Spain’s Domestic and Foreign Trade Dynamics

Posted on Mar 6, 2025 in Economy

Foreign Affairs and Trade

Trade is the activity that provides surplus commodities and services to consumers. It can be performed within the boundaries of a country (domestic trade) or outside them (foreign trade).

Internal Trade

It is characterized by:

  1. Its location depends on the existence of a transport system between the producer and the consumer, and the existence of a broad consumer market with adequate purchasing power. Both factors contribute to urban neighborhoods and communities with good transport networks, high population density, and a higher GDP per capita (Madrid, Catalonia, Basque Country, and Cantabria) and to the detriment of neighborhoods and communities with smaller and less developed economies (Extremadura, Castilla-La Mancha, Canary Islands).
  2. Its structure has profoundly changed in recent years, and these changes have affected:
    • Distribution channels (abolition of intermediaries).
    • Consumption (greater purchasing power due to the increase in income; diversification of supply reaching more consumption, and a decrease in the frequency of purchases due to women’s incorporation into the workforce and systems to preserve perishable products).
    • Distribution (self-service sales, which, by eliminating staff and purchasing large quantities, allow for lower prices).
    • Equipment (data-phone, optical bar code readers, computers).
    • Payment (credit cards and electronic purses).
  3. By type, it is distinguished:
    • The retail trade, greater or wholesaler, concentrates production and seeks to distribute it to central locations for production and consumption (Catalonia, Andalusia, Valencia, and Madrid).
    • Retail trade, or retail selling, is for direct consumption.
    There is a contrast between traditional and modern trade.
    • Traditional Trade: Small establishments in buildings of considerable antiquity, run by individual entrepreneurs, with small staff, and often family-run. They are often outdated due to low investment in equipment, caused by a lack of capital and difficulties in accessing credit. These characteristics explain its crisis, despite its advantages (personalized treatment and immediate accessibility).
    • New Commercial Forms: These include large supermarkets and department stores in city centers that sell all kinds of merchandise, and integrated regional commercial centers, which combine shops, leisure, and hypermarkets.
  4. Commercial areas are constituted by the geographic space whose population is directed to an important location for the acquisition of goods that are not necessities.
  5. Spanish commercial policy has two basic instruments:
    • The plan under the Internal Trade Modernization (1995) even pretends to increase the competitiveness of retail trade by improving professional qualification, diffusion of innovation, modernization, and management technology; business cooperation.
    • The 1996 Retail Law established free enterprise and commercial business, regulating various aspects and liberalizing opening hours for commercial establishments.

Foreign Trade

Foreign trade is the exchange of products and services from one country to the rest of the world. Export is the sale of national products abroad, and import is the purchase of foreign products for the country. In recent years, both have increased due to Spain’s incorporation into global economic globalization.

  1. Regarding products, semi-finished industrial goods, equipment, road vehicles, and consumer goods have become less important in the export sector. Imports are prominent in energy, industrial, and agricultural products.
  2. Areas of foreign trade have been amended following Spanish entry into the European Union.
  3. Trade policy has been influenced by the establishment of a single market with the European Union.