Ling-en HSIA 13th November 2008

http://www.slideshare.net/lingen

CONTENTS

Introduction _____________________________________________________________________ 3

I/ The Catching up ________________________________________________________________ 4

A/ Financial aspects ___________________________________________________________________ 4

B/ The Openness of economic relations ___________________________________________________ 6

C/ Labour market _____________________________________________________________________ 8

Conclusion __________________________________________________________________________________ 12

II/ The current situation of Spain ___________________________________________________ 13

A/ Facing the enlargement ____________________________________________________________ 13

B/ The environmental issue ____________________________________________________________ 13

C/ The impact of the crisis ____________________________________________________________ 15

Conclusion _____________________________________________________________________ 17

Annex ______________________________________________________________________________________ 19

Bibliography: ________________________________________________________________________________ 23

Introduction

Spain joined the European Union (EU) in 1986 and from this date, many economic changes have occurred.

Firstly, we will see some of those structural changes during the last two decades: the financial aspects, the international relations and the labour market. According to these modifications, we can say that there has been a catching up.

Secondly, we will take a look at the economy of Spain through the present environment: the enlargement of the EU, the awareness of the environment issue and the impact of the financial crisis.

I/ The Catching up

A/ Financial aspects

Since 1986 Spain has received a net total of EUR 78,131 million from the EU (contributions

minus receipts). These transfers have been essential for the transformation of the Spanish economy

in financing a large number of social and regional cohesion projects.

Nonetheless, with the enlargement process of poorer countries, Spain will become a net contributor

to the Community budget in 2010.

Moreover, in order to access to the Economic & Monetary Union (EMU), Spain have managed to

decrease the inflation rate and the interest rate

B/ The Openness of economic relations

Concerning the direct investment, the last two decades have been a huge change in the economy of Spain. Following the privatisations of the major Spanish public companies, Spanish businesses made huge investments abroad. During the last ten years, on average the yearly foreign investment in Spain has been 40, 000 million euros, ten times more than the precedent decade.

The Spanish investments abroad increase, as well, mainly since the privatisations of the major Spanish public companies in the 90’.

In 2005, even if more than 70% of Spain’s external trade took place with EU states, the share in the EU trade has been stable. Meanwhile, the trade deficit got worse from 34,916 million US dollars in 1992 to 112,697 million US dollars in 2006.

Since the 80’, Spain has needed external financing practically every year because of the growth of the Spanish economy, the impossibility of devaluing the currency following the introduction of the euro and the decline in the competitiveness of Spanish exports.

Source: INE

C/ Labour market

Temporary contracts has been generating a high level of rotation of staff in Spain, which

prevents them from undertaking the necessary training to become more productive. The low

productivity also reflects the insufficient use of new technologies. The reasons are mainly the very

poor expenditures on the Research and Development (R&D) in comparison with the EU-15, even if

there has been an increase. Moreover, the women employment rate was only 80% of the EU rate in

2003 as well as the people having completed the secondary education in 2004.

Even if the unemployment rate has decreased a lot, it still is one of the highest in the EU. The

paradox is that the need in unskilled workforce in the agricultural or construction sector is very high

but Spaniards don’t want to work in these sectors. Indeed, these sector resort to immigration of

workers from poorer countries of South America and Africa.

In 1998, the immigration from those continents was around 30,000 persons. In 2007, the number of

immigrants rose to 400,000. Furthermore these figures don’t take into account the illegal workers

which mean that the amount of foreigners living in Spain has become much more.

Source: INE

Countries ofProvenance 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

TOTAL 57.195 99.122 330.881 394.048 443.085 429.524 645.844 682.711 802.971 920.534

Europa 25.735 40.327 85.994 112.619 154.589 165.037 234.218 247.112 289.721 373.241

Alemania 7.233 9.500 10.546 10.912 11.348 11.114 11.789 13.508 15.434 16.177

Andorra 64 59 102 108 109 152 231 377 446 486

Bélgica 1.327 1.856 2.262 2.340 2.254 2.199 2.346 2.641 2.624 2.832

Bulgaria 241 658 6.493 11.761 15.842 13.648 17.898 15.453 17.664 26.889

Francia 2.663 3.426 4.285 4.928 5.464 5.994 8.023 9.912 12.165 12.777

Italia 1.652 2.073 2.924 3.800 4.579 5.366 6.637 9.376 12.022 14.635

Paises Bajos 1.061 1.682 2.162 2.390 2.847 3.045 3.883 4.951 5.388 5.199

Polonia 435 810 3.815 3.632 3.838 3.456 6.118 7.165 13.751 15.126

Portugal 1.364 2.015 2.968 3.080 3.634 5.050 8.000 11.966 18.742 25.186

Reino Unido 4.514 7.932 11.007 16.233 25.632 32.148 44.315 41.633 39.497 35.930

Rumanía 503 1.773 17.435 23.276 48.292 54.998 49.487 93.976 111.920 174.149

Rusia 563 1.132 3.544 4.729 4.509 4.578 5.766 6.577 6.652 6.289

Suecia 525 1.248 1.400 1.651 1.626 1.431 1.461 1.719 1.974 2.042

Suiza 740 945 1.233 1.153 1.159 1.130 1.303 1.464 1.728 1.805

Ucrania 184 582 6.271 10.857 10.799 9.065 10.277 8.633 8.635 9.299

Otros Paises 2.666 4.636 9.547 11.769 12.657 11.663 56.684 17.761 21.079 24.420

Africa 13.118 20.248 54.241 55.797 55.156 58.807 89.991 101.295 91.158 109.615

Argelia 652 1.174 3.893 5.172 3.821 3.443 4.634 5.137 5.334 6.301

Guinea Ecuatorial 331 683 1.676 1.118 930 1.265 1.204 1.787 2.373 2.527

Marruecos 10.534 14.843 38.178 39.256 39.930 40.865 58.839 69.288 60.830 71.397

Nigeria 172 893 2.568 2.636 2.453 3.061 4.387 5.259 4.074 4.924

Senegal 290 486 1.827 1.914 2.015 2.821 5.761 5.718 5.659 10.261

Otros Paises 1.139 2.169 6.099 5.701 6.007 7.352 15.166 14.106 12.888 14.205

Asia 2.549 3.587 10.127 11.041 11.559 13.915 25.618 31.725 29.821 39.754

China 1.012 1.622 4.745 5.146 5.606 7.293 14.400 14.729 13.170 16.437

Filipinas 385 483 1.092 1.177 1.201 1.134 1.060 1.653 2.781 3.866

India 233 285 635 819 862 1.272 2.337 3.566 3.558 4.841

Japón 132 182 246 245 276 346 383 519 702 630

Pakistán 272 350 1.642 1.784 1.758 1.703 4.317 7.427 5.428 8.122

Otros Paises 515 665 1.767 1.870 1.856 2.167 3.121 3.831 4.182 5.858

América 15.724 34.863 180.316 214.349 221.580 191.577 170.055 198.091 268.482 284.772

Argentina 1.291 2.163 7.401 18.086 40.628 24.759 23.237 23.664 23.044 21.216

Bolivia 147 500 3.318 4.835 10.562 18.119 35.339 38.349 69.467 46.055

Brasil 879 1.598 4.113 4.283 4.582 7.349 13.017 20.771 28.249 31.838

Canadá 99 141 185 250 297 293 372 455 526 626

Colombia 2.298 7.451 45.868 71.014 34.042 10.888 16.610 20.541 27.864 35.690

Cuba 1.887 3.094 5.284 5.039 4.886 3.903 4.692 5.215 6.936 7.865

Chile 445 744 2.213 3.034 3.933 4.364 5.696 7.301 8.453 8.404

Ecuador 1.954 8.973 91.120 82.571 88.732 72.581 11.936 11.588 14.292 24.647

Estados Unidos 658 1.077 1.502 1.805 2.353 2.561 3.017 3.644 4.402 4.676

México 350 658 1.412 1.798 2.782 2.699 3.268 4.535 4.969 5.371

Perú 2.054 2.898 5.893 7.057 7.884 13.310 12.968 17.095 18.884 24.637

República Dominicana 2.145 2.868 5.552 5.383 5.458 6.558 8.167 10.506 12.291 16.036

Uruguay 221 399 1.350 3.062 7.002 9.266 9.845 7.234 8.059 7.721

Venezuela 921 1.618 3.587 4.257 5.789 10.401 10.208 11.082 10.540 12.096

Otros Paises 375 681 1.518 1.875 2.650 4.526 11.683 16.111 30.506 37.894

Oceanía 69 97 203 242 201 188 270 513 658 526

Australia 55 68 106 141 142 132 180 322 343 382

Otros países 14 29 97 101 59 56 90 191 315 144

País desconocido 0 0 0 0 0 0 125.692 103.975 123.131 112.626

Immigration of foreigners from the foreign countrie s classified by countries. 1998-2007.

Conclusion

Since the entrance of Spain in the EU in 1986, there have been many changes in the structure of the economy. The annual GDP growth rate has been very high in comparison of the EU-15. Today, in terms of GDP, Spain is ranked 8th. The ranking of Spain of the Human Development Index (HDI) which takes into account development parameters is 13th just behind the United States.

There is no doubt that there has been a catching up and even though it is not possible to know exactly the impact of the entrance in the EU, it is evident that Spain has taken advantage of the EU.

However, from now on, Spain will be facing new challenges in the present environment.

Source: UNDP

II/ The current situation of Spain

The enlargement of 12 new countries since 2004 has had an influence and it is now the turn of Spain to help those countries as well. The 21st century will also be the century of the awareness of the environment. Finally, like all the countries, Spain is facing the current financial crisis and managing that does not seem simple.

A/ Facing the enlargement

The enlargement process has been contributed to the trade deficit. The variation of

imports from the 10 countries that joined the EU in 2004 was 304.9 % when the variation of

the EU-15 rose of only 104.7% during the same period. But in the same time, the exports of

Spain to those countries rose only of 58.8% (in comparison of the 95.4 % for the EU-15).

Regarding the Foreign Direct Investment (FDI), it seems like the investors are more attracted

to the new less-developed countries in spite of Spain. Furthermore, the off shoring is more

frequent toward these countries.

As we have seen before, the European Union aids for development go more and more

towards those countries and less to Spain.

B/ The environmental issue

Spain has been making important efforts to reduce CO2 emissions but in comparison

with the other European Countries, there still is more effort to do.

Today, the challenge for Spain is to reduce its dependency on oil, diversify its energy

sources, making greater use of renewable energies, and improve consumption efficiency.

Protocol.

Greenhouse Gaz emisions (year base: 1990)

%

Source: eurostat

C/ The impact of the crisis

The long expansion of economic activity can be broadly attributed to a combination of positive

shocks, such as a sustained credit expansion and strong immigration, together with sound choices in

monetary and fiscal policies in the framework of the accession to the monetary union.

Significant imbalances emerged however during the expansionary phase: an oversized housing sector

a high indebtedness of private agents, households and firms, coupled with insufficient productivity

growth, has hurt the competitiveness of the Spanish economy.

Employment prospects reflect the picture for economic activity in general. According to

BBVA, in 2009, 750000 jobs will be destroyed and the unemployment rate will reach 15.4% when

the European Commission forecast the same rate for 2010.

Source: European Comision

Conclusion

“Within the European Union we want to lead initiatives and adapt, when necessary, the current

framework of multilateral institutions to make them serve these objectives. [support trade. adapt the

welfare state to suit new circumstances (globalization). Rather than deregulation, we want clear and

efficient rules so that the market will develop its potential without violating the principles of equity

and justice] “ (José Luis Rodríguez Zapatero).

The Spanish economy has developed very quickly during the last 40 years. Some structural weakness

remain but if the government manages to reduce the trade deficit and boost the productivity, Spain

could face the crisis in a few years. Moreover, Spain plays an important role in the EU today and

together with the other State Members, they can make the EU "the most dynamic and competitive

knowledge-based economy in the world capable of sustainable economic growth with more and

better jobs and greater social cohesion, and respect for the environment by 2010".

Maybe not in 2010 but still…

Annex

Unemployment rate by gender; Total Real GDP growth rate% Growth rate of GDP volume - percentage change on previous yeargeo\time 1998 2002 2006 geo\time 1998 2002 2006 2007 2008 2009EU (27 countries) : 8.9 8.2 EU (27 countries)3.0 1.2 3.1 2.9 2.0 1.8Euro area 10.0 8.3 8.3 Euro area 2.8 0.9 2.9 2.6 1.7 1.5Belgium 9.3 7.5 8.3 Belgium 1.7 1.5 3.0 2.8 1.7 1.5Bulgaria : 18.2 9.0 Bulgaria 4.0 4.5 6.3 6.2 5.8 5.6Czech Republic 6.4 7.3 7.2 Czech Republic-0.8 1.9 6.8 6.0 4.7 5.0Denmark 4.9 4.6 3.9 Denmark 2.2 0.5 3.9 1.7 1.3 1.1Germany 9.1 8.4 9.8 Germany 2.0 0.0 3.0 2.5 1.8 1.5Estonia 9.2 10.3 5.9 Estonia 5.4 7.8 10.4 6.3 2.7 4.3Ireland 7.5 4.5 4.5 Ireland 8.4 6.4 5.7 6.0 2.3 3.2Greece 10.8 10.3 8.9 Greece 3.4 3.4 4.5 4.0 3.4 3.3Spain 15.0 11.1 8.5 Spain 4.5 2.7 3.9 3.7 2.2 1.8France 11.0 8.6 9.2 France 3.5 1.0 2.2 2.2 1.6 1.4Italy 11.4 8.6 6.8 Italy 1.4 0.5 1.8 1.5 0.5 0.8Cyprus : 3.6 4.6 Cyprus 5.0 2.1 4.1 4.4 3.7 3.7Latvia 14.3 12.2 6.8 Latvia 4.7 6.5 11.9 10.2 3.8 2.5Lithuania 13.2 13.5 5.6 Lithuania 7.5 6.9 7.8 8.9 6.1 3.7Luxembourg 2.7 2.6 4.6 Luxembourg6.5 4.1 6.4 5.2 3.6 3.5Hungary 8.4 5.8 7.5 Hungary 4.8 4.1 4.1 1.1 1.9 3.2Malta : 7.5 7.1 Malta : 2.6 3.1 3.7 2.6 2.5Netherlands 3.8 2.8 3.9 Netherlands3.9 0.1 3.4 3.5 2.6 1.8Austria 4.5 4.2 4.8 Austria 3.6 1.6 3.4 3.1 2.2 1.8Poland 10.2 20.0 13.9 Poland 5.0 1.4 6.2 6.6 5.3 5.0Portugal 5.0 5.1 7.8 Portugal 4.9 0.8 1.4 1.9 1.7 1.6Romania : 8.6 7.3 Romania : 5.1 8.2 6.0 6.2 5.1Slovenia 7.4 6.3 6.0 Slovenia 3.6 4.0 5.9 6.8 4.2 3.8Slovakia 12.6 18.7 13.4 Slovakia 4.4 4.8 8.5 10.4 7.0 6.2Finland 11.4 9.1 7.7 Finland 5.2 1.6 4.9 4.5 2.8 2.6Sweden 8.2 4.9 7.0 Sweden 3.8 2.4 4.1 2.7 2.2 1.8United Kingdom 6.1 5.1 5.4 United Kingdom3.6 2.1 2.8 3.0 1.7 1.6Croatia : 14.8 11.2 Croatia 2.5 5.6 4.8 5.6 4.5 5.0Macedonia, the former Yugoslav Republic of: : : Macedonia, the former Yugoslav Republic of3.4 0.9 4.0 5.1 4.8 5.5Turkey : : 8.4 Turkey 3.1 6.2 6.9 4.5 4.3 4.7Iceland : : : Iceland 6.3 0.1 4.4 3.8 1.3 0.4Norway 3.2 3.9 3.5 Norway 2.7 1.5 2.5 3.7 2.5 2.1Switzerland : : : Switzerland2.6 0.4 3.4 3.3 2.2 2.2United States 4.5 5.8 4.6 United States4.2 1.6 2.8 2.0 0.9 0.7:=Not available b=Break in series Source of Data: Eurostat

Bibliography:

• Economic Forecast Autumn 2008, European Commission, 03/11/2008

http://ec.europa.eu/economy_finance/pdf/2008/autumnforecasts/es_en.pdf

• Foreign Direct Investment in Spain, William Chislett, 17/10/2007

http://www.realinstitutoelcano.org/wps/portal/!ut/p/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzK

LN4k3NHYFSYGYTn76kShCBvGOCJEgfW99X4_83FT9AP2C3NCIckdHRQAUwpTT/delta/base

64xml/L0lDU0lKQ1RPN29na2tBISEvb0lvUUFBSVFnakZJQUFRaENFSVFqR0EhLzRKRmlDbzB

laDFpY29uUVZHaGQtLzdfNF8zRjc!?WCM_PORTLET=PC_7_4_3F7_WCM&WCM_GLOBAL_

CONTEXT=/wps/wcm/connect/Elcano_in/Zonas_in/DT47-2007

• In Spain's interest: A Committed Foreign Policy, José Luis Rodríguez Zapatero

2/7/2008

http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_C

ONTEXT=/Elcano_in/Zonas_in/Europe/00027

• OECD Factbook 2008: Economic, Environmental and Social Statistics, OECD 2008

• Human Development Report 2007/2008

http://hdr.undp.org/en/

• 20 Years of Spain in the European Union (1986-2006), Elcano Royal Institute European

Parliament

• EUROBAROMETER 62 PUBLIC OPINION IN THE EUROPEAN UNION

European Commission, 2004

http://ec.europa.eu/public_opinion/archives/eb/eb62/eb62first_en.pdf

• Migraciones Estadística de variaciones residenciales 29 julio 2008, INE

http://www.ine.es/jaxi/menu.do?type=pcaxis&path=%2Ft20%2Fp307&file=inebase&L=

0

• La Economía española en la Unión Europea (1986-2002), Jesús Garmendia Ibáñez,

Servicio Editorial Universidad del País Vasco

• Los efectos económicos y sociales de la ampliación de la Unión Europea en España

Consejo Económico y Social, Colección Informes, 2008

• El entorno exterior y la crisis financiera debilitarán la actividad económica en España en

2009, JoséLuis Escrivá, Jefe Grupo BBVA, 12/11/2008

http://estaticos.elmundo.es/documentos/2008/11/12/bbva.pdf