Impact of the NextGeneration EU funds in Catalonia

According to official figures from the Catalan government, 52,461 beneficiaries have received funding totalling 5.39 billion euros from the NextGeneration EU funds. More than half of the funds distributed have gone to businesses, 97% of which are SMEs, which have received 56% of the amount committed so far.

 

The interactive viewer set up by the Generalitat’s Department of Economy and Finance is updated periodically and makes it possible to consult how these resources have been distributed in Catalonia, in calls for proposals, tenders and direct concessions made by both the Generalitat itself and the Spanish government.

This tool shows how, of the 7,469.8 million euros of Next Generation funds allocated in Catalonia, 5,390 million euros have already been distributed among 52,461 beneficiaries, including businesses, local corporations, research centres, non-profit organisations, individuals and other public sector entities. Of these, more than half have gone to businesses, 97% of which are SMEs, which had received 56% of the resources by the end of February 2024.

Most of the resources have been allocated to the business sector. Specifically, 2,748.4 million (51% of the total) have gone to 12,439 businesses, while 663 local corporations have received 1,087.5 million (20%) through grants and direct concessions. Likewise, 237 research and/or training centres have been beneficiaries of 984.7 million (18%) and 976 non-profit and third sector entities have received 270.9 million (5%). In addition, 169.3 million (3%) went to 38,021 individuals and 123 million (2%) were distributed among 125 other public sector entities.

 

Sustainability, energy transition and new technologies

In terms of the sectors to which the funds have been allocated, projects related to electric vehicles stand out, such as the construction of a production plant by the South Korean company Lotte Energy Materiales in Mont-roig del Camp to manufacture copper sheets, a key component in electric car batteries. A new Seat assembly line in Martorell, as well as a battery subscription service and the Silence network of recharging stations, and the ultra-fast-charging battery to be manufactured by Bold Valuable Technology, among others.

On the other hand, part of the funds will also go to companies such as Openchip & Software Technologies, Lhyfe Hidrogeno and Bunge Ibérica, and will be used to build infrastructures for advanced processors and semiconductors, to develop green hydrogen projects or to finance proposals linked to the Agri-Food PERTE, such as industrial strengthening, the acceleration of sustainability and the competitiveness of the alternative protein value chain. In addition, Alier, La Farga YourCopperSolutions and Ametller Origen Obradors have received grants to promote the circular economy.

European funds have also reached non-profit organisations, including third-sector organisations, among which 268 million have been distributed. The Jaume Bofill Foundation, with more than 16 million, and the Fundació Agropecuària de Guissona, with more than 11 million, stand out, followed by the Fundació la Muntanyeta, with 7 million, and the Fundació Catalana de l’Esplai, with more than 6 million. The Asociació Dincat, the Clúster de Foònica i Òptica (SECPHO), the Fundació Sociosanitària i Social Santa Tecla, and the Fundació Santa Teresa del Vendrell each received more than 5 million.

 

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The news that Saudi Arabia has decided not to renew a supposed agreement with the United States that compelled it to sell its oil in dollars has gone viral online and in the alternative press, sparking debates about the possible decline of the dollar as the world’s reserve currency, while pundits in the mainstream media dismissed it as fake news.

 

The information that went viral online and was repeated by some media outlets last week stated that on 9 June 2024, Saudi Arabia had not renewed its 50-year petrodollar agreement with the United States, according to which it had to sell its oil exclusively in US dollars and invest its surplus in US Treasury bonds.

The debate has focused on the fact that this development may accelerate the de-dollarisation trend, whereby countries seek to reduce their dependence on the US dollar. Thus, further weakening the dollar’s hegemony as the world’s reserve currency and accelerating its decline.

The mainstream media simply ignored the story or dismissed it as “fake news“, citing experts such as Paul Donovan, chief economist at UBS Global Wealth Management, who claims there was never a formal agreement requiring Saudi Arabia to price its crude oil in dollars. Furthermore, Donovan explained, that after the 1974 joint economic cooperation agreement was signed, Saudi Arabia continued to accept other currencies, such as the pound sterling, and it was not until later that year that the Kingdom stopped accepting the pound as payment currency.

Yet, other commentators have also come out lending credibility to the alleged deal: “Since the 1970s, the US has been pressuring Saudi Arabia to sell its crude oil in dollars to protect the dollar’s status and demanding that Saudi Arabia buy US bonds and weapons,” said Shigeto Kondo, senior researcher at the JIME Center of the Japan Institute for Energy Economics.

 

Let’s review a bit of history

The dollar’s status as the world’s reserve currency predates the creation of the petro-currency known as the petrodollar, essentially, oil export revenues denominated in US dollars. That said, we must acknowledge the financial flows, known as petrodollar recycling, whereby the money that Western countries spend buying oil ends up flowing largely back into the US economy through financial investments or the purchase of debt by energy producers.

It is true that this currency pattern established in 1973 was not born out of a contract or a treaty, but out of an agreement, let us call it implicit, initially between the United States and Saudi Arabia and later extended to other OPEC countries, according to which the oil-producing countries agreed to sell their oil in dollars in exchange for protection from the American partner and to reinvest the surplus from oil exports in buying US weapons and debt through Treasury Bonds.

In other words, after an oil crisis called into question the future of the dollar as a reserve currency, especially after France, Germany and other countries cashed in their dollar reserves, the US military became a mercenary military force for theocratic regimes in the Persian Gulf in exchange for ensuring that the dollar remained the currency of choice for oil purchases around the world, perpetuating its demand and value.

This recycling of petrodollars creates an almost unlimited demand for the issuing country’s debt, which allows the US to print large amounts of money (debt) without consequences. Moreover, any leader from this region who has opposed selling his oil in US currency – as Saddam Hussein and Muammar al-Ghadafi did – has been considered a direct threat to the petrodollar, i.e. to US hegemony. These countries were then subjected to a military intervention, which “coincidentally” led to the resumption of selling their oil in dollars.

 

The reality of a multipolar world

Ultimately, it is irrelevant whether there was a formal agreement between the two countries to use the dollar as the oil trading currency. The global geopolitical and economic context in the 1970s was much different than it is today. The dollar had emerged as the “de facto” reserve currency before any agreement was signed and there was no real alternative.

Today, however, we find ourselves in the context of a multipolar world that is spurring a necessary and inevitable rebalancing of the world order and does not require the expiry of a 50-year-old agreement. At the 2023 Davos Forum, Saudi Arabia’s finance minister, Mohammed Al-Jadaan, announced that the kingdom was open to accepting local currencies for oil trading and reaffirmed his decision on a visit to India last September. Oil sales in other currencies are no longer a novelty.

Over the past two decades, the dollar has gone from accounting for more than 70 per cent of global official reserves to 58 per cent today, according to IMF data. This is not to say that it is in any imminent danger of losing its status as a global currency, far from it, but it is undeniable that its days are numbered. Its supremacy as a trading currency and the hegemony it gives to the United States are being eroded year by year.

 

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The hegemony of the dollar as the reference currency in global trade and as an instrument of monetary liquidity have granted power and privilege to the US for decades, but in recent years there has been fear that a growing number of countries are managing to decouple their economies from dependence on the dollar. We analyse the reasons behind it.

 

August 15 marked 50 years since President Richard Nixon assembled his team at Camp David to announce that he was suspending the dollar convertibility into gold. It was the beginning of the end of the Bretton Woods Agreements and became effective the following year when Nixon formalized it as a permanent decision.

Until then, the dollar was a currency based on the existence of gold as a counterpart. From that moment on, it became a fiat currency, money placed on trust, with its value derived from the relationship between supply and demand and the stability of the issuing government. A value that, unlike the guaranteed currency, is based on people’s faith, and may lose its value due to inflation, or even become inoperative in case of hyperinflation.

This new monetary framework replaced the intrinsic value granted by the demand for gold, mainly from the jewellery sector, with the creation of the petrodollar system, ergo establishing the dollar as the oil transaction currency, which forced any country willing to buy oil, to convert its currency into dollars. Such a system creates a  dollar surplus that must be recycled and invested in the purchase of US government bonds and treasury bills, and consequently, creating an almost unlimited demand for the issuing country’s debt, a fact that allows the US to print large amounts of money without consequences. It is like a government black card.

Abusing a position of privilege

This demand for dollars gives the United States the possibility to assume perpetual debt because current account deficits are not a problem, due to its refinancing ease and confidence that investors will continue to buy assets that are considered safe. 

Moreover, US control of the International Monetary Fund (IMF) and the World Bank (WB), two bodies born out of the Bretton Woods Agreement, as well as of SWIFT (Society for Worldwide Interbank Financial Telecommunication), added to US petrodollar hegemony, confer them such a negotiating, intimidating and punitive power that is often used for their own economic interests and at the expense of the interests of other countries.

The widespread application of economic sanctions by American administrations, especially under Trump’s government, not only against countries considered enemies of US interests, but also against allied countries that refuse to obey orders coming from Washington, is causing many states to question US dollar hegemony and to take steps to create a multilateral financial system to shield their economies.

 

Russia and China de-dollarise

Over the past decade, Russia and China have initiated programs and signed de-dollarisation agreements to protect and shield their economies from US government and International Monetary Fund (IMF) sanctions. By 2020, less than half of bilateral trade transactions between these two countries were in dollars, and this year Russia has announced that all of its National Investment Funds will move away from dollar to euro or gold denominations.

It is not surprising that other countries such as Venezuela, Turkey, Pakistan or Iran be also in the process of de-dollarisation, but perhaps it was not so predictable that the European Union would sign similar trade agreements and promoted, like these countries, its own digital currency to diversify its options and reduce the risk of a possible paradigm shift.

The dollar is not in danger of losing its status as a global currency, but its supremacy as a trading currency, and as a bargaining tool, may be seriously eroded if the United States continues to abuse its position of power.

 

If you want to discover the best option to protect your savings, go to Preciosos 11Onze. We will help you buy at the best price the ultimate safe haven asset: physical gold.

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We are all familiar with the basics of insurance. But do you know how this sector works, how it is regulated and where its profits come from?

 

Insurance is nothing more than a financial tool to cover certain risks. They have been doing so for thousands of years. The Code of Hammurabi, a compendium of laws from ancient Babylonia, already regulated loans, which made it possible for lenders and shipowners to share the risks and profits of maritime trade.

We are all more or less familiar with the basics of insurance. A policy is nothing more than a contract between the insured and the insurance company by means of which, in exchange for a premium (insurance price), the insurance company undertakes to compensate for damage caused or to pay a capital sum, rent or other benefit in the event of a loss covered by the contract.

All the details of the insurance coverage and other conditions are set out in the policy, which establishes the rights and obligations of both parties. The policyholder, who is the person or company that contracts the insurance and pays the premium; the insured, who is the one exposed to the risk covered by the insurance, and the beneficiary, who is the one entitled to receive the consideration agreed in the policy, may coincide or be different persons or entities.

All these concepts are probably familiar to us. But, do we know how the insurance sector works? We review how it is regulated and where its benefits come from.

The regulatory framework

There are different types of insurance companies depending on their legal constitution: public limited companies, mutuals, cooperatives and mutual benefit societies. Moreover, each of them can operate in one or multiple fields (automobile, household, civil liability…), but they always require the authorisation of the regulatory body.

To ensure the proper functioning of the sector, both the characteristics and the operation of these entities are regulated, establishing limits on their activity and imposing minimum solvency requirements or certain training for their employees.

On 1 January 2016, Solvency II, the European directive by which all European insurers estimate their financial soundness in the same way, came into force. This directive makes it mandatory to calculate the amount of resources an insurer must have to cope with possible negative scenarios related to business (more claims than expected or higher claims), investments (e.g. a fall in the stock market) or other types of events. The insurer must have sufficient own funds to cover this potential gap.

Solvency II is based on three pillars. The first determines the minimum own funds required of each insurer, depending on the risks assumed. The second pillar proposes the qualitative assessment of risks, which are identified, measured, monitored and managed according to the risk appetite of each company, and establishes internal control of these risks through corporate governance in order to improve the efficiency and profitability of the institutions. The third pillar seeks greater transparency for insurance companies thanks to the regular reports that they must submit.

This European directive is complemented by the Law on the regulation, supervision and solvency of insurance and reinsurance companies, which regulates the sector in Spain. 

A primary source of income

According to data from the International Monetary Fund, the volume of premiums written in the world reached 24 trillion euros in 2016, 85% of which belonged to life insurance. 

In the case of life insurance, the main marketing channel is the banking sector, with a market share of just over 70%, while insurance agents and brokers have a market share of just over 20%.

In contrast, other insurance products are mainly marketed through insurance agents and brokers, who have a market share of about 60%, followed by direct sales (19%) and the banking channel (13%). 

A primary way in which insurance companies make money is by carefully assessing the risk of each of these policies so that the premium income exceeds the claims they have to pay out. 

The true nature of the business

However, insurers are primarily managers of the resources that their customers entrust to them through premiums, as they use part of that income to invest. In fact, it is estimated that 12% of the world’s assets are in the hands of insurance companies

However, since the great financial crisis, legislation has set strict prudential limits on investment. Until 2007, the insurance sector experienced an idyllic period of tranquillity. But the great financial crisis, which took the US insurance giant AIG by storm, brought to the surface the close relationship between insurers and banks, both in terms of their shareholdings and in their fixed-income and equity issues. 

According to Unespa, which brings together nearly 200 insurance companies in Spain, they invest mainly in public debt and, to a lesser extent, in private funds and shares: for every euro invested in the latter, six are devoted to public debt. Moreover, the association points out that, in times of economic boom, “insurers have come to have an investment capacity equivalent to 2 % of GDP”.

Reinsurance, a booming business

A third source of income is reinsurance. These are agreements whereby one insurer, called a cedant, transfers all or part of its risks to another insurer, called a reinsurer, in exchange for a part of the premium. This allows the cedant to protect itself from large potential losses in situations of overexposure. 

Climate change and the COVID-19 pandemic are driving this area of business, the volume of which is expected to exceed 500 billion euros by 2025.

Big changes on the horizon

There are many signs that the insurance industry is preparing for a time of momentous change. Ecosystems are expected to form in which providers from different industries will interact to create value from shared data. As a result, it will be less about selling products and services in isolation and more about experiences created by a multitude of players.

67% of insurance industry leaders believe that current business models will be unrecognisable in the next five years and that these ecosystems will be the main agent of change, according to Accenture Research. In addition, 58% of insurance companies report that they are already actively seeking ecosystems in which to integrate and three out of four expect that at least half of their profits will come from these ecosystems in the next five years.

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Els éssers humans posseeixen valors morals intrínsecs que regeixen part del seu raonament i comportament. L’evolució dels nostres hàbits de consum segueix aquesta naturalesa humana o ens deixem portar pel context econòmic i corrents socials del moment? Mireia Cano, cap d’agents d’11Onze, ens fa reflexionar sobre la relació entre la teoria de la llei natural i el consum responsable.

 

Els principis sobre els quals es basa la distinció entre un comportament correcte i incorrecte, el bo i el dolent, són característiques de conducta en part regides per la condició humana. Les normes culturals del moment defineixen les pautes morals acceptables per la societat. Dit això, hi ha valors morals i ètics, coneguts com la llei natural, que han perdurat al llarg del procés d’evolució de l’ésser humà gràcies a la necessitat més elemental de sobreviure i conviure en societat, i en harmonia amb l’entorn natural que ens envolta.

Ara bé, com a consumidors, les decisions que prenem en el nostre dia a dia estan en concordança amb aquesta llei natural? Mireia Cano ens planteja aquesta pregunta: “Comprem de forma conscient per naturalesa o ens deixem endur per les lleis socials?”, i ens insta a fer una reflexió sobre en quin món desitgem viure “des d’un punt de vista mediambiental, econòmic i pensant en la distribució de la riquesa”.

Consum conscient i responsable

Consumir d’acord amb els nostres valors no sempre és fàcil o convenient, i sovint entrem en contradiccions. La cap d’agents explica que “són coses que tots sabem, però sovint ens refugiem en el discurs que les nostres accions, com ara reciclar, són tan petites que no valen la pena”. Això és un error perquè, com puntualitza Cano, “es tracta de totes les decisions de consum que prenem, des del menjar, els subministraments o la roba”.

És comprensible que en èpoques de crisi la preocupació per l’economia familiar pesi més que l’ètica. La inflació desbocada i la crisi energètica han disparat el preu de molts productes i castrat el poder adquisitiu de molts consumidors. Però Cano assenyala que potser la clau està a replantejar el sistema en què vivim, “nosaltres, com a consumidors, tenim el poder de decidir per quines empreses apostem i, per tant, quines volem que siguin les empreses del futur”.

 

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Fractional-reserve banking is a system in which only a portion of deposits must be available for withdrawal. The remainder can be used for investment or lending to help expand the economy. It is currently the banking system used in most of the world’s economies.

 

Doubts about the solvency of Silicon Valley Bank and Credit Suisse led their customers to withdraw their deposits en masse in March. None of them had sufficient reserves to cope with the flood of savers and businesses wanting to withdraw their money. The former eventually collapsed and the latter had to be taken over by UBS following a liquidity injection of millions of dollars by the Swiss central bank.

Banking systems in most countries oblige banks to keep a small part of their customers’ deposits in reserve to meet withdrawals, either in physical cash or in highly liquid instruments. The rest can be used for investments and loans that contribute to the growth of the economy by keeping money flowing. This is the basis of fractional reserve banking.

This type of banking makes possible the bank multiplier, which expands the money in circulation when, upon receiving a deposit, the bank holds only a small fraction in reserve and lends out the rest. In this way, two people hold the same money, the one who has made the deposit and the one who has received the loan. This is why the monetary base, i.e. real money, is lower than the monetary aggregates of the financial system.

Beyond its own reserves, if a bank needs additional liquidity to fund loans, liquidate deposits or meet other obligations, it can borrow money from other banks. Or, as a last resort, it can turn to the discount window of its country’s central bank, where it can obtain money at a higher interest rate.

The risk of banking panic

The problem with fractional reserve banking is the constant risk of insolvency in the face of a massive withdrawal of funds from an institution, especially given the process of deregulation that the sector has undergone since the 1980s. In a panic situation such as that experienced by customers of Silicon Valley Bank and Credit Suisse, there is a risk that withdrawals will exceed the available reserves and the system’s capacity to inject sufficient liquidity. 

Fractional reserve banking is considered to have its roots in the Middle Ages and was linked to the trade in precious metals. Goldsmiths began to use the gold deposited in their establishments to issue interest-bearing loans in the form of promissory notes, which were later used as a medium of exchange. The promissory notes issued eventually exceeded the amount of physical gold in their custody. 

From the 17th century onwards, banks issuing paper money became widespread. By the 19th century, thousands of banks were already doing so. The crisis caused by the bankruptcy of many of them led to the creation of central banks, which had to back the currency they issued exclusively.

The situation in the Eurozone

At present, credit institutions in the euro area are obliged to hold at least the equivalent of 1% of specific liabilities, mainly customer deposits, with their national central bank. This is currently equivalent to around 165 billion euros, according to data from the European Central Bank (ECB). As the Banco de España indicates, this is “a monetary policy instrument that affects the structural liquidity needs of the market and allows short-term interest rates to be stabilised”. 

These minimum reserve requirements are fixed for a period of six to seven weeks, known as the “maintenance period”. The amount of funds to be set aside is calculated on the basis of the institution’s balance sheet before the maintenance period begins.

At the end of each maintenance period, the euro area national central banks pay interest to private institutions on these minimum reserves. This remuneration has historically been linked to the main refinancing operations (MRO) rate, but from the end of 2022, the minimum reserves are remunerated at the deposit facility rate. This change better aligns the interest paid on reserve requirements with prevailing money market rates.

The vulnerability of US banks

In March 2020, the Federal Reserve reduced reserve requirements for all depository institutions to zero. Instead, banks are now paid a specific interest rate on their reserve balance to encourage reserve maintenance. 

This measure, aimed at injecting liquidity into the US economy during the pandemic, has increased risk in the US banking system, as seen in the case of Silicon Valley Bank.

 

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The increase in extreme weather events is a challenge for governments and the population. What are the economic consequences of climate change? How can we prepare for natural disasters that affect our territory? We talked about it with Gemma Vallet, director of 11Onze District and Carolina Rafales, from the product team.

 

This year’s summer is expected to be one of the hottest in the historical series, a forecast that seems to be repeated year after year—an early summer marked by unsettled weather and storms. More and more often, meteorologists are warning of a new DANA, better known as a cut-off low, which can cause heavy rainfall for hours or days.

The effects of climate change are increasingly palpable, and we have no choice but to adapt and take the necessary measures to mitigate the economic and social effects that come with these extreme weather events. As Carolina Rafales explains, “These meteorological phenomena can present violent storms and hailstorms, so we must be prepared”.

How to deal with a DANA

This meteorological phenomenon is characterised by torrential rainfall, often violent and accompanied by strong winds, which can cause flooding. The fact that this rainfall occurs in a short time and in very localised areas means that it can cause years of damage to infrastructures and buildings, as it is difficult to channel so much water.

If the region where we live can be affected by a cut-off low, “it is essential to stay informed of the development of the storm and avoid leaving home on foot or by car,” says Rafales.

She also reminds us that “we must make sure that the pipes and drains in our house are free of obstructions”.

Similarly, it would not be a bad idea to be prepared if the electricity goes out, which is one of the negative effects that frequently result from these storms. Rafales advises us to always have our mobile phones charged, or external backup batteries. In cases of extreme flooding, we will have to leave the affected area and seek shelter on higher ground, so it is advisable to have an emergency kit ready, including spare clothes, torches, a radio, a first aid kit and provisions.

 

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Monitoring our driving is now inescapable, connected cars have become smartphones on wheels and are an additional business opportunity for all brands, from offering optional equipment via subscriptions to selling the data generated by millions of customers to third parties. Should we be concerned about this new loss of privacy?

 

As technology advances, internet-connected cars are becoming an increasingly present reality in our lives. Car manufacturers argue that these vehicles with no physical buttons, giant screens and full of cameras and sensors that monitor our behaviour offer a ‘safer’ and more comfortable driving experience.

This ability to communicate with other vehicles, devices and services via the Internet also opens up new business opportunities for brands. Some car manufacturers have already tested the patience of their customers with monthly subscription models for heated seats, while others offer more power in exchange for an annual subscription or are charging a subscription fee for the most popular options.

Moreover, this interconnection allows vehicles to collect and transmit real-time data on driving habits, location and vehicle status, offering additional revenue potential for brands willing to sell this information, which may pose a threat to users’ right to privacy.

 

From theory to reality

A report by the Mozilla Foundation warned that connected cars are “terrible in terms of privacy and security”. Also, it highlighted that 25 of the most popular car brands collect without consent a large amount of data from their users, not only strictly related to driving, such as their place of residence or usual destinations, but also much more sensitive data, such as facial expressions, health status and genetic information or information about their sex life, all of this through connected devices, microphones, and cameras.

According to the study, 84% of the brands surveyed share or sell owners’ data and 92% give drivers little or no control over their personal data. Although all brands fail in data handling, Tesla scores the worst, while Renault, Dacia and BMW have the least bad scores.

Some called this report alarmist, yet a few months later, the New York Times reported that some brands were already sharing data on their customers’ driving habits with insurers and that “bad drivers” had already had their policies raised by as much as 21%, without ever having had an accident.

Kenn Dahl, a computer scientist from Seattle in the United States who drives an electric Chevrolet Bolt, obtained a report from LexisNexis. This New York-based data agency works with insurers, which recorded the 640 times he or his wife had driven the car in the last six months, with all the details, such as start and end times, distances driven, and all the times he went over 130 km/h, or when he did hard braking or hard acceleration.

All this data was collected and, above all, sold without Mr. Dahl’s knowledge. In this case, it was sold to insurance companies, but it could just as easily have been sold to other companies in any field.

 

Are we protected by European law?

European legislation on the processing of personal data applied to connected cars is based on the General Data Protection Regulation (GDPR) and the ePrivacy Directive, which set out the principles and rights that have to be respected in the processing of personal data.

Among other obligations, data controllers have to inform data subjects about the use of their data, obtain their consent where necessary, ensure data security and confidentiality, minimise the amount and duration of data retention, and allow the exercise of the rights of access, rectification, erasure, limitation, objection and portability.

Basically, the same regulation that already applies to data processing and privacy on mobile devices, such as smartphones. That said, it is no secret that the devil is in the details, which is why experts always recommend that we carefully review the terms and conditions and only provide data or accept functionalities that provide real value, which is something we are used to when using a mobile phone, but which until recently was unthinkable to have to take into account every time we start up “our” vehicle.

 

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The sustainable economy seeks to increase social welfare while promoting sustainable consumption through a financial system based on green businesses. Either through the transformation of existing ones or by creating new businesses. It aims to reduce poverty and ensure quality development for present and future generations, without compromising the health of the planet, i.e. without consuming more than nature generates. 

 

The development of a sustainable economy in any territory involves policies aimed at promoting the use of sustainable energy sources, fostering competitiveness in sustainable activities and investing in innovation and education. According to the 2011 Sustainable Economy Law, we understand sustainable economy as “a pattern of growth that reconciles economic, social and environmental development in a productive and competitive economy, that favours quality jobs, equal opportunities and social cohesion, and that guarantees respect for the environment and the rational use of natural resources in a way that allows needs to be met”.

Why is a sustainable economy necessary?

The advocates of a sustainable economy base their arguments on the environmental forecasts for the coming decades, which, according to experts, are not very positive.m In this sense, the data on the ecological footprint for the future are not very flattering. Those who promote sustainable economy advocate the use of renewable energies such as wind, solar, hydraulic and geothermal energy, to extend the life of the products we consume, second-hand purchases, rental of single-use objects, etc. Preserving the planet’s resources, consuming only seasonal foods, recycling, avoiding plastics, pollution, etc. In this way, the survival of future generations can be guaranteed and, in addition, as it is a model of sustainable development, it is also a model of sustainable development.

But we also have detractors, who are those who feel comfortable or are accustomed to a capitalist economic system, which is the one that currently governs the West, who consider a sustainable economy unrealistic. They believe that it is a production model that is doomed to failure from the outset, due to the inability to supply all the needs of today’s world population.

 

Characteristics of a sustainable economy

The development of a sustainable economy in any territory involves the development of policies aimed at promoting the use of sustainable energy sources, fostering the competitiveness of green businesses and investing in innovation and development.

Thus, this socioeconomic system is governed by the following fundamental axes:

  • Environmental protection: preserving the planet’s biodiversity, minimizing the impact of pollution and fighting against climate change.
  • Use of renewable energies: promote the use of alternative sources of energy that do not pollute and minimize the impact on the environment.
  • Commitment to efficiency: make the most of the resources we have and take care of scarce resources, such as water, which will allow us to achieve another pillar of economic sustainability, which is efficiency.
  • Promoting recycling: establishing a circular economy model in which the waste generated is used to create new products, thus reducing the ecological toll of the current production system.
  • Limiting consumption: limiting the use of renewable resources so that they are not used at a higher rate than they are generated. Furthermore, non-renewable resources must be progressively replaced by renewable resources. 
  • Improve the social standard of living: promote, through education and innovation, equality among people in all territories.

Among the measures that can be implemented by public bodies, we can find the premiums and subsidies to new sustainable economic sectors such as clean energy, or the support to ecological business models. In addition, we must promote the recycling of all kinds of waste, the application of energy efficiency and conservation techniques in all areas of the economy and the promotion of the circular economy as well as new models of more sustainable cities.

The current society is unsustainable, as it consumes resources at a higher rate than nature generates, therefore the relationship between economy and sustainability is very close, if the energy needed for a society comes from resources that are not sustainable, they will become more and more expensive because of their scarcity and that can lead to geopolitical and economic imbalances in the medium and long term.

In Catalonia, and specifically in Manresa, the Ecoviure fair is held every year to show the novelties of a sustainable economy.

This fair was born in 1997 with the intention of serving as a meeting point for people and professionals who, from different fields, work for the environmental, social and economic sustainability of the planet. The fair lasts three days and brings together traders, sustainability technicians, entrepreneurs and government representatives interested in learning about new developments in the green economy.

They can find stands of food products, renewable energies, household products, water treatment or textile products.

There is also an edition for children and families, with the aim of spreading the values of ecology and sustainability, with activities to experiment, play and learn. There are also several workshops and proposals for the youngest children. They need to become aware that we need to move towards a more supportive, fair and respectful society towards the environment.

 

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Gross domestic product (GDP) is the main metric used to measure a country’s economic performance. However, this indicator has significant limitations and sometimes does not reflect people’s real well-being. To analyse the economy in terms of actual economic and social well-being, several agencies have proposed alternatives that can help guide public policies towards more sustainable economies that offer a better quality of life.

 

GDP represents the total value of all goods and services produced in a country over a given period, and has been established as the primary method of measuring a country’s economic success since the 1950s. It is generally calculated every quarter, but the annual GDP is the yardstick used to measure an economy’s size and make comparisons between countries.

There are many ways of calculating GDP, but the method most commonly used by central banks and national statistical institutes measures three main components: consumption, investment and government spending, plus the difference between exports and imports. This is useful for getting an overview of economic activity, but it has some important limitations.

On the one hand, it does not show how wealth is distributed within a country, nor does it consider social welfare. Therefore, it does not reflect the inequality that can be caused by concentrated wealth and does not take into account factors such as health, education, security, or the quality of life of the population.

On the other hand, it does not measure sustainability or the negative environmental impact of some economic activities, nor does it take into account the informal economy and unpaid domestic work, which account for a large part of economic activity in many countries.

To address these limitations, several alternatives have been developed that go beyond the dominant economic paradigm to analyse the economy and present a more realistic picture in terms of the economic and social well-being of the population as a whole.

 

Measuring a more humane economy

Various local and international organisations argue that it is necessary to adopt a reflective attitude towards the regulations that determine the models and indicators used to analyse economic growth to improve the reliability of the information used in decision-making. To this end, many alternative proposals for measuring quality of life have emerged.

  • Human Development Index (HDI). Created by the United Nations, it combines economic indicators, such as per capita income adjusted for purchasing power parity, with other health variables such as life expectancy and education. This provides a more holistic view of human development that facilitates the analysis of differences in quality of life between countries.
  • Genuine Progress Index (GPI). Similar to the HDI, it takes into account factors such as wealth distribution, environmental degradation and unpaid work, but undercounts the costs of environmental degradation and loss of natural resources, income inequality, external debt and crime.
  • Index of Sustainable Economic Well-being (ISEW). Similar to the GPI, the sustainable economic well-being index values unpaid domestic work and takes into account environmental degradation, income inequality and expenditures related to crime and unemployment to account for factors that are not measured in GDP.
  • Gross National Happiness Index (GNI). Developed in Bhutan, the GNI index emphasises the importance of emotional and social well-being. It is based on nine factors to measure the prosperity of the population: psychological well-being, health, education, time use, cultural diversity, good governance, community vitality, ecology, and standard of living.

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