Spain’s Economy: Primary Sector to Regional Disparities
Livestock and Primary Sector
The livestock sector is the largest producer of pork in Spain, making it the world’s fourth largest. Fishing plays a vital economic role. Spain’s forest area covers about 26.3 million hectares, with the Basque Country having the most woods and the Canary Islands the least. The primary sector provides raw materials for the food industry.
The agrifood industry employs 14.3% of Spain’s workforce. Its product distribution significantly impacts the transport sector. Key subsectors include meat, milk, bread, pastries, wine production, and canned vegetables.
Industrial Production and Construction
Spain’s entry into the European Union in 1986 boosted its foreign market and increased imports and exports, changing the business structure. EU access led to trade globalization, reducing the labor market’s importance due to new export opportunities. The number of SMEs increased due to workplace specialization. Catalonia accounts for nearly a quarter of Spain’s industrial turnover. The three main industrial sectors are food, beverages, tobacco, chemicals, and transport equipment.
Secondary sectors include metal production and processing, plant and equipment, metal products, and non-metallic mineral products, representing 28.3% of industrial production value, with a significant metallurgical industry presence.
The economic value of production doesn’t always align with employment numbers. Sectors like textiles, leather, footwear, food, beverages, tobacco, wood, and cork employ many, while more productive sectors employ fewer workers per production unit.
The construction sector is a major job creator but depends on economic factors and is fragmented into small businesses. Dependence on public infrastructure work is significant.
Productive and Economic Imbalances Between Regions
Contrasts in Regional Economic Development
Diverse natural, historical, and social conditions have led to uneven economic development across Spain. Spain’s economy is the 5th largest in the EU and 11th globally by GDP. However, significant areas have low development and low-income populations.
Considering net annual family income, Navarre and the Basque Country have the highest figures, while Extremadura, Andalusia, and Castilla-La Mancha have the lowest. These results are consistent when considering the population living below the poverty line.
Financing of Autonomous Communities
The Constitution outlines two basic financing models for autonomous regions: the common system and the total system.
The common system is used by most regions. They receive two types of resources from central state administrations: tax resources and fiscal resources. Tax resources involve transferring tax money to regional administrations, while fiscal resources are state funds not tied to specific taxes. Communities can also receive EU funds, subject to regulatory conditions.
The leasehold system applies only in Navarre and the Basque Country, known as Foral or historical territories. The Constitution’s additional first provision, the Basque Country’s Statute of Autonomy, and the Law of Reintegration and Improvement Scheme of Navarre establish that economic relations between the state and these territories are governed by the economic agreement system. Each territory manages and collects taxes, contributing to state expenses with a share of money.
Redistribution of National Resources
Not all regions have the same powers, and the funding system must address different economic needs. These needs can change rapidly due to factors like population growth. In common communities, sufficient funds are used to balance the financing system. Communities with fewer powers may have a negative balance if their actual needs are less than initially calculated.
Most funding for common communities comes from the state to support less economically developed regions. The 1978 Constitution established a compensation fund for inter-territorial solidarity, implemented with the 1980 Law on Financing of the Autonomous Communities (LOFCA).
For inter-territorial solidarity to work, richer communities receive less money than they contribute in taxes. This benefits poorer regions but may hinder the development of richer communities if the deficit represents a high portion of their GDP.
Redistributing resources is challenging and has shortcomings. The Balearic Islands, Catalonia, Valencia, and Madrid have significant fiscal deficits, while communities with charter arrangements do not contribute to inter-territorial solidarity.