Kingdom of Spain
LOCATION AND SIZE.
Spain is located in southwestern Europe. It is bordered by the Atlantic Ocean and the Bay of Biscay in the northwest and by the Mediterranean Sea in the east and the south. It has a 1,214 kilometer (754 mile) land border with Portugal in the west and a 623 kilometer (387 mile) border with France and a 63.7 kilometer (39.5 mile) border with the tiny city-state of Andorra in the northeast, characterized by the Pyrenean Mountains. In the south it has a 1.2 kilometer (.75 mile) border with Gibraltar (which legally belongs to the United Kingdom) and a 96 kilometer (59.6 mile) border with Morocco (Ceuta, Melilla). All together Spain's 504,782 square kilometer (194,896 square mile) territory, including the Balearic Islands in the Mediterranean, the Canary Islands in the Atlantic, Ceuta, and Melilla, has 1,917.8 kilometers (1,191.7 miles) of land boundaries and 4,964 kilometers (3,084.6 miles) of coastline. Spain is slightly bigger than twice the size of Oregon. Its capital, Madrid (with 2,866,850 inhabitants), is situated on the Central Plateau, and Barcelona (with 1,508,805 inhabitants), another major city, is in the northeast by the Balearic Sea (Western Mediterranean). Madrid and Barcelona are the only Spanish cities with a population over a million.
The population of Spain was 39,996,671 in July 2000. This compares to 37.7 million in 1981 and 38.7 million in 1984. Population growth was encouraged by the totalitarian regime of General Francisco Franco (1939-1975) through different state-sponsored programs that financially rewarded families with more than 5 children. Moreover, Spain experienced an urban boom in the 1960s and as a consequence over half the population lived in towns of at least 50,000 inhabitants by 1970. This boom was primarily a consequence of the "economic miracle" of the late 1950s and early 1960s spurred on by the stabilization plans led by the International Monetary Fund (IMF) and the Organization for Economic Co-operation and Development (OECD). There was rapid industrialization, agriculture was transformed, the industry and service sector came to dominate, and subsequently, there were major migratory shifts from rural to urban centers.
During the Spanish transition to democracy that followed Franco's death in November 1975 and after the establishment of the Spanish constitution in 1978, population growth decreased. The population growth was a meager 0.11 percent in 2000. According to the last census (1998), the population density is 201.3 per square kilometer (521.4 per square mile). Similar to other western European nations, this lack of growth can be attributed to
The projected population for 2010 is 39,917,000. Like other Western European nations Spain will have to face the challenge of a decrease in the proportion of active population due to the aging of the nation. Moreover, it remains to be seen how tighter immigration laws can be reconciled with the fact that the projections show that without the influx of foreign immigrants, the population of Spain will in fact decline much more significantly. This immigrant population, which has increasingly entered Spain since the mid-1980s, is concentrated from Northern Africa (Morocco) and South America (Colombia, El Salvador, and Argentina).
LIVESTOCK, DAIRY, AND POULTRY.
This sector has traditionally been financially the most important sector, accounting for 39 percent of overall agricultural output in 1999. However, the sector has suffered from increased competition from other EU countries, and the "Agenda2000" will gradually cut the beef support prices by 20 percent. Although economists predicted that livestock production would increase slightly in 2000 with improved pasture conditions and more rain, outbreaks of "mad cow disease" prevented such increase. BSE (bovine spongiform encephalopathy), which is also referred to as "mad cow disease," is a highly contagious, lethal disease of the central nervous system in cattle. There have been several cases, particularly in Britain in the 1990s, of people who have died after eating meat from cows infected with BSE. In Spain, the first cases of mad cow disease were detected in September 2000 in Galicia, with subsequent cases arising in other provinces in Spain. The cases in Spain can be traced back to Britain; the same feed that was given to cows that developed BSE in the UK was transported and used in other western European farms. Although there have been no human fatalities reported in Spain as a result of the contamination, consumer confidence in beef plummeted. By February 2001, consumption of beef had fallen by an estimated 80 percent. More consumers turned to other meats, including fish, pork, poultry, and lamb, in spite of the subsequent rise in prices. The price of beef, in the meantime, continues to slide, which leaves the future of Spain's beef industry in doubt.
This sector—which includes citrus, deciduous fruit, olives and olive oil, nuts, wine, and vegetables—is gaining importance to the point that its value of production now equals that of livestock, dairy, and poultry at 39 percent. This sector has greatly benefitted from access to EU markets and accounts for 70 percent of overall agricultural exports. Both Spanish olive oil and wine production were initially subject to the tough restrictions imposed by the Common Agriculture Policy during the 1990s. However, recent policy changes have allowed for Spain's quota for olive oil production to reflect the actual production capacity. Spain's vineyards have also benefitted from policy changes; previous programs which uprooted vineyards are now replaced with new programs that concentrate on restructuring vineyards to make the Spanish wine industry more competitive. Spain produces some of the best red wines in world, with the most famous being those from the Rioja region. More than 30 percent of such wines are destined to the EU, North American, and Latin American markets. Other regions producing fine wines include Catalonia, Ribera del Duero, Navarra, and La Mancha. These wines are generally made from the Tempranillo variety of grapes and offer a distinct taste to those from France, for example, which use the Merlot variety.
This sector includes grain, tobacco, cotton, forage, sugar beets, and oil seeds. It covers a larger area than the horticultural crops, but accounted for only 15 percent of the total value of production in 1999. The most important sector of field crops is cereals, especially wheat and barley. However, Spanish cereal production has suffered from competition from the EU, and, under the "Agenda2000," support prices for all grains will be reduced by 15 percent. The most plentifully produced field crop is alfalfa, used for animal fodder. The "Agenda2000" will also reduce area payments for oilseeds to the same level with grains, which is expected to reduce the production of the sunflower seed crop significantly.
Even though the total catch declined in the 1980s, the fishing industry is still important in Spain. The main fishing ports are Vigo and La Coruna in the Northwest. Despite Spain's vast fishing waters, Spanish fishermen have several times been arrested for fishing illegally in Canadian and Moroccan waters. The most visible conflict of late has been the so-called "Turbot War" with Canada in 1995 when Canadian authorities fired on Spanish fisherman for trespassing in Canadian waters. Legal experts argue that the Canadian government clearly violated international law by firing upon a vessel which was, in fact, in international waters. Although there was a peaceful resolution to the conflict, the incident highlights concerns voiced by other countries in the past, such as Ireland and Morocco, about Spanish fishermen.
Ever since liberalization became a goal in the late 1950s, Spanish industry has been growing and becoming more diversified. This is particularly the case in mining, manufacturing, and metalworking. As a result, companies have grown bigger, and foreign investment has become more significant.
Spain has one of Europe's most important and diversified mining sectors. Over half the production is coal, while other major products are iron, pyrites, copper, lead, zinc, tungsten, uranium, mercury, potash, and chloride. Despite its strength, Spanish mining is not sufficient to satisfy domestic demand and, therefore, Spain continues to be a large-scale importer of minerals. Due to competition from other EU countries, the Spanish mining industry has been subject to restructuring and closures, especially in the Asturian coal industry, which has led to miners' protests. The mining sector remains stagnant but is expected to recover when Spain increases its gold production.
The iron, steel, and shipbuilding of Asturias and the Basque Country experienced downsizing in the 1980s. However, the sector has been recovering strongly since 1996, thanks to increased production in shipbuilding, data-processing equipment, and transportation equipment.
In the automobile industry, Spain's top exporters—Opel, SEAT, Volkswagen, Citroen, and Renault—set records in 1996 and 1999. The fact that all car producers in Spain are foreign multinationals is reflective of their strength in the economy. The German car company Volkswagen, for example, actually received large amounts of subsidies from the Spanish governments of the 1980s and 1990s to take over the (then) only native Spanish car manufacturer, SEAT.
In other manufacturing activities, however, foreign multinationals play less of a role. For example, the cotton, woollen textiles, and clothing industries have maintained their importance in the economy. Predominantly located in the Catalan area since the 19th century, they are characterized as being small- and medium-sized enterprises that are family-owned. Spain also manufactures toys, shoes, electrical appliances (televisions, refrigerators, and washing machines), and foodstuffs. Toys and shoes, in particular, have a reputation for high quality and constitute a main export for the manufacturing sector.
Spain overtook the United States recently as the world's second most important tourist resort. The tourist industry employs 12.5 percent of the Spanish workforce and accounts for 10 percent of GDP, with a 9 percent annual growth rate. The success of the industry stems from a variety of factors. It generally costs less to travel and vacation in Spain compared to many places in the world. Spain's already high-quality resorts are improving as aging accommodations are restored. The warm weather is another draw for tourists, especially in southern Spain. The main tourist areas are Mallorca, the Canary Islands, and the Costa Brava. The total number of tourists in 1999 was 58,588,944, and the total number of available accommodations in the country was 1,282,013. This booming industry's role in the Spanish economy does have a downside, however; some analysts worry that the seasonal nature of the tourist industry may add to the precariousness of the Spanish labor market.
The largest Spanish bank is the BBVA (Banco Bilbao Vizcaya Argentaria), and the second largest is the BSCH (Banco Santander Central Hispano), both the fruit of mergers in 1999. BBVA is the product of the merger of the Banco de Bilbao (founded in 1857), Banco de Vizcaya (1901), and Argentaria (1983); the BSCH comes from the merger of Banco de Santander (1857), Banco Hispano-Americano (1900), and Banco Central (1919). Other important banks in Spain include Banco Urquijo, the Grupo March, la Caixa, and Caja de Madrid. The concentration of native Spanish banks in the sector stems from the Ley de Ordenación Bancaria of 1921 that disallowed foreign banks from operating in Spain for several years. Although foreign banks were allowed to enter into Spain in the early 1960s, the stronghold obtained by main Spanish players effectively prevented outside competition. In fact, when many of the foreign banks entered the Spanish market in the late 1960s and early 1970s—such as Deutsche Bank, Barclays, and Manufacturer's Hanover Trust—they did so only with the cooperation of big Spanish financial players such as Banco Bilbao, Vizcaya, and Santander. Cooperation included the sharing of staff with members of Spanish financial institutions—especially important given the fact that many foreigners cannot speak Spanish. Despite liberalization of the financial sector, Spanish financial capital maintained its dominance.
Today, Spain's financial services are diversified and fully integrated in the international financial markets. The EU single market in banking and insurance services has intensified competition, brought down interest rates, and encouraged mergers. Spanish banks are well capitalized. Beyond the main players mentioned above (BBVA, BSCH), there are 103 domestic private banks—mostly headquartered in Madrid—and 53 foreign ones—34 of which are headquartered in the EU. There are also 50 confederated savings banks and 12 regional savings bank federations that are, in principle, non-profit making. They concentrate on private savings and loans and financing public and private projects. To this day, Spanish investment and brokerage entities have increased in number and in the volume of their investments. The credit market is structured around private banks.
The sector is registering spectacular increases. The main operator of telecommunications is Telefónica, but, given recent liberalization initiatives, other operators such as Airtel and Amena have gained significant market strength in a short period of time. The mobile telephone market increased from 14 million to 19 million users during the first half of 1999. Growth is also expected in the cable television sector, even though only 10 percent of the population subscribes to these services. Although the number of PCs per household is low in Spain compared to other industrialized states, it is projected that falling PC prices and cuts to prices on local calls will allow for PC consumption to triple within 5 years.
The EU liberalized the aviation sector due to increased demand for air transport services. As a result, many new local airlines are in competition with the main national airline, Iberia. Two major new competitors, Spanair and Air Europa, have daily flights between major cities in Spain as well as the rest of Continental Europe and the United Kingdom.
Spain has no territories or colonies.
—Raj S. Chari
Peseta (Pta). There are coins of 1, 5, 10, 25, 50, 100, and 500 pesetas and bills of 1,000, 2,000, 5,000, and 10,000 pesetas. Similar to other Western European countries which comply with the European Union's Economic and Monetary Union (EMU), the Spanish currency will no longer circulate after January 2002 when it will be replaced by the euro, the new unified currency of 12 European Union member states. The fixed exchange rate is 1 euro will be worth 166.667 pesetas. Since January 2000, transactions on the Spanish stock market have already been done in the new currency.
Production machinery, motor vehicles, transport equipment, foodstuffs, leather products, and minerals.
Machinery and heavy equipment, fuels, chemicals, semi-finished goods, foodstuffs, and consumer goods.
GROSS DOMESTIC PRODUCT:
US$677.5 billion (purchasing power parity, 1999 est.).
BALANCE OF TRADE:
Exports: US$112.3 billion (f.o.b., 1999 est.). Imports: US$137.5 billion (f.o.b., 1999 est.).