This paper uses a multi-equation model to achieve an overall study of two key factors which explain growth, technology and institutions. The paper focuses on the process of the accumulation of these factors and the interrelationship arising among them. A theoretical model is given, together with empirical evidence for the joint impact of these factors on economic growth in a wide-ranging sample of countries between 1985 and 1997. This paper also contributes certain novel aspects in the variables employed. Thus, an indicator of human capital and an index reflecting institutional infrastructure have been used. The human capital indicator considers health, formal education, informal education and accumulated experience. It embraces a wider range of factors than the variables conventionally used in empirical studies. As to the institutional infrastructure index, it has been constructed on the basis of six institutional sub-indices, comprising voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption. Thus, the index constructed captures a greater wealth of the items commonly covered by the concept of institutions.

Purpose: With the opening up of the economy since the 1959 Economic Stabilization Plan, was it the production of electricity that drove the growth of gross domestic product (GDP) in Spain or, on the contrary, was it the growth of GDP that drove the production of electricity well into the 21st century? The purpose of this paper is to answer this question.Design/methodology/approach: A cointegration approach based on the studies conducted by Pesaran and Shin (1999) and Pesaranet al.(2001) is applied, as it is suitable for short data series like those used in this paper.Findings: The results of this paper allow us to conclude that electricity production boosted economic growth in Spain during the period under study, confirming the growth hypothesis.Research limitations/implications: The results of this paper should be interpreted with caution, as electricity today amounts to less than a quarter of the total amount of energy used in Spain. It was not possible to incorporate other inputs to the production function (such as other energy inputs, technological or human capital), but the methodology used avoids the problems of omitted variables and of autocorrelation.Practical implications: The results show that a small economy with limited resources, such as the Spanish one, is more vulnerable to energy shocks than other energy-sufficient economies. As Spain is a country with high energy dependence from abroad, the government must first ensure the electricity supply. Increased availability and access to different sources of electricity will improve the outlook for the Spanish economy. Conversely, a shortage in supply of electricity will constrain the regular pace of economic growth.Social implications: Spain should investigate and explore more efficient and cost-effective sources of energy, in particular the renewable energies, as traditional energy sources will be scarce before long.Originality/value: This paper differs from previous ones carried out for Spain in several aspects: it considers a broader period of time, from 1958 to 2015; the relationships between electricity production and GDP are analysed for the first time in a neo-classical production function where electricity, capital and employment are considered as separate factors; and a cointegration approach based on the studies conducted by Pesaran and Shin (1999) and Pesaranet al.(2001) is applied, as it is suitable for short data series like those used in this paper.