Analyzing Spanish Trade: Internal and External Markets
Spanish Trade
Trade is the activity that offers surplus goods and services to consumers. It may be within or outside a country’s borders.
Domestic Trade
Domestic trade is characterized by the following features:
- Its location depends on a transportation system between producers, traders, and consumers, and a huge consumer market with adequate purchasing power. This favors urban areas and communities with a good transport network, high population density, and higher per capita income (Madrid, Catalonia, Navarra, Basque Country, and Cantabria), and hurts small communities and less economically developed ones (Extremadura, Castilla-La Mancha, and the Canary Islands).
- Its structure has changed in recent years. Distribution channels, consumption patterns, equipment, and payment methods have been affected.
According to type:
- Wholesale (or wholesaler) concentrates and distributes products to retailers. It facilitates central displacements from production to consumption.
- Retail (retailer or retailer) sells directly to consumers. It includes both traditional trade and modern formats.
Traditional trade establishments are of considerable antiquity, led by individual entrepreneurs, with small and usually familiar staff. The facilities are often outdated due to low investment, caused by a lack of capital and difficulties in accessing credit during economic crises.
New commercial forms: These include supermarkets, self-service stores, and department stores, which sell all kinds of goods. Integrated regional malls combine shopping, entertainment, and hypermarkets.
The commercial areas comprise the geographic area whose population is directed to an important town for the purchase of goods other than necessities. These are usually provincial capitals.
Spanish trade policy instruments include two main components:
- The Framework Plan for Modernization of Internal Trade of 1995 aims to increase the competitiveness of retail through the diffusion of innovation, technology upgrading and management, business cooperation, and trade and country planning.
- The Retail Trade Act of 1996 promotes freedom of enterprise and business premises. It regulates commercial aspects and liberalizes the opening hours of shops, though it takes into account existing laws.
Foreign Trade
Foreign trade is the exchange of goods and services between a country and the rest of the world. It includes exports (sales of domestic products abroad) and imports (purchases of foreign products). These have risen as a result of Spain’s incorporation into the globalized world economy.
Exports are less important in the primary sector and most important in industrial semi-finished goods (iron, steel), equipment (machinery), vehicles, and consumer goods. Imports include energy, industrial, and agricultural products.
The areas of foreign trade were amended following Spain’s entry into the European Union. The trade balance shows a deficit for Spain due to the reduced competitiveness of Spanish products.
Trade with Asia, Africa, and North America is in deficit, while trade with Latin America shows a favorable balance.
Trade policy is influenced by the Single Market and the European Union’s agreements with the World Trade Organization.
Spanish trade policy aims to support exports through:
- The organization of fairs and exhibitions.
- Information for businesses about opportunities abroad.
- Credit for trade networks abroad.
- The promotion of Fund credits (Funds Development Assistance) with other countries in exchange for the supply of Spanish goods and services.
- Plans for the training of entrepreneurs in foreign trade.
- Support for the internationalization of small firms.