The Evolution of Spain

This part covers a little bit of Spanish history and how it has evolved over the time to become a key member of the European Union.

Spain is a sovereign state and a very important member of the European Union. Spain emerged from what was traditionally known as the Iberian Peninsula. Originally, it was the kingdom of Spain. It is located in the Southwestern part of Europe and borders the Mediterranean Sea to the South and East of its territory. It borders the Atlantic Ocean and Portugal to the Northwest. It has an area of about 505,922 square kilometers making it the second largest European country. It has a population of about 47 million people. It sets Spain among the most populous nation in Europe.

Spanish is the official language. It is also important to note that this language is the second most spoken official language in the world. It is spoken as an official language both in Africa and some parts of the Americas. Spain is endowed with numerous natural beauty including plateaus, mountains, and ranges that attract tourists across the globe. It has several rivers flowing from these ranges. Among the notable ones are the Ebro, Douro, Tagus, and Guadalquivir among others. These rivers play a key role in the Spanish economy. They form an important source of water for either farming and or various industries. Given its location, Spain has enjoyed much external influence since prehistoric times. It has various communities with diverse cultures. The Spanish constitution of 1978 placed value of the cultural diversity of Spanish people as it sought to maintain the autonomy of various communities. As a result, the country is made up of 17 regions. These regions are made up autonomous communities. These communities have their own elected authorities appointed by the members of the communities. The autonomous communities form the first level of administrative division in the country. They are very important administrative structures in the country. They form an integral part of the Spanish government structure. Some communities such as the Catalans have their language, which was given recognition alongside the Spanish language and have representatives in the central government.

This country has had a share of bad leadership and dictatorship for a good number of years. Notable among its dictators is Francisco Franco who hanged on power till his death in 1975. Since then, the Spanish people haves enjoyed a bit of democracy, although, few challenges have been experienced in the past. Spain has a parliamentary government and the parliament is divided into two distinct Cortes, namely the Senate and the Congress of Deputies. Spain is constitutionally a monarch with the hereditary kingship. The kingdom of Spain is headed by the king who has the responsibility to choose the prime minister of the government after a general election has been carried out. The king is the head of state while the prime minister heads the government. The current prime minister is Don Mariano Rajoy who was elected in December 2011. He took the power from the socialist Prime Minister Jose Luis Rodriguez Zapatero who had ruled Spain since 2004. Before taking power, Mariano was the leader of the people’s party and also the opposition leader since 2004. On the other hand, the kingdom of Spain is headed by King Juan Carlos 1 who proclaimed power in 1975 after the death of former head of state, King Francisco Franco who was a renowned dictator in the world.

Prior to the current crisis, the Spanish economy had enjoyed massive growth and had been credited for having successfully avoided the virtual zero growth rate that some of the other partners in the European Union experienced. For instance, the country's economy is said to have   created approximately more than half of all the new jobs created in the European Union for a period of over five years until 2005. This is an indication of how important the Spanish economy was prior to the economic crisis that ravaged the country in the recent years. The good thing, however, is that this economy is rapidly being reversed to make it achieve its potential once again. In addition, the Spanish economy has been regarded as one of the most dynamic economy within the European Union, which has attracted significant amounts investments from foreign countries.

Spain has been an economic power house of Europe before it was plagued by severe economic crisis that led to decline in its influence in Europe. Its manufacturing sector has been one of the most vibrant in Europe for years. The agricultural sector has been among the most profitable in Europe. It was contributing enormously to the growth domestic product of the Spanish people and also to the rest of Europe and beyond. It is known for its fruits exports worldwide. It is also home to the finest wine and olive oil. This shows how significant Spain is both in Europe and the world at large. It influences the world from all the corners. In addition, Spain has been ranked as the world’s twelfth biggest economy. The Spanish citizens have also enjoyed one of the best living standards in the world before the economic crisis struck the nation. In 2005, for example, the living standard index was ranked among the top five best living standards in the whole world. Spanish mainly practices Christianity with Catholicism being the main denomination in the country. 

Madrid is the capital city of the Spanish kingdom. It serves as an administrative center and a business hub in the world. It is a home to major organization offices including the united nation offices. It is also a very important commercial center in the world. In addition, Madrid is a home to one of the most successful football clubs in the world, as well. Real Madrid is the most successful club in the European history having won the highest number of trophies in Europe and has a huge following across the globe.

The Body

This section has more in depth look at Spain as member of the European Union. Its contributions influence the challenges it has faced in the recent times. 

Spain joined the European Union in 1986 and since then its impact on the Union has been tremendous. Spain is credited for being among the founders of the Euro in 1998 and has been a key member in the European Union. Prior to the joining of Spain in the European Union the union was largely an affluent of the rich northern European countries, which had already been industrialized. By then, Spain had an economy that relied on the agriculture more than the industrial sector. It was relatively poorer than the industrialized European countries, which were initially in the European Union. It is as a result of the economic disparity that the European Union was expanded to help the poorer countries in Europe catch up with the rest of Europe. This expansion allowed countries like Spain and Portugal to join the union. The expansion was also aimed at creating an economic and political region block that could have more bargaining powers in the world. This would make Europe stronger both economically and politically. It would open up more markets for member state to export their surplus production and import from other member states, the goods that it was not endowed with. Those are some of the main reasons that made the European Union to administer new members into the Union.

The admission of Spain and other countries like Portugal into the European Union led to the alteration of various policies such as the Common Fisheries Policy (CFP) so as to accommodate their massive fishing fleets. The contribution of Spain in the European economy is so huge and this has led to a better Europe than it originally was. This is the reason why the recent economic crisis experienced in Spain is of great concern to everyone in the European Union and the world at large. The massive jobs the economy created in the past have been declining leading to higher rate of unemployment in Europe.

What the key sectors that supported the Spanish economy and what led to the economic crisis? The agricultural sector is among the key sectors in the Spanish economy. The agricultural sector in Spain is one of the most developed in Europe. It has been vibrant and very profitable in the past. The fact that Spain is one of the largest countries in Europe gives it an upper hand in agriculture. It has huge land mass that has been used for agricultural production. This has made Spain among the biggest exporters of horticultural product such as fruits and flowers. It is home to oranges, lemons, pears, apples, bananas mandarins, and grapefruit, which form part of the exports. Livestock products also form an important part of the agricultural sector. Various animals are reared for commercial purposes. Among them are cattle, pigs, sheep, and even poultry. 

Another important sector in the Spanish economy is the tourism industry. This industry brings to the economy billions of dollars every single year. Spain has beautiful natural site such as mountains and ranges that attract viewers from across the world. It has one of the most favorable climates in Europe, which is a key source of tourist attraction in the country. Historical and cultural monuments make tourism a key sector in the economy and the tourism industry has been a large source of employment in the country.

Well-developed infrastructure has been critical in attracting investors into the country. The country has one of the best transport systems in Europe, which has eased the movement of goods and services promoting economic prosperity.

Despite all these resources and the economic stability that Spain enjoyed in the past, the Spanish people have had their share of economic crisis just like the most of other European countries like Greece and Portugal. The question for most of us is what caused the economic crisis in Spain, and perhaps in other European countries, and what is the impact of these economic crises in the affected countries and Europe as a whole? Several factors led to the economic crisis in Spain.  One of the most notable reasons that dragged the Spanish people into the economic crisis is the political instability that has plagued the country in the recent times. Having various autonomous states, the Spanish government has had a rough time trying to cohesively hold all these autonomous units together. The Catalans for example has been threatening to secede from Spain. Terror attacks by the rebel groups in the country have been a disgrace to the economy of Spain. Attacks have been witnessed even in the capital city Madrid making the economic condition hostile in the country; hence, most of the investors had to with draw their investments.

Another cause of the financial crisis and perhaps the major one is collapse of the banking sector as a result of long-term loans mainly issued for forty years. Some of the beneficiaries of the loans for instance the building companies crashed leading to major losses for the banks. A high rate of bankruptcy of the major companies became common in the country. There was particularly a severe increase in unemployment as a result of collapse of the major companies, which were a major source of employment for the Spanish people. By March 2012, the rate of unemployment rose to 24.4% .This was particularly a high rate for Spain, which had initially enjoyed dismal unemployment rates. Previously, Spain had a vibrant economy since the previous prime minister took power in 2004, during his first time in office the Spanish economy was performing.

However, even during this time some cracks could be noticed in the economy as the trade deficit went alarmingly high. The rates rose to 10% of the gross domestic product (GDP) by the year 2008. It lost competitiveness to its major trading partners.

High rates of inflation have also had a negative contribution towards the economy of Spain. The Spanish currency lost its competitiveness in the international trade market resulting into unfavorable balance of payment for Spanish kingdom. Inflation made production in the country very expensive while the demand for goods and services went down. The result for this was a reduced gross domestic product. The living standards become worse during the economic crisis that loomed Spain since the year 2007. The house prices sky rocked during this economic crisis since the building industry was no longer performing. Prices of various goods went high and the production sector became severely hit by the high cost of production. The family indebtedness rose to a record high of 115%. It is during the year 2008 that the gross domestic product of Spain contracted for the first time in a period of 15 years.  The unemployment crisis set in due to the poor performance of the economy. The youth were the major recipients of the economic crisis in Spain.Another big problem that was encountered during the economic crisis was the emigration problem. Prior to the year 2008 immigration to Spain was so high. However, when the economic crisis set in emigration became the order of the day. Both Spaniards and foreigners stated leaving the country to look for job opportunities elsewhere.

In addition, the Spanish tourism industry was severely affected, because people did not have enough disposable income. Other parts of Europe and America meant that foreigners who used to come to Spain were no longer coming due to the financial difficulties in their own countries.

Another major problem experienced by Spain during its economy’s recession is the increase of public debt.  The public debt for example went to a high rate of 36.2% of the gross domestic product. As a result of these economic crises, Spain and other victims of the European Union were severely weakened. The influence of Spain in the European Union consequently dropped tremendously.

Politically, Spain has had a share of ups and downs. Constitutionally Spain is a hereditary monarch headed by the king who happens to be the head of state. The kingdom is made of royal families who predominantly are of catholic denomination. Some of the rulers of Spain practiced dictatorship with the most recent one being Francisco Franco who reigned until his death in 1975. He was known worldwide for his dictatorial rule. Generally, the Spanish politics derives its basis from the Spanish constitution of 1978. This constitution established Spain as both a social and democratic state.

The Spanish national sovereignty is vested on the people from whom the state draws its powers. The Spanish government is a parliamentary monarchy. The parliament is composed the Congress of Deputies and the Senate. The government is constitutionally a monarch, whereby the monarch happens to be the head of state while the prime minister also known as the president of the government is the head of the government. The executive role is exercised by the government, which is composed of the Prime Minister, the deputy prime ministers and other ministers who form the cabinet also referred to as the council of ministers. Cortes Generales or the general court is vested with the legislative power. Spain has a bicameral parliament composed of the Congress of Deputies and the Senate. Spanish constitution gave rise to regional government. These regional governments function under a system, which is known as the stateof autonomies. This system is a highly decentralized system of administration, which is based on asymmetrical devolution to the various regions and nationalities that make up the Spanish nation. The central government retains full sovereignty. The country is divided into 17 autonomous, which are self-governed as per the constitution. There are also two autonomous cities. The largest one is Barcelona. The form of government of each autonomous community and autonomous city is also based on a parliamentary system, and like the central government, the executive power is vested on the president and his/her Council of Ministers who are elected by the people. These autonomous regions have sometimes been the cause of political instability in Spain. The central government has a hard task in handling some the region especially those who have threatened to secede. The Catalans, for instance, have been a thorny issue in the Spanish politics. These conflicts of interest have led to a number of civil wars in Spain in the past. The political instability has also led to the decline of the Spanish influence in Europe and across the globe. Recent terror attacks in the capital city of Madrid have shown how vulnerable the situation is in Spain.

Various governments have performed differently and had different impacts on the influence of Spain in the European Union and the world at large. In the 1970s, under the leadership of the then king Franco, Spain was viewed with a lot of suspicion and the then members of the European Union were not ready to adopt Spain into the union due to its political stance. After the death of Francisco Franco in 1975, Spain’s road to democracy began. The successor of Franco, Juan Carlos who is still the head of state was vied to be friendlier to the rest of the world. During his reign, since the year 1975, Spain has undergone numerous reforms including the establishment of the Spanish constitution of 1978 on which is supreme in the land up to date. This new constitution vested power on the Spanish citizens and recognized the diversity of the Spanish people. After these reforms, Spain was admitted into the European Union in 1986. The leadership of Jose Luis, who was the prime minister before being succeeded by the current prime minister, had mixed results. During his first term in office the Spanish economy was considered to be among the performing economies of Europe. Up to the year 2005, the Spanish economy produced the highest number of new jobs in Europe. However, towards the end of his first term and during his second term, the economy crumbled to its news. The disruptions of the election that made him fail to win a majority seats in the parliamentary election became the starting point of his government. During his second term that ended in December 2011, the Spanish economy was officially declared to be in recession. Transfer of power to the current Prime Minister Mariano Rajoy did not have an immediate change on the economy as expected. The economy continued to in recession.

Being a very important team player of the European Union, various measures have been taken to rescue the Spanish economy and to make it recover its competitiveness in the world stage. Various assistances have been offered to restore the Spanish economy. For instance, on 9th June 2012, the Euro zone finance ministers agreed to allow a provision of up to 100 billion Euros to rescue the loans from Euro zone. As of October of 2012, the Spanish government is said to have negotiations with the European commission, international monitoring fund, and other institutions to try to rescue the Spanish economy. The Euro group intended to inject funds into the Spanish banks to enable them recover from the devastating consequences of their poor lending strategies. The funding was to help the Spanish government to do an orderly bank restructuring in its country to revive the fallen banking sector, which had been hardly hit by the financial crisis and liquidity problems. On June 21, 2012 a decision was reached to give 62000 million Euros to the Spanish banks, which would then be shared by the various banks in need. In addition, it was agreed that the rescued banks will be subject to control and that stringent requirements would be put in place to protect any losses on the money lent to the banks.

Due to these stringent measures, the costs borrowed by Spain have reached points that are not sustainable in the long run. Consequently, this has led to the prospect of a second aid for the Spanish economy. Spain has come up with a restructuring plan, which expects the European commission to accept and approve for its go ahead. The Spanish economy being one of the largest economies crippled by the economic crisis gave the Spanish government had better bargaining power than its counterpart affected by the same problem.  The Spanish government has put in place various mechanisms to enable its economy recover from the financial crisis witnessed in the country. It has carried out major reforms in its economy to promote economic recovery. The proposed budget for the year 2013, for instance, proposes a reduction of government spending by 8.9%. The banking sector is being restructured to meet the current banking standards and to shed off some of its out dated practices that contributed to its fall. The government has also made efforts to seek for financial aid with the European bank being the main target.

Spain is the fourth European biggest economy to seek bill out. These pleas to bailout Spain have been hindered by disagreements among the European member states. Some member states like Germany are opposed to the idea of bailing out the Spanish banks. The battle by the European leaders to save Spain and the Euro zone in general has generated a heated debate on how to respond to Spain’s growing problems.

Comparatively, Spanish economy has been doing tremendously well. It has been the world’s twelfth best economy and the fourth largest in Europe. However the recent financial crisis has greatly weakened the economy of this Europe giant. Despite being the 12th largest economy on Earth, Spain has been ranked number 136 for ease of starting up a new business. In this dimension, Spain has performed poorer than some of the world’s poorest countries with countries like Afghanistan ranked higher than Spain. 


There are numerous questions that linger in our minds regarding the Spanish economic future and its influence in the European Union. Is all lost for Spain or can this country bounce back to its glory? With the numerous political unrests being experienced in Spain, will the country hold cohesively all its autonomous regions and especially those that have shown the desire to secede from the nation? The economic crisis have led to riots and massive strikes being witnessed in the country, for how long will this continue and is there some light at the end of the tunnel? These are the questions that need to be tackled in conclusion. Despite the recent economic challenges that face the Spanish people, not all is lost for this nation. The only thing that the government of Spain needs to do is diversify the economy and to reform economic policies so as to make them fit in the modern world economy. It should be remembered that one of the main cause of the economic stumble by Spain was the application of substandard accounting policies by the banking sector, which misled the nation and made it unprepared to face the economic crisis head on. Reforms on such policies will be crucial in the recovery of the economy. Diversification of the economy will also do well to economic recovery process.

Spain has large land masses, which could be used for agricultural production. Increased, agricultural production will increase exports and help to achieve a favorable balance of payment from the international trade. Vibrant agricultural sector will also provide raw materials for the manufacturing industries, hence promoting the gross domestic product for the country. This could lead to reduced rates of unemployment in the country since many jobs will be created for the Spanish people and the rest of the world. The government has already shown signs of reducing its expenditure with the proposed budget of year 2013 showing a reduction of government spending by 8.9%. This will reduce borrowing for the government expenditure and help reduce the rising public debt.

The political unrest being experienced in Spain is mainly due to inequality being witnessed in the country. Some regions feel neglected and suffering from unfavorable economic policies being exercised by the central government. The high rate of unemployment in Catalan, for instance, has created animosity between the region and the central government with the region fighting for its independence from the main land. This political animosity could be solved if the central government comes up with fair economic policies that cut across all the seventeen regions. If the living standards of the Catalans are improve and more job opportunities given to them then they will have been solved their grievances once and for all. The terrorists need to be fought decisively to make the country a preferred choice for investors. The recent attacks by the terrorists have shown Spain as high risk country to invest considering the fact that some of the most famous commercial and administrative centers such as the capital city of Madrid have fallen victims of the terrorist attacks. This leaves questions on the countries capability to deal with the threat of terrorism. The effect of this on the economy has been devastating. The tourism industry has been hardly hit by this as tourists consider the country unsafe for their visit. The jobs that this industry helped create in the past have been lost as a result of its poor performance.

The foreign exchange associated with the tourists has also been lost. If these concerns are addressed as quickly as possible, the economy of Spain could easily bounce back to its original vibrant nature it has been enjoying in the past. It should be remembered that this economy has recovered in the past to become the twelfth biggest economy in the world and the fourth biggest economy in Europe. If it was possible then, it is still possible today to revive the Spanish economy to its previous success. The massive strikes witnessed in the country have resulted from low wages coupled with high inflation rates in the country, which has seen the prices of commodities go high making the living standards of the Spanish people deteriorate. The only sure way to handle these riots and strikes is through a sound economic recovery.

The stay in the European Union will be of great importance to Spanish economy. It might help to achieve its full potential once again. Being a member of the European Union provides more opportunities for Spain. Large external market for its exports will be guaranteed if it remains a member of the European Union.  It will also enable it to import cheaply those commodities that it is not endowed with.

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