Spain

Rachael Johnston

Overall Score: 67.6 World Rank: 49

Spain Quick Facts/ Europe

Population: 46.6 million people

GDP: 1.4 trillion

GDP Growth: -1.2%

GDP Per Capita- 29,851

Unemployment: 26.7%

Inflation: 1.5%

Foreign Direct Investment: 39.2 billion

7 Major Sources of Economic Progress

Legal System

The Spanish Constitution of 1978 states that Spain is a social and democratic state subject to the rule of law, which advocates liberty, justice, equality and political pluralism as the overriding values of its legal system. To guarantee the assured effective judicial trusteeship to all citizens by the Constitution, judges must remain impartial in cases that they judge and must abstain from cases that they have no reason to enter into. Courts and tribunals are independent of all authority or people in the exercise of jurisdictional power. The supreme Court is allowed to decide not only if the decisions are against the law, but also, if judicial decisions of the lower courts were against the established jurisprudence.

Competitive Market

In the two markets which were opened up to competition first (air transport and telecommunications), average prices have dropped substantially. This is not the case for markets which were opened up to competition later or not at all (such as electricity, gas, rail transport and postal services), where prices have remained unchanged or have even increased. Although this may be due to sector-specific factors — for instance, gas prices are closely related to oil prices – it seems that consumers have been able to benefit more easily from lower prices in sectors which are more open to competition.

Limits on Government Regulation

Spain’s economic freedom score is 67.6, making its economy the 49th freest in the 2015 Index. Its score has increased by 0.4 point since last year, reflecting improvements in six of the 10 economic freedoms, driven by investment freedom, monetary freedom, and the management of government spending, that outweigh declines in freedom from corruption and fiscal freedom. Spain is ranked 21st out of 43 countries in the Europe region, and its overall score is above the world average.

An Efficient Capital Market

Procedures for establishing a business have been streamlined, and licensing requirements have been reduced. Bankruptcy proceedings are fairly straightforward. Labor market reforms have made it less costly to dismiss a permanent worker. Spain subsidizes fuel for high-seas fishing fleets, but a 2013 clean energy bill cut renewable-energy subsidies and capped the earnings of existing renewable-power plants. Spain's business freedom is 77.5, labor Freedom is 52.5, and monetary freedom is 81.3.

Monetary Stability

Spain’s most recent uptick in economic freedom reverses three straight years of declines. The rule of law is respected, and export growth is encouraged by an open trade and investment framework. The inflation rate in Spain was recorded at -1.10 percent in February of 2015. Inflation rate in spain averaged 7.06 percent from 1955 until 2015, reaching all time high of 28.43 percent in August 1977 and a record low of -1.37 percent in July of 2009.

Low Tax Rates

Spain’s top individual income tax rate is 52 percent, and its top corporate tax rate is 30 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 32.9 percent of gross domestic product. Government expenditures amount to 44.8 percent of domestic production, and public debt equals 94 percent of domestic output. Their government spending is up 39.8 but their fiscal freedom is down 53.1.

Free Trade

The government of Spain recognizes the value of foreign investment and the economic importance of attracting more. The government places special emphasis on attracting foreign investment to help spur recovery from the economic crisis. There have been no significant changes in Spain's regulations for investment and foreign exchange under the Socialist Party (PSOE) government that took office in March 2004 and was re-elected in March 2008. Spanish law permits foreign investment of up to 100 percent of equity, and capital movements are completely liberalized. Both in the mainland and islands there are numerous free trade zones where manufacturing, processing, sorting, packaging, exhibiting, sampling and other commercial operations may be undertaken free of any Spanish duties or taxes. The largest free trade zones are in Barcelona, Cadiz, and Vigo. Spanish customs legislate allows for companies o have their own free trade areas.

Economic Video

Businesses kept closing which would allow the opened ones more people. Bars invented finger foods that they bring out and walk around with like a cock tale party. The average bill per clients is low, but the number of clients is higher. A restaurant stayed open by having longer hours and creating more food options and making their own sauces which is a lot cheaper.

Extra Credit

  • Spain produces large crops of wheat, barley, vegetables, tomatoes, olives, sugar beets, citrus fruit, grapes, and cork.
  • Spain is the world's largest producer of olive oil and Europes largest producer of lemons, oranges, and strawberries.
  • The name Spain comes from the word Ispania, which means the land of rabbits.
  • On May 15th many of the single women in Madrid visit the chapel called Ermita de San Isidro to prick their fingers with pins and put it in a vessel, in order to find a husband.
  • Spain is the only country in Europe that produces bananas, besides a few small Portuguese islands.
  • Most Spanish railroads, unlike those of the rest of Western Europe, use broad-gauged tracks, although some regional systems consist of narrow-gauge railways.