Since the mid eighties the growth of total factor productivity (TFP) in the Spanish economy has been decelerating. This paper analyzes this worrying trend in two ways. First, we study the process of factor accumulation (infrastructure, human capital and technological capital) in the Spanish economy, and conclude that there is no clear evidence of lack of progress in this area. As a consequence, we shift our attention to possible institutional constraints. The second analysis focuses on the relationship between the regulatory environment and TFP growth. Using indicators of industrial and retail sector regulation, both at a regional level, we conclude that there is scant evidence of a significant correlation between the degree of regional government intervention and the rate of growth of the TFP.