Spanish Economy: Production Factors, Demographics, and Capital

Posted on Mar 13, 2025 in Geography

Unit 6: Production Factors

6.1 The Geophysical Basis of the Spanish Economy

The natural factor has two dimensions:

  • Geophysics: This dimension addresses nature’s most influential aspects on economic activity.
  • Environment: This dimension reflects the state of conservation within the biosphere.

Its elements include:

  • Geographical: Spain’s location between Europe, Africa, and America is a favorable factor.
  • Regional: Spain has a large extension compared to other EU states.
  • Orography: This acts adversely, disrupting communications.
  • Basement: Spain lacks a rich subsoil, with limited oil and natural gas resources.
  • Costs: Spain has benefited from economic activity, traffic, and tourism.
  • Weather: This is especially beneficial for tourism.
  • Hydrography: Low rainfall, erratic seasons, and imbalances between river basins are present.
  • Flora and Fauna: Very rich and varied, supporting activities related to rural tourism.

6.2 The Spanish People and Their Productive Activity

Their study allows for two demographic perspectives:

  • Static Perspective: This analyzes the population at any given time.
  • Dynamic Perspective: This looks at changes over time.

For statistical study, the “census of population” is used. These are official records that provide insight into the basic structure of the population, as well as other socioeconomic and cultural characteristics. They are conducted by the INE (National Statistics Institute) every 10 years. Another official data source is the municipal censuses of each municipality, conducted every 5 years and coordinated by the INE.

The population pyramid is a statistical tool that represents the distribution of population by age and sex in a given year. The total population is ever-growing due to natural increase and net migration.

Migration can be internal or external:

  • Internal: Occurs within the country itself (e.g., from the interior to the coasts). These are currently very few.
  • External: Spain has transitioned from an emigrant country to an immigrant country, which has helped to rejuvenate the population pyramid.

A characteristic process in Spain in recent decades is the aging of the population, which is a decrease in birth rate.

Consequences of Aging Population:

  • From the market point of view: Demand is dominated by the tastes of an aging population, representing growth arrest and barriers to new technologies, assuming a lower level of investment.
  • From the point of view of supply: This can brake investments, as older employees have more experience but a shorter horizon for international investments.
  • Increased government spending: More spending is required for nursing home care than for colleges.
  • Increase in the dependency ratio.

6.3 The Physical and Technological Capital in Spain

The Spanish population is characterized by a low activity rate due to aging, and the unemployment rate has always been high. The tertiary sector has seen the most employment growth, while the primary sector has seen the least.

Characteristics of the Employed Population:

  • Increased participation of women.
  • Reduction of employment among youth under 25 and over 55.
  • Increased employers and autonomous workers.
  • Increases in the tertiary sector, contract work, and non-replacement of machines.

Characteristics of the Unemployed Population:

  • Female unemployment is higher than male unemployment.
  • Youth unemployment is detrimental to the acquisition of experience and labor skills.
  • Long-term unemployment.
  • Territorial discrepancies and structural unemployment.

Causes of Unemployment:

  • Historical patents, caused by structural changes due to integration in the EU.
  • Demographic aspects; the demographic boom from the current rate in Spain has never been high.
  • Market rigidities; the legislation of Spain has hampered the flexibility of use.
  • High labor costs, due mainly to social contributions.
  • Worker training and the quality of entrepreneurs.

Physical and Technological Capital of Spain can be classified into 4 categories:

  1. Fixed capital such as plant, machinery, etc.
  2. Infrastructures of transport.
  3. Public facilities.
  4. Residential estate.

The capital at any given time is the result of investment less accumulated depreciation and its assets, and almost always retired. Currently, the largest investments are done in those, then in residential buildings, the public, and finally equipment transport infrastructure.