In the 1960s, the Spanish economy began to transform itself from a largely agricultural to a more diverse economy, strong in the manufacturing and service sectors.
Between the years of 1961 and 1973, Spain experienced an economic boom where its economy grew at around 7% a year. This took Spain from being a “developing nation” (as designated by the United Nations) to being one of the fastest growing economies.
By the mid 1970s the Spanish economy experienced a marked slowdown, largely brought about by the 1973 Oil Crisis (el crisis de petroleo). The construction and tourist industries were seriously affected by the oil crisis, but the manufactring, textile, shipbuilding and automobile industries were also hit very hard. Unemployment went on the increase as did the cost of living leading Spain into economic stagnation.
In 1980 Spain entered a period of recession, which forced the Spanish government to stop subsidising the price of oil in Spain and allow it to increase towards world levels. At the same time interest rates fell.
Economy in Spain
In the early to mid 1980s, the Spanish government launched a programme aimed at tackling industrial decline. Laws and white papers were issued to restore the profitability of industry in Spain (thereby enhancing the economy in Spain) by downsizing to restructure debt and unnecessary capacity and staff. Investment was also targeted at emerging technologies for sectors of the economy showing potential fro growth and profits. Consequently, investment and development were aimed at sectors such as food processing, consumer electronics and defense systems. Unfortunately the downsizing strategies led to serious labour force unrest and violent confrontations. However, from the mid 1980s Spain’s economy emerged from stagnation.
In 1986 Spain joined the European Union (la Unión Europea), which boosted the Spanish economy and by the end of 1987 all major economic sectors showed significant increases.
In the 1990s, Spain went through a period of severe recession, which impacted output, investment and public defecit. There were several very high profile bankruptcies (Torras and Banesto) as well as increasing inflation. The Spanish government began to privatise public companies such as Argentaria, Telefónica, Endesa and Repsol. 1993 saw the end of EU subsidies after the seven year bedding in period, which meant that Spain now had to compete on a level playing field.
Industry in Spain today is largely based on SMEs (Small and Medium Enterprises). Around 30% of Spain’s industries are foreign owned. The economy in Spain is further hampered by a lack of modern technological equipment. The largest companies in Spain are state owned and largely run at a loss: Iberian Airlines is one such example.
In terms of the industrial economy Spain relies mostly upon the Basque Country and Catalonia. The Basque Country is the most important region in this arena producing almost half of the industrial output of Spain, while Catalonia still remains one of Europe’s most important industrial and trading regions.
Spain’s Economy and Europe
As an important segment of the European economy Spain currently has the fifth largest in Europe, representing approximately 9% of EU output. Its principal export and import agreements are with France, Germany and Italy. Its most important industries are tourism, chemicals and petro-chemicals and heavy industry. Perhaps the most important industry is tourism (particularly in Andalusia).
As for agriculture, Spain produces olive oil (the largest producer in the world), wine (third highest producer) and dried fruit (sixth largest producer). Other key crops are wheat, rice, peppers, avocados, tomatoes, tobacco and cork.