SPAIN
GEOGRAPHY
Situated in Europe and located in the Iberian Peninsula, a part of its territory includes Canary Islands and Balearic Islands. It borders with France, Portugal, Mediterranean Sea, Gibraltar and Morocco through the autonomies cities of Ceuta and Melilla. The Upland Meseta occupies for the majority part the central of Spain and in its heart lies the capital, Madrid. Other important Mountain ranges are the Pyrenees in the East, Cordillera Cantàbrica in the North and Sierra Nevada in the South. The main islands are gathered into two archipelagos: the Balearic Islands and the Canary Islands. The Balearics are located in the Mediterranean Sea; the most famous ones are Mallorca, Menorca, Ibiza and Formentera. The Canary Islands in the Atlantic are of volcanic origin and contain the highest peak on Spanish territory, Teide Peak, which rises to 3,718 metres on the island of Tenerife, other important islands are Gran Canaria, Lanzarote, Fuerteventura, Tenerife, La Palma, La Gomera and El Hierro.
HISTORY
The Iberian Peninsula has been populated since prehistoric times, as it is possible to see evidence of human habitation at the Atapuerca since 35,000 BC. Around 4000 BC Iberians, arrived from the east, settled down the majority part of Spain. Later on arrived the Celts and during the Bronze Age, civilization culminated the Tartessian around Seville (1000-500 BC). Around 1100 BC, Phoenician seafarers (Lebanon) set up exchanging colonies in Cadiz and elsewhere along the Spanish coast. Greeks also traded along the northeaster coast. With the fall of Phoenicia, the Iberian Peninsula came under the rule of Carthage (present day Tunisia), but was occupied by Rome following the Punic Wars. During six centuries, the Romans laid the foundation of Spanish language and culture. After the fall of the Roman Empire in the fifth century AD, the Visigoths then ruled Spain. In 711, the Muslims of northern Africa invaded Spain across the Strait of Gibraltar, occupying most of the peninsula within a few years. Their presence lasted more than seven centuries, though the Christian kingdoms to the north increased in power over the generations, gradually driving the Moors southwards. The last Moorish kingdom, Granada (the eastern half of present-day Andalusia), was conquered in 1492.
After the discovery of the new world by Columbus, there was the expulsion of Jews and Moors, which marked Spanish history forever. Spain was now put as the forefront of European countries but constantly drained in resources.
After the accession of the Bourbon dynasty in the 18th century, Spain became, with France, a sphere of influence for the following 100 years, up to the defeat of Napoleon’s army.
During the 19th century, Spain was sharply divided between conservatives and liberals, and rural and urban society. Coups d’état and changes of government were frequent. With the increasing power of the working class, in 1931 king Alfonso XIII was forced to abdicate, and Spain was declared a republic.
In Spain, the dictatorship arrived because of a coup against the government of the second republic (1931-1936) that will later degenerate into the Civil War from 1936 until 1939. The general Francisco Franco assume all the power, gaining the interest of all the conservative forces and the “derechistas” and the ones of his army. Initially Francoism went against the opponents but year after year Spain closed itself with the intent of reorganize its society and economy. The last years of Francoism were dominated by a more open mentality and economic development, known also as “Milagro Español” (Spanish miracle).
When Franco finally died in 1975, Spain was taken over by King Juan Carlos I, who soon led Spain toward democracy. As a fruit of its new freedoms, the country celebrated a cultural renaissance in the 1980s and 1990s, and in 1992 hosted both the Summer Olympics in Barcelona and the Expo ’92 in Seville.
SOCIAL CULTURE AND RELIGION
The main language is Spanish, also called Castellan, but inside the country, it is not difficult to find other languages, such as Catalan, Guascon dialect, Valencian, Aragonese, Aranese, Galician and Basque. Roman Catholicism became the official religion in 589 and it has been closely related to the culture ever since. Even after an inner conflict at the beginning of the 19th century between Church and state, over land ownership and the control of education, Catholicism remain the official language. After the Spanish Civil War, the general Francisco Franco restored it as state religion, status that remained until 1978. Nowadays Spain does not have an official religion but the Roman Church continues to receive financial support from the country.
POLITICS
Spain’s political system is currently based on the Spanish Constitution since 1978. After the military regime set up by Franco, since 1975, Spain gradually moved to a multi-party democracy and today it is seen as a full democracy.
The political system in Spain is a parliamentary monarchy with the reigning monarch working as the official head of state and the prime minister as head of government. Currently Felipe IV, is the monarch and king of Spain since 2014 and the prime minister is Pedro Sanchez of the Spanish Socialist Worker’s party (PSOE).
The Parliament is known as the Courts General, which consists of two chambers: the Upper house, with 8 elected and 57 appointed by regional legislatures, and the Lower House, called congress of Deputies with 350 members elected by the citizens.
Spanish’s Government has the responsibility of running the country, although the Generals controls the action of the government and have the right of approving budgets.
The Congress of Deputies (Lower House) is the more powerful of the two chambers, able to approve or reject laws, initiate legislation and with the power to vote the prime minister in or out. The Senate (Upper House) can veto legislation but this can be upturned if there is an absolute majority in the Congress of Deputies. It has a greater degree of power regarding the autonomous communities at regional level.
In addition, there are three other types of government in Spain, known as: regional autonomous communities, local provinces and municipalities. There are 17 autonomous communities (plus two autonomous cities), which are subdivided into 50 provinces. Provinces are then further divided into municipalities.
The autonomous communities are organized as the parliamentary system, with executive and lesgislative division with its own Statute of Autonomy. The autonomous communities in Spain are Andalucia, Aragon, Asturias, Balearic Islands, Basque Country, Canary islands, Cantabria, Castilla-La Mancha, Castilla Y Leon, Catalonia, Extremadura, Galicia, La Rioja, Madrid, Murcia, Navarra and Valencia. The two autonomous cities are Ceuta and Melilla.
Main Spanish political parties and leaders
Spanish Socialist Workers’ Party (Partido Socialista Obrero Espanol – PSOE) – democratic socialist and pro-European party born in 1879 that has governed Spain for a long period. Currently led by Prime Minister Pedro Sanchez.
People’s Party (Partido Popular) – conservative Christian party. Overthrew from power in June 2018, the party is currently led by Pablo Casado.
United We Can (Unidos Podemos) – socialist party formed from an alliance of left-wing parties to contest the 2016 election. Led by Pablo Iglesias.
Citizens (Ciudadanos) – Catalan centre-right liberal party formed in 2006. Campaigns on a pro-European, anti-Catalan nationalism platform. Led by Albert Rivera, the party won 32 seats in the 2016 election.
Republican Left of Catalonia-Catalonia Yes (Esquerra Republicana de Catalunya-Catalunya Si – ERC CatSi) – coalition party made up of pro-Catalan independence parties and formed in 2011. The party has 9 seats in Congress.
Catalan European Democratic Party (Partit Democrata Europeu Catala – PdeCAT) – pro-European Catalan nationalist party founded in 2016. Has 8 seats in Congress.
Basque Nationalist Party (Partido Nacionalista Vasco – PNV) – centre-right Basque nationalist party founded in 1895 and currently led by Andoni Ortuzar. Has 5 seats in Congress.
Basque Country Unite (Euskal Herria Bildu – EHB) – left-wing basque nationalist party formed in 2011. Won 2 Congress seats in 2016.
Canarian Coalition (Coalicion Canaria) – centre-right party that has governed the Canary islands since its foundation in 1993. Has one seat in Spanish parliament.
ECONOMY
Spain’s economy is the thirteenth largest by nominal GDP as well as one of the largest in the world of “Purchasing power parity”. After the Civil War, the economy of Spain was destructed, but since 2008, it has progressed and the last 15 years are known as the “Spanish Miracle”.
The economy of Spain had created more than half of all the new jobs in the European and since 1990, many Spanish companies have gained multinational status, expanding their activities in Latin America, Eastern Europe and Asia. Spain is the second biggest foreign investor in Latin America, after the United States. Spanish companies have also expanded into Asia, especially China and India. Traditionally until 2008, most exports and imports from Spain were held with the countries of the European Union: France, Germany, Italy, UK and Portugal. The most important customers Spain has are from Latin Marcia, Asia (Japan, China and India), Africa (Morocco, Algeria, Egypt) and the United States. From Oil, to food products and petroleum, Spain has been cooperating with these countries for years.
After the economic crisis in 2008, Spain turned outwards, concentrating on export supply and export amounts. It has growth in product sales of medium and high technology.
Currently these are some examples of companies that ranked among the largest European firms:
- Telefonica—ranked in the top 3 in the ICT sector
- Santander and BBVA Compass—both ranked in the top 5 in the financial sector
- Repsol—ranked in the top 3 in the oil and gas sector
- ACS—ranked top three in infrastructures
- Iberdrola—ranked in the top 5 in the energy sector
All of these companies (and more) have expanded their operations globally, serving as an example and reference for other smaller Spanish companies in the same sectors. Spain’s diversified economy includes manufacturing, financial services, pharmaceuticals, textiles and apparel, footwear, chemicals, and a booming tourism industry. In the last two decades, Spain has invested principally in infrastructure, highways, rails, airports and seaports. In addition, Spain’s 46 ports place the country near the top internationally in terms of its handling of port traffic.
Spain invests a lot in education, and, at the moment, the 40% of population are young adult, between 25 – 34 years old, with at least a post-secondary education. In fact, Spain is home to three of the top twenty business schools in the world and ranks third in that category only behind the United States and United Kingdom. Despite the skill-level of the workforce, labor costs in Spain are 30 percent less than the Western European average.
BUSINESS OPPORTUNITIES
Why collaborating with Spain?
Consolidated economic recovery
After three consecutive years of growth above 3%, also in 2018 the Spanish economy confirmed its dynamism, although there was a physiological attenuation of the expansion dynamic. In fact, Spain ended 2018 with an overall GDP growth of 2.6%, the best growth rate among the major European economies. The IMF and the European Commission estimate that the Spanish economy will grow by 2.3% in 2019 and by 1.9% in 2020.
Top position for key markets in Latin America and North Africa
Spain presents itself as one of the most attractive European markets, with 46 million potential consumers and an additional basin of more than 80 million tourists who visit the country each year. It also offers a privileged position as a gateway to the Latin American and North African markets.
Favorable business climate
Moderate fiscal pressure, presence of tax incentives for businesses and investment incentives, in particular to encourage technological innovation and youth work and to support small and medium-sized enterprises. Facilitated procedure for setting up new companies by filling in an electronic single document. Presence of an Italian-Spanish section in the Bar Association of Madrid.
Intense economic and commercial ties with Italy
Italy and Spain, due to geographical, cultural and consumption orientation, have always had important economic-commercial relations. Based on ISTAT data, in 2018 bilateral trade exceeded 44 billion euros. In particular, Italian exports to Spain grew by 3.2% compared to 2017. The strong presence of Italian companies in strategic economic sectors confirms Spain as one of the most interesting European markets for Italian companies.
Communications favored by modern transport and logistics infrastructures
The Global Competitiveness Report 2018 places Spain in 10th place in the world in terms of infrastructure quality and logistics. In fact, Spain has two of the largest airports in Europe (Madrid and Barcelona) and is the third country in Europe for the number of air passengers. It is also the 1st country in Europe in terms of highway length, 1st country in Europe and 3rd in the world in terms of high speed railway lines. It also has an efficient port infrastructure (3 Spanish ports are among the top 20 ports in the world for container traffic).
WHERE TO INVEST
- Other means of transport (ships and boats, locomotives and rolling stock, aircraft and spacecraft, military vehicles)
- Vehicles, trailers and semi-trailers
- Information and communication services
- Basic pharmaceutical products and pharmaceutical preparations • Chemical products
WHAT TO SELL
- Machinery and equipment
- Vehicles, trailers and semi-trailers
- Articles of clothing (including leather and fur)
- Metal products, excluding machinery and equipment
- Chemical products
What about numbers?
In 2018 (provisional data) Spanish exports reached 285,024 million euros, marking a growth of 3.2% compared to the previous year; imports, with a value of 318.864 million euros, recorded an increase of 5.4%.
The slower pace of Spanish exports has led to an increase in the trade deficit which rose from € 26,288 million in 2017 to the current € 33,840 million. The coverage rate stood at 89.39% against 91.31% in 2017.
Trade between Spain and Italy is concentrated in the macro-sector of industrial and technological products which, in 2018, represented 75.8% of Italian sales to the Spanish market and 62.9% of Spanish sales to Italy.
Consumer goods are, for Italy, the second largest interchange group with a share of around 17% of the total; for Spain they represent 15.7%. With regard to agri-food trade, Italian-Spanish trade recorded negative trends in 2018 both in Italian sales (€ 1,521 mln / -1.6%) and in Spanish sales (€ 4,877 mln / € -7.5). The balance of this sector is clearly favorable to Spain and justifies the imbalance in the overall Italian trade balance.
On the basis of the provisional data of 2018, chemical products lead the ranking of Italian sales to this market, with a value of 3,060 million euros and a share of the total of 14.5%. During the period under review, Italian exports of these products increased by 9.2%.
In second place are the equipment and components for vehicles that have suffered a 7.6% decrease, going from 1,693 million euros in 2017 to the current 1,564 million euros. This is followed by fuels and lubricants with a value of 1,539 million euros and an increase of 1.8% compared to 2017.
INTERNATIONAL RELATIONS
Spain and Germany
Due to the difficulties of taking off its economy and its excessive deficit, in 2000-2002 Germany was known as the “sick of Europe”. In 2003 the economic situation in Germany was bad, it was worse than in Spain. Eight years later the situation in both countries has reversed. The German economy is running smoothly (great growth, low unemployment, ..) and the Spanish economy is heading towards disaster.
How did they arise from their ashes?
Germany: Until the year 2000 the deficit improves and from that year increases. With Angela Merkel improves again and there is no deficit in 2007 and 2008. In 2009 and 2010 the deficit reaches 3% and 4%. Since then it improves and in recent years they achieve a surplus.
Spain: In the 1st Aznar legislature the deficit falls and in the 2nd it remains close to zero. In the 1st Zapatero there is a surplus and unfortunately it is triggered during the 2nd. With Rajoy, the deficit improves but always falls below the target set with the EEC.
Export and Import of Germany
In 2017 Germany exported $1.33T, making it the 2nd largest exporter in the world. During the last five years the exports of Germany have increased at an annualized rate of 0.2%, from $1.33T in 2012 to $1.33T in 2017. The most recent exports are led by Cars which represent 11.9% of the total exports of Germany, followed by Vehicle Parts, which account for 4.81%.
In 2017 Germany imported $1.08T, making it the 3rd largest importer in the world. During the last five years the imports of Germany have increased at an annualized rate of 0.4%, from $1.1T in 2012 to $1.08T in 2017. The most recent imports are led by Cars which represent 5.55% of the total imports of Germany, followed by Vehicle Parts, which account for 3.89%.
Spain and France
France is Spain’s leading economic partner with annual trade of more than €60 billion. In 2017, France posted a trade surplus with Spain of €700 million, down 7% on the previous year. France’s market share in Spain has grown to 11.1% due to sales of transport equipment and reached 2008 levels again; in 2016, France was Spain’s second-largest supplier after Germany, and its leading customer. Likewise, Spain’s market share in France is growing (6.4%, the highest in 10 years) mainly due to France’s revitalized automobile market. Spain is France’s second-largest customer after Germany and its sixth-largest supplier.
Investment has been significant in both directions: France remains the third-largest investor in Spain (behind the United Kingdom and the United States), with more than 2,000 subsidiaries employing over 300,000 people. Spanish companies are working in more than 1,300 sites in France and employ more than 55,000 people.
Exports and Imports of France
French exports rose by 3.8% in 2018, amounting to €491.6 billion. According to French Customs data, this increase is mainly thanks to the motor vehicle and textile/clothing/leather sectors, which are currently experiencing strong growth, up 7.9% and 8.2%, respectively.
French imports totaled US$659 billion in 2018, down by -0.1% since 2014 but up by 7.5% from 2017 to 2018.French imports represent 3.7% of total global imports which totaled an estimated $17.778 trillion one year earlier during 2017 (as calculated on January 21, 2019).From a continental perspective, almost two-thirds (63.8%) of France’s total imports by value in 2018 were purchased from fellow European countries.