Next Generation EU and industrial transformation: Evidence from Spain

• NGEU funds drive mission-oriented industrial transformation through PERTEs. • Energy-related activities absorb most resources, reinforcing green specialization. • Regional strategies activate place-based industrial hubs aligned with EU missions. • Firm-level absorption reflects structural capabilities (size and digital intensity). • Territorial asymmetries and administrative capacity shape NGEU effectiveness. Next Generation EU (NGEU) funds represent a large-scale public investment aimed at mitigating the economic impact of COVID-19 and advancing industrial modernization across the European Union. This study analyzes their early effects in Spain through three objectives: (i) to provide an integrated overview of the design and industrial orientation of the Spain Can Plan, including the role of Industrial Policy Spain 2030 and PERTEs as mission-oriented instruments; (ii) to examine the macro-level implementation of NGEU funds across strategic policy levers, beneficiaries, and regions; and (iii) to assess how sectoral patterns and firm-level characteristics shape the absorption of support. Evidence from the ELISA and SABI databases shows pronounced territorial and sectoral asymmetries, with energy-related and capital-intensive activities receiving a high share of resources. At the firm level, funding allocation is closely linked to pre-existing structural capabilities, whilst post-COVID financial indicators point to improvements in profitability, productivity, and financial stability. The study concludes with policy recommendations to strengthen Spain’s industrial modernization and its strategic positioning in the global economy.