The Spanish Cabinet approved a bill on Friday to diversify the economy and shift it from its over-reliance on the construction sector.
The government aims to boost innovative industries such as renewable energy, biotechnology, while also targeting the aeronautical, automobile and food industries so as to raise the economy's long-term growth potential.
Press reports cite Prime Minister Jose Luis Rodriguez Zapatero as saying the bill is essential for Spain's present and future after a cabinet meeting in the Andalusian capital of Seville.
Spain's economy contracted 0.1% in the three months through December, as it continues to battle high unemployment.
The Iberian nation has the largest unemploment rate in the eurozone at 20%, with some 45% of under 25s without a job.
The government pumped billions of euros into the economy in order to mitigate the downturn and in the process racked up a massive budget deficit.
Spain's budget deficit - at 11.3% of gross domestic product - is nearly four times over what European Union rules allow.
The government has announced spending cut plans, including a civil service hiring service and a raise in the retirement age in a bid to consolidate public finances and bring down its deficit.
For comments and feedback: editorial@rttnews.com