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UNIT 6: THE SPANISH ECONOMY

1 THE SPANISH ECONOMY

RECENT TRENDS IN OUR ECONOMY


Spain joined the Eurpean Union in 1986. This led to the modernisation of the
economy through:
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Rationalisation policies for low-productivity economic sectors.


Transformation of the countrys infrastructure with the aid of
European financial support.

Between 1995 and 2008, Spain experienced considerable economic growth


linked to the construction industry. However, towards the end of the last
decade, this sector was hit by a recession. The crisis spread to the rest of
the economy, causing a drop in gross domestic product (GDP) and the loss
of millions of jobs. Today, Spains unemployment rate is among the highest
in Europe, creating serious social problems.
IMBALANCES BETWEEN THE SECTORS
Like other developed countries, there has been a relative decline in jobs in
the primary and secondary sectors in favour of the servie industry, or
tertiary sector.
The service industry or tertiary sector, creates the most jobs and contributes
the most wealth to our countrys economy. It includes trade, hotels and
restaurants, government, finantial services, education, health care and
social services. It respresents 76%.
Industry, construction and agricultura account for a much smaller share of
the economy. These activities have undergone significant modernisation,
but their pace of growth has een slower. The crisis also had the biggest
impacto in these sectors: Industry represents 14%, construction is 6% and
agriculture 4%.
TERRITORIAL IMBALANCES
The different autonomous communities have unequal levels of development
in terms of GDP.There is a difference of around 15,000 per person between
the region with the highest GDPper capita and the region with the lowest.
In recent decades, greater territorial balance has been achieved in terms of
Access to facilities and services, as well as universal access to education,
healthcare, pensions and social services.

2 AGRICULTURE, LIVESTOCK FARMING, MINING AND FISHING

KEY ASPECTS OF THE PRIMARY SECTOR


In Spain, the economic importance of the primary sector has declined
since the mid-20 th century. Despite this decrease, its productive
capacity has increased as a result of:
-

Modernisation. In recent decades, the sector has become highly


mechanised and industrial. This had led to a reduction in the
amount of labour used.
Spains entry into the European Economic Community (EEC).
Sine 1986, various European policies have accelerated the
transformation of the sector.
1 Agriculture
In Spain, water use has determined the two predominant
types of farming systems:
o Irrigated farming is found along the Mediterranean coast
and in the Guadalquivir, Ebro and Guadiana river valleys.
Productivity is high due to the use of industrial farming
methods. The main crops are fruits and vegetables,
industrial crops (which require processing before they are
used, such as cotton and beets), fodder crops (for animal
feed) and rice.
o Dryland farming is found in the inland areas of the
pennsula. The main crops are cereals, grapes, olives and
pulses. These crops are farmed extensively using litle
technology. However, productivity is increasing due to the
construction of infrastructure such as irrigation systems
and greenhouses.
2 Livestock Farming
Spanish livestock farming has a srong presence in markets
in the European Union and around the world as a result of
two types of production:
o Extensive methods require large amounts of land and
have lower productivity. Animals raised include:
Cattle (for meat and milk) along the coast of the
Bay of Bscay
Sheep on the Meseta Central
Pigs on the south-western grasslands.
Goats in inland mountain areas, the southern part of
pennsula and the Canary Islands.

o Intensive methods use more technology and have higher


yields. They provide a regular supply of food to urban
makets,including:
Pigs for meat.
Chikens for eggs and meat production
3 Mining
In Spain, mining is becoming increasingly less important.
In the late 1990s, coal mining provided work for some
20,000 people; today it only employs 8,000. Nevertheless,
this figure would be even lower if it were not for state
policies that support this sector in regions that would be
severely paralysed by the total closure of mines.
The mining regions of Asturias have been working to find
alternative economic activities for a number of years. In
Langreo, former industrial and mining spaces have been
refurbished in order to convert them into major cultural
centres, technology parks and company-incubation
schemes.
4 Fishing
Because of the length of our coastline, fishing has
traditionally been an extremely important activity in our
economy.
The fishing industry is also notable for its large volumen of
catches. However, since our entry into the European
Union in 1986, there has been a considerable drop in
catch volumen. In order for this activity to remain
sustainable, from an environmental and economic
persective, it is necessary to set strict fishing quotas.
This has resulted in a restructuring of the fleet, reducing
and modernising it. Additionally, alternative methods such
as aquaculture and the economic diversification of fishing
areas ae being encouraged.

3 INDUSTRY CONSTRUCTION AND ENERGY


THE EVOLUTION OF SPANISH INDUSTRY
Spanish industry began to evolve when it experienced the Industrial
Revolution. However, this did not hapen until the 19 th century. It then

went through several different periods in the 20 th and 21 st


centuries.
-

1950s and 1960s: Highly localised industrial development


begins in major cities.
1970s: there is a major industrial crisis throughout the world,
causing energy prices to rise.
1980s: Industrial restructuring makes it posible to recover from
the crisis, aided by Spain s entry into the EEC.
1990s: There is new industrial growth. Investment in the iron
and steel industry and shipyards decreases, and innovation and
investment in technology industries are strengthened.
21 st century: The globalisation of the economy has encouraged
offshoring, which involves closing factories in Spain and moving
production to countries with lower labour costs. This has
combined with the effects of the international crisis, causing
considerable upheaval in the Spanish construction industry.

THE LOCATION OF INDUSTRY


There are significant imbalances in the territorial distribution of
industry: it is concentrated at the main industrial hubs and urbana
reas.
-

Declining industrial areas are located around the Bay of Biscay


in Galicia, Asturias, Cantabria and Pas Vasco. The heavy
industries that once thrived there have undergone a
restructuring process.
Subsidised industrial areas are located in various `pats of the
coast of Anndaluca, around the Guadalquivir and inland urbana
reas such as Valladolid and Puertollano in Ciudad Real. In these
areas, industrial development used to receive aid through
government plans. Today it is in decline.
Inland industrial gaps. Inland Spain has very little
industrialisation although there are some agri-food processing
plants.
Dynamic industrial areas are located along the Mediterranean
such as in Catalua, Comunidad Valenciana and Regin de
Murcia, along the Ebro and in the Comunidad de Madrid.

CONSTRUCTION
This is a labour-intensive sector. It employs a large number of
workers, most of them with few skills, to build or refurbish buildings,
or create industrial structures or infrastructural elements. It also

requires trained professionals, such as architects and engineers, to


plan and implement a wide range of projects.
Several Spanish construction companies have an international
presence. Leading major projects such as the expansion of the
Panama Canal, the high-speed train from Medina to Mecca, and the
underground railway system in Riyadh, Saudi Arabia.

ENERGY DEPENDENCE
Spain has no oil or other non-renewable energy sources, making it
necessary to import most of its energy from abroad.
Most electricityproduction is still primarily obtained from nonrenewable energies: nuclear and termal power plants. Spain currently
has seven nuclear reactors: Almaraz I and II, Asc I and II, Vandells II,
Trillo and Cofrentes. They produce around 20% of all electricity
consumed in Spain. In recent years, renewable energy production has
increases significantly: wind, solar, hydroelectric and biomass.
4 SERVICES
In recent decades, the service industry, or tertiary sector, has become
the most important sector in our economy. This growth of the service
sector is similar to hat experienced by the other developed countries.
In Spain, this is linked to the following factors:
-

Higher overall living standards. Greater purchaising power has


given rise to new needs, which must be met through services:
leisure, cultura, personal services, etc.
The outsourcing of processes. Companies in industry and other
sectors of production prefer to outsource to other companies
crtain services that their employees used to do. In theory, this is
to sabe costs, leaving external service companies to compete
amongst themselves to offer the most competotive price.
For example, a bottling company last century would have
directly employed designers, mechanics, machine operators,
cleaners, accountants, etc. The same company today might
only have machine operators, leaving the designing, fixing,
cleaning and accounting to other companies.

Consolidation of the welfare state. This legally guarantees the


right to certain public services, such as education, healthcare,

social services and disability care. A large portion of our taxes


go towards the funding of these importnt activities.

DOMESTIC TRADE
Domestic trade includes all commercial transactions that take
place within a state.
In Spain domestic trade is characterised by:
-

Small-scale businesses. These are usually small family


businesses engaged in traditional commerce, dealing directly
with customers. This type of business helps energise
neighbourhood life and contributes to the development of a
sense of community and belonging.
These businesses are very vulnerable. They face competition
from large retail operations, as well as new ways of selling,
which have created new consumer habits that are very different
from the traditional ways.
The emergence of new ways of selling. E-commerce is
experiencing significant growth.
Use of new technologies. Technology is now commonly used to
manage merchandise. Examples include bar code readers.
The proliferation of shopping centres. These are monopolising
the market in large and mid-sized cities.

FOREIGN TRADE
Foreign trade is made up of comercial transactions between
different countries.
In Spain, he basic characteristics are:
-

Exports are sales of products and services produced here and


sold to other countries.
Spain primarily exports food, industrial machinery and vehicles
such as cars and lorries.
Spain s main trading partners are its neighbours in the
European Union: France, Germany, Italy, Portugal, and the
United Kingdom.
Imports are purchases of products and services from other
countries.
Spain imports a lot of capital goods such as machinery and
tolos, technology and textiles.

Spain s main suppliers are European Union countries, the


United States and in recent years, China.
-

The balance of trade is the difference between what we export


and what we import. Traditionally, Spain has had a negative
balance of trade, importing more than we export.

5 TOURISM
THE IMPORTANCE AND ORIGINS OF TOURISM IN SPAIN
Tourism is extremely important to the Spanish economy. It creates a
lot of employment, although they are generally low quality jobs with
temporary contracts. However, the influx of foreign currency from
foreign tourists helps to offset Spain s trade dficit.
Beginning in the 1960s, tourism became more popular for the
following reasons:
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Natural resources and physical environment. Spain has large


areas of coastline and beaches, and a favourable climate.
Improvements in workers rights. In developed countries, social
advances such as paid holidaytime allow for more free timeand
leisure spending. This has enabled Spain to benefit from the
develoment of domestic and international tourism.
The develoment of a fabric of tourist support businesses. The
huge numbers of tourists ariving in Spain are served by a highly
dynamic economic sector.
Government support. There has been major investment in
infrastructure, including roads nd airports, as well as tourism
promotion.

TOURIST ATTRACTIONS IN SPAIN


Spain has been a global power in tourism for serveral decades. The
quality and diversity of its attractions from the basis of a wellrespected intrnational brand.
-

Beach holidays:
Spains coasts are the main attractions for both foreign and
Spanish tourists in summertime.However, tourist activity drops
sharply during the rest of the year. It is highly developed along
the Mediterranean coasts, the coast of Andaluca and in the
Canary and Balearic archipelagos.

Winter tourism:
This kindo of tourism centres around Winter sports. It requires
high mountain areas, months with Winter weather and ski resort
infrastructures. A number of tourist services have proliferated in
these areas, including hotels, restaurants and shops.

Rural tourism:
The main aim of this kind of tourism is for people to spend time
in the outdoors, often just for weekends. It can contribute
positively to the economy of the destination areas.
It includes varieties such as agrotourism, ecotourism and
outdoors sports.

Business tourism:
Trips for business reasons. These are considered tourism when
travellers use the industrys services, such as transport,
accommodation and restaurants. This type of ourism is
predominantly urban.

Conference tourism:
Large numbers of people from a given group choose a city as a
location for congresses and conferences, scientific gatherings,
business meetings, cultural event and trade fairs. These events
generate a lot of wealth in cities.

Cultural tourism:
Historical spots and cultural events are the reasons many
tourists visit Spains inland cities. They are usually marketed in
the form of tours and can ac as a complement to beach
holidays.

6 TRANSPORT

CHARACTERISTICS OF THE TRANSPORT SYSTEM


Spain has a well-structured system of transport for both peopleand goods.
At an international level, it has connections to other transport networks,
supporting the development of commerce and tourism.

At a national lvel, the density of the transport network varies. There are also
differences in terms of how much infrastructural elements are used, and as
well as how easy it is for the population to Access them.
MAIN TRANSPORT NETWORKS
Public investment in the modernising of infrastructure has made it posible to
build roads and high-speed railways, and to improve airports and sea ports.
In addition, more airline routes and low-cost flights have made it easier for
people to get around, and so promotes tourism.
The road and railway networks are both radial, arranged around a central
poin, in Madrid, although direct connections between other regions are
increasing.
TYPES OF TRANSPORT
Means of transport are the different systems or ways of moving passengers
and goods from one place to another.
-

Road transport:
This is the main form of passenger and goods transport. Spain has an
extremely dense radial network that reaches every part of the
country. The most recent central government infrastructure plans
propose a gradual shift to a mesh network. This would avoid having
the majority of the countrys traffic run through Madrid.
The Spanish road nwork is made up of roads owned by different
authorities: town councils, provincial and island councils, autonomous
communities and the State. It is also pat of the European road
network.

Rail transport:
Rail transport is highly suitable for long-distance goods transport, due
to the cost and volumen. However, in terms of passengers, it faces
serious competition from road transport.
There are significant territorial imbalances due to a lack of public
investment in infrastructure in certain regions.
The two main types of rai transport useb by passengers are loca and
suburban trains in the metropolitan arear, and high-speed rail (AVE)
over long distances.

Air travel and transport:


This is used for travellers nd urgent lightweight, high-value goods.
The Spanish airport network is made up of 46 government-run (b
AENA) and two privately owned airports.
The majority of passenger traffic is concentrated at the airports in
major cities such as Madrid and Barcelona, and coastal tourist

destinations such as the Canaries, the Balearics and the Costa del
Sol, with international connections.
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Sea and river transport:


This is mainly used for goods transport because of its low cost and
high carrying capacity. It is the way most of our imports and exports
are transported.
The most important forms of passenger transport are short-distance
ferries (between the pennsula and ceuta, Melilla and he archipelagos,
and beween islands) and tourist cruise ships.
In terms of river ransport, the only navigable river is the Guadalquivir
whose port is island, at Sevilla.