Country… “This extraordinary people have preserved their ancient language, genius, laws, government and manners, longer than any other nation of Europe” John Adams (1786) President of the United States of America 

A people who love their self-government… The Basque Country has its own Treasury… It governs, levies and collects all taxes in the Basque Country… And pays the Spanish State for the services it provides in our country 

Basque Fiscal System: some learning (1) * We did not apply fiscal measures that reward all companies with the same corporate reduced tax rate, regardless of their effort towards the compromise with the Country… * On the contrary we applied “selective” tax deductions to those companies that shared a common vision of economic and social future for the Country, defined by all relevant stakeholders, through a public-private shared leadership among Administration, Business and Society 

Basque Fiscal System: some learning (2) So that in practice, even though we have now in the Basque Country similar nominal corporate tax rate of 28.0 percentage to surroundings regions, some companies can support rates below 12% (and some cooperatives below 10%), if they have a strong commitment to the Country, to employment creation, to internationalization and to innovation. 

1. A successful story: 30 years of radical transformation 

80’s: TOUGH economic, social and political crisis. high unemployment (25%) collapse of basic industries obsolete infrastructures 80’s: triumph of the neo-liberal focus in the world context: “the best industrial policies are the ones that don’t exist” 30 YEARS FOR A RADICAL TRANSFORMATION 1980: beginning of Basque self- government IN THIRTY YEARS EUSKADI HAS BECOME A NEW COUNTRY. FROM A DECADENT AND OBSOLETE ECONOMY, IT'S TURNED INTO A POTENT, VENTURESOME AND COMPETITIVE CENTER OF BUSINESS • GDP has grown during the last decade above Spain and the EU • 75% of production is exported (50% in medium/high technology products) • Unemployment has diminished drastically (from 25% to 4,7 %) • First in Spain in terms of income per capita • Above the European average in terms of income per capita (136 %) Tech Desert DURING THE 80's, THE BASQUE ECONOMY UNDERWENT A PROCESS OF INTEGRAL RESTRUCTURING FOLLOWING RECESSION 

Taux de Risque de Pauvreté 2000 2005 2006 1 Allemagne 2 Hongrie 3 Pays Bas 4 Slovénie 5 Finlande 6 Luxembourg 7 Autriche 8 EUSKADI 9 Belgique 10 Bulgarie 11 Malta 12 FRANCE 13 Lettonie 14 Pologne EUROPA 15 Lituanie 16 Roumanie 17 Estonie 18 ESPAGNE 10 11 11 11 11 12 12 13 13 14 15 16 16 16 16 17 17 18 18 1 Suède 2 EUSKADI 3 Tchéquie 4 Pays Bas 5 Allemagne 6 Autriche 7 Danemark 8 Slovénie 9 Finlande 10 Slovaquie 11 FRANCE 12 Hongrie 13 Luxembourg 14 Bulgarie 15 Malta 16 Belgique 17 Chypre 18 EUROPA 24 ESPAGNE 9 9,5 10 11 12 12 12 12 12 13 13 13 13 14 14 15 16 16 20 1 EUSKADI 2 Tchéquie 3 Pays Bas 4 Suède 5 Danemark 6 Slovaquie 7 Slovénie 8 Finlande 9 Autriche 10 Allemagne 11 FRANCE 12 Luxembourg 13 Bulgarie 14 Malta 15 Belgique 16 Hongrie 17 Chypre 18 EUROPA 25 ESPAGNE 9,8 10 10 12 12 12 12 13 13 13 13 14 14 14 15 16 16 16 20 Source : INE et EUROSTAT 

Human Development Index 2007 1 2 3 4 5 6 7 8 9 10 11 12 13 Iceland Norway Basque Country Australia Canada Ireland Sweden Switzerland Japan Netherlands France Finland United States 0.968 0.968 0.964 0.962 0.961 0.959 0.956 0.949 0.953 0.953 0.952 0.952 0.951 14 15 16 17 18 19 20 21 22 23 24 25 Spain Denmark Austria United Kingdom Belgium Luxembourg New Zealand Italy Hong Kong Germany Israel Greece 0.949 0.949 0.948 0.946 0.946 0.944 0.943 0.941 0.937 0.935 0.932 0.926 Human Development Index = Life Expectancy Index + Education Index + GDP Index Source: Eustat. HDR and UNDP – United Nations Development Programme. Human Development Report 2007 

Identity, innovation and sustainable development: “small is beautiful… and powerful” The defence of Basque identity, culture and language is not solely related to a legitimate political fact such as the claim for an identity in the current globalized world; it is also related directly to the achievement of Sustainable human development. 

How have we got here? 2. 

The key decision: an idea of country, self-government, shared leadership, training… and commitment to the “real economy” The Basque Country made a strategic decision to commit to a productive economy… This decision was taken by the new democratic Basque institutions after more than 40 years of dictatorship in Spain… It was the determination and tenacity of our society and the leadership of the new governments which made this possible. 

Basque economic structure Basque Country Spain European Union-27 Agriculture & Fishing 0.80 % 2.90 % 1.90 % Industry 29.40 % 17.50 % 20.20 % Construction 9.10 % 12.30 % 6.30 % Services 60.70 % 67.30 % 71.60 % 

The Second Great Social and Economic Transformation INNOVATION & KNOWLEDGE Building the Information and Knowledge Society Making The Basque Country a European reference in science and technology Broadening Total quality for managing organizations 1 2 3 Following on immediately from this, we put forward the aim of what became called the “second great social and economic transformation” of The Basque Country, based on three factors: LEHENDAKARI (President) Juan Jose Ibarretxe, July 2001 “A society that has achieved the level of development that The Basque Country enjoys today can no longer approach the future in terms of the adoption of foreign technologies and cost advantages. What it must do is tackle the challenge of innovation, quality and knowledge creation head on” 

 Economy of scale  Centralised and unique industrial and regional policies  The best industrial policy: the one that does not exist  Complete separation/confrontation State-Enterprise  Exclusive Picking winners  “Viva el MERCADO” (prominence to the market)  Tripartite competition: USA- Japan-Europe  Free rein to International Multilateral Organisations  Economy first … then  Interdependence, small is beautiful, posible and essential  De-concentration of regionalised microeconomic policies  “Comprehensive” strategy for competitiveness in solidarity  Public-private and public-public partnerships  All industry matters  Transformed public leadership, with committed participation of entrepreneurs  Multiple competition / New players  Guiding principle: each country is unique. Its own and differentiated strategy Dominant ideas In the past What we believed in and did 

% Young people aged 20 to 24 with high school or university education 2004 2005 Europe 74.2 74.6 Basque Country 80.2 81.1 Spain 61.2 61.8 

Export growth has been well above that of European countries and only surpassed by emerging countries like India and China EVOLUTION OF BASQUE EXPORTS COMPARED WITH OTHER COUNTRIES AND THE WORLD ECONOMY 1993-2006 1993= 100 0 200 400 600 800 1000 1200 1993 2003 2006 World United States Brazil Europe Germany France United Kingdom Italy China Japan India Basque Country Source: OMC, Eustat and own elaboration CHINA Basque Country India Exports: Share 

Productivity rates. Europe top 10 ranking Productividad. Ranking 10 Europa Fuente: EUROSTAT y EUSTAT 2000 2005 2008 1 Luxemburgo 2 Bélgica 3 EUSKADI 4 Irlanda 5 Italia 6 Francia 7 Austria 8 Finlandia 9 Holanda 10 Suecia … 13 España 175,9 136,6 132,1 127,4 126,0 125,1 120,6 114,7 114,4 113,5 103,7 1 Luxemburgo 2 Irlanda 3 Bélgica 4 EUSKADI 5 Francia 6 Austria 7 Holanda 8 Reino Unido 9 Italia 10 Finlandia … 13 España 169,5 134,1 129,8 127,2 122,2 115,1 114,0 112,5 111,0 110,7 101,2 1 Luxemburgo 2 EUSKADI 3 Irlanda 4 Bélgica 5 Francia 6 Finlandia 7 Holanda 8 Austria 9 Suecia 10 Reino Unido … 12 España 172,8 132,0 131,4 124,3 121,1 119,7 115,5 113,5 111,6 111,0 104,5 

Índice de Innovación Europeo EIS 2008: C.A. de Euskadi y UE-27 Fuente: Eustat y PRO INNO Europe: INNO - Metrics. Comisión Europea 

The Basque Country… case chosen and studied at Harvard Business School “The Basque Country is one of the few regions in Europe that has made significant progress in upgrading its traditional industrial base” Michael E. Porter 

¿What is the strategy behind these results? “Our own strategy” of Sustainable Human Development” Three phases Three axes Five reasons for success Characteristics 

The three phases 1st phase: 1980s “Learn to compete” 2nd phase: 1990s “Learn to compete cooperate” 3rd phase: 2000-2010 “Learn to innovate in cooperation” 

The three axes Developement: “Innovation” Human: “Equality” Sustainability: “The environment” 

The five reasons behind the success of the Basque model Concept of National Identity Public - private shared leadership Commiment to the real economy Economic growth hand in hand with social balance Self - government First Second Third Fourth Fifth 

New Strategy 2015: Competitiveness based on Solidarity 3 

“Vision for the Basque Country” A country… at peace, proud of its roots and its traditions, tolerant and respectful to diversity, highly productive, which competes using its people, who use their creativity and take responsibility for their work within the framework of shared projects, in an open and international setting, socially cohesive, supportive to the world and respectful to the environment *The Basque Country Forum of competitiveness 2015 

TERRITORIO (Compacidad, Diversidad, Integración) GOBERNANZA (Visión Común, Políticas, Estrategias) CAPITAL CREATIVO Y FINANCIERO SUBSITEMA ECONÓMICO • Industria Creativa • Talento • Innovación • Glokal SUSBSISTEMA FÍSICO Y CONSTRUIDO • Urbanismo •Movilidad •Eficiencia Energética •Medio Ambiente SUBSISTEMA SOCIAL •Gobernanza • Cohesión Social • Cultura e Identidad • Innovación Social VALORES - COHESIÓN INFRAESTRUCTURAS, MEDIO NATURAL BUILDING CREATIVE AND INTELLIGENT SPACES… 

Technological Strategy NEW FABRICATION SYSTEMS SERVICES BIOSCIENCES NANOSCIENCES ALTERNATIVE ENERGIES ELECTRONICS FOR INTELLIGENT TRANSPORT ECOINNOVATION SUPPORTING THE PRESENT BUILDING THE FUTURE SOCIAL INNOVATION MANUFACTURING HIGH EFFICIENC Y NEW MATERIALS i - TOURGUNE LANGUAGE INDUSTRY BIOBASQUE NANO BASQUE ENERGY GUNE ISTGUNE INTELLIGENT ENVIRONMENT ENVIRONMENT INDUSTRY BIODIVERSITY METEOROLOGY HUMANITIES, SOCIAL SCIENCES, ECONOMY FOOD SECURITY SOCIAL RESEARCH ENVIRO BASQUE BUSINESS TRANSFORMATION ICTs COMMERCE METEOROLOGY AND CLIMATOLOGY ENERGY NEW SECTORS BASED ON SCIENCE AND TECHNOLOGY Development of Scientific and Technological capabilities for the creation of new sectors TRADITIONAL SECTORS Transforming sectors in which our economy is specialized 

34 Public bodies CADEM Health R&D units Technology parks Technology centres Entrepreneurial R&D units BICs Sectorial R&D centres Universities Cooperative research centres CIC biomarGUNE CIC biomaGUNE BASQUE TECHNOLOGY AND INNOVATION NETWORK… AGREGATION 82 members 

NEW INSTITUTIONAL ARCHITECTURE 

1. The importance of Self-government and economic capacity of institutions 2. It is important to build on your own real capacities: people, industry and technology were, and still are, crucial for us. 3. An entrepreneurial Vision for the country is also needed: definition and deployment of a lot of strategies and plans with a broad participation of stakeholders is necessary for building a deep concept of competitiveness (social, sustainable competitiveness) 4. Institutional Wealth, accountability, public private collaboration and cooperation within the clusters and sectors Final Remarks 

Sustainable Human Development: Identity and Innovation… “roots and wings” The result of this presentation shows us that defending and advancing in Basque self-government, cultural and economic identity has not only been behind the demand for a legitimate political project for the nation, but also behind the development of our own model of competitiveness based on solidarity 

“I love small nations. I love small numbers. The world will be saved by the few” André Gide (Kohr,1970) 

R & D & i & K …a positive vision 

The Basque Country… a Country on the move Juan Jose Ibarretxe Markuartu 2012