Spain - Economic analysis of government's policies, investment climate and political risk.
THE
McKEEVER INSTITUTE
OF
ECONOMIC POLICY
ANALYSIS
SPAIN: Economic Policy Analysis
This site presents an analysis of the Spainish government's economic policies
compared to a revised list of 34 economic policies as prepared by student Mr. Jordi Sanchis Sanchez with the McKeever
Institute of Economic Policy Analysis (MIEPA) in December 2001. To read the analysis
scroll through this site. To learn more about the background policies,
click here Introduction and Policy Recommendations
To learn more about MIEPA, click here Return
to MIEPA's Home Page
Jordi Sanchis Sanchez, a Spainish native who currently [December 2001] lives
in Berkeley, has completed a study of his home country government's economic
policies as compared to the MIEPA list of policies as outlined above. The study on Spain is shown below. The
ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the
bottom of the file.
Return to MIEPA's Home Page
SPAIN:
Comparison of Spain's economic policies to MIEPA criteria as prepared
by native student of Spain, Mr. Jordi Sanchis Sanchez, studying in the US in
December of 2001.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 5.0 15.0 15.0 100 %
2 4.5 13.5 15.0 90
3 4.0 12.0 15.0 80
4 4.5 13.5 15.0 90
5 4.5 13.5 15.0 90
6 4.0 12.0 15.0 80
7 4.5 13.5 15.0 90
8 4.0 12.0 15.0 80
9 2.5 7.5 15.0 50
10 5.0 15.0 15.0 100
11 5.0 15.0 15.0 100
12 2.5 5.0 10.0 50
13 5.0 10.0 10.0 100
14 3.5 7.0 10.0 70
15 4.5 9.0 10.0 90
16 3.0 6.0 10.0 60
17 2.0 4.0 10.0 40
18 5.0 10.0 10.0 100
19 4.0 8.0 10.0 80
20 3.0 6.0 10.0 60
21 2.5 5.0 10.0 50
22 5.0 10.0 10.0 100
23 4.0 8.0 10.0 80
24 4.5 9.0 10.0 90
25 4.0 8.0 10.0 80
26 4.0 8.0 10.0 80
27 4.0 8.0 10.0 80
28 4.0 8.0 10.0 80
29 2.5 2.5 5.0 50
30 5.0 5.0 5.0 100
31 4.0 4.0 5.0 80
32 2.5 2.5 5.0 50
33 5.0 5.0 5.0 100
34 2.5 2.5 5.0 50
TOTAL 133.5 293.0 375.0 78.1%
===== ====== ===== =====
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INDIVIDUAL POLICIES
1. Freedom from internal control: 5.0
Nowadays, and thank to the Constitution, Spanish government respects fully
all rights of its citizens. Now Spain has no official religion. The
constitution disestablished the Roman Catholic Church as the official state
religion, although more than 90% of the population are at least nominally
Catholic. Spaniards can move within and outside the physical boundaries of
their country with no required permission from the government. Both men and
women have, legally, the same rights to undertake a new business and for
equal job opportunities. The dignity of the individual, all rights he or she
inherits, the free development of the personality, including religion, the
respect for the law and other individual’s rights are the foundations of the
Spanish Constitution and lifestyle.
When the Spanish Constitution was established in 1978, after the dictator
Franco’s death, Spain started a process of conversion to freedom. Free of a
dictatorship that forced Catholicism be the only religion; Spanish be the
only language. Spaniards did not enjoy equal job opportunities for both men
and women, since women were supposed to serve men, be just the men’s
spouses. The different cultures within Spanish limits and besides the “pure”
Spanish culture were pursued and, for instance, writers and political
figures had to immigrate to other countries, such as Argentina and France,
as political refugees. Things, fortunately, have changed in Spain.
Sources (besides personal):
http://www.hg.org/guide-spain.html. Legal Research Center. Data of Access:
12/02/01.
http://alcazaba.unex.es/constitucion/tituloI.html#capitulo1. Constitucion
Española. Data of Access: 12/02/01
2. Freedom of speech: 4.5
Spain enjoys political plurality and freedom of speech, and so it is
established in the Spanish Constitution. Since the constitution was created,
independent newspapers and TV channels have appeared making use of the
freedom of speech and promoting and exposing different points of view.
However, the public TV channels, those owned by the government, those
everybody has the right to access, are frequently inclined to support or
highlight the current government’s tendencies. When the government changes
the public media also changes, there is always people covered by the hand of
the government in the public media. Although there is freedom of speech in
Spain, nobody is punished by thinking or saying anything that differs from
the standard (freedom means that there is not standard), the government
usually and subtly makes coverage of all those opinions that are not of its
interest in the public media. All those who are not represented equally by
the public media express themselves through private TV channels, magazines
or newspapers, which have a place in the Spanish society.
Since Spain was converted to a parliamentary monarchy, where public and
democratic elections are the means to elect the government, there are many
political parties that promote and make also use of the freedom of speech.
Spain is a free country where freedom of speech is defended and put into
practice.
Source (besides personal):
http://alcazaba.unex.es/constitucion/tituloI.html#capitulo1. Constitucion
Española. Data of Access: 12/02/01
3. Effective, fair police force: 4.0
It is always an utopia to think of a fair police force, at least in Spain.
Things have changed after Franco’s fascist dictatorship, where police forces
were not meant to protect Spaniards but to force them to behave in a certain
way. Police did not only fight against criminals but also against innocent
and respectful citizens. However, today police corps are often the means of
the government to keep citizens down, to control them. Although Spain is a
country where freedom is defended by the Constitution, police forces do not
belong yet to its citizens, but to its Government, and police often acts
against people just because they are making use of their freedom of speech
to defend Government interests.
However, Spaniards are not nor feel intimidated by police. In addition,
certain autonomous communities have their own police corps, which makes
citizens feel more connected to their authorities, who will protect the
citizens’ safety and interests of those communities. Spain is a safe place
although crimes are present, and police deserve credit for it.
Source: personal.
4. Private property: 4.5
Spaniards have the right to private property, so it is established in the
Constitution. In the article #33, the Constitution states that in Spain “it
is recognized the right to private property and to inheritance… and nobody
will be thwarted of his or her goods and rights unless there is a just
cause, either of public utility or social interest”. Private business are
also respected and protected by Spanish laws and Constitution.
In Spain, however, there are cases of squatters. Spain is the best place for
squatters, but not because private property is not defended but because
there are a lot of buildings left and abandoned. If the owner or proprietor
wants the squatters out of his property squatters have to leave, although
sometimes police force and authority it is required in order to do so.
Source:
http://alcazaba.unex.es/constitucion/indice.html. Spanish Constitution. Data
of access: 12/10/01.
5. Commercial banks: 4.5
Spain has a great variety of commercial banks in which most citizen and
companies deposit their money. Most of these banks provide a full range of
services and operations, including collection and payment services outside
of Spain through their foreign branches. Moreover, they are very involved in
financing major public and private projects by subscribing and purchasing
fixed-interest debt securities. All commercial banks are lenders to both
private customers, or citizens, and businesses, but their rates and
restrictions or requirements are quite strict, although they are getting
better, which did not promote new small business and the buying of housing
by young people.
Sources (besides personal):
http://www.hg.org/guide-spain.html; Legal Research Center. Data of Access:
12/10/01.
http://www.bde.es/; Banco de España. Data of access: 12/10/01
6. Communication systems: 4.0
Spain has an extensive network of communication facilities such as
telephone, TV and radio stations, fax, newspapers, magazines, and Internet,
among others, which are easy to access all over the country. However, it may
be harder in rural areas and in some western and southern parts of the
country which are not as developed as the main cities and capital. According
to CIA statistics, there were 44 main lines for each 100 persons in
1999;17.336 million were main telephone lines and 8.394 million were
cellular phones, numbers that increased in the following years. The general
assessment of the CIA is that telephone network is generally adequate.
Spaniards also have access to 224 (plus 2,105 repeaters) television stations
and 208 AM stations, and 715 FM, according to data of 1998. Spain also, and
most importantly in my opinion, had, in the year 2000, 56 ISPs (Internet
Service Providers). This number is also increasing and is leading to Spain
to a more advanced country in terms of telecommunications. All these areas
within telecommunications enjoy competition, however, the state-owned
company Telefonica is the responsible for the large development in certain
areas, although it still has the monopoly of almost all the infrastructure
of telecommunications. Spain is not as modern as other countries in terms of
telecommunication but it provides the necessary infrastructure to help and
promote business and education.
Sources (besides personal opinion):
www.telefonica.com; Telefonica’s web site. Data of access: 12/10/01.
http://www.cia.gov/cia/publications/factbook/. CIA’s country briefing. Data
of access: 12/10/01.
7. Transportation: 4.5
There is no place in Spain you cannot get by using public or private
transportation and the means they require. Due to its geographical situation
Spain has a great deal of harbors and ports, which is the main mean or
source of transportation for commerce and industry together with the train
network. Spaniards and foreigners travel from one city or town to another by
car, train, and plane, which are still the most efficient and popular
transportation systems. Spain has 110 airports, which 75 out of those 110
have paved runways and take national, and some international flights. Spain
has also a great variety of bus companies that offer competitive fares to
travel in and out of the country.
Almost all the lengths of the Spanish highways are paved and public, but
some have been privatized in certain regions, such as Cataluña, but its
quality is not better necessarily as the average of the other national
highways.
Sources (besides personal opinion):
http://www.cia.gov/cia/publications/factbook/. CIA’s country briefing. Data
of access: 12/10/01.
8. Education: 4.0
In Spain there are private and public institutions where students can obtain
what in the USA would be called a Bachelor’s Degree. However, in Spain it is
harder than in the USA to obtain the degree. Overall, Spanish students are
more knowledgeable about their subject, their major, when they finish their
undergraduate studies than the American graduates. This is due to the higher
level of expectations that Universities have on their students, to the way
the educational system is set up, and to the level of specialization that
the programs in Spain offer, there are no general education requirements
like in the US system.
There are also technical schools, where students work to obtain something
similar to what an Associates Degree would be in USA. Public institutions
are where most of the students apply and attend for their undergraduate
years, be because it is cheap but also because it is prestigious and a
larger system than the private one. It is highly competitive and hard
academically wise due to its excess of demand. Some private institutions are
the main focus for people who could not get into the public system; for
people who want to pay for a more comfortable and secure education; for
people that can not study a certain field of study, like design, in the
public system; and some are for people with good grades that also have can
afford it, who end up studying in the most prestigious institutions amongst
all.
The average in years to graduate from an undergraduate program in Spain is
still high, although the percentage of graduates is increasing. It is so
mainly because students think they won’t find a job due to the high rates of
unemployment, although it is changing. Some of them still drop because they
think university is useless and because they may have more opportunities
through specialization or technical skills. Some others get discouraged
because they could not find a spot in their programs. However, students will
eventually wish finishing their studies in order to get a job and start
living on their own, since it is not until they finish school or get a
decent monthly payment when they can start thinking about being independent.
Only people who attend private institutions are more likely to find a
well-paid job after they finish their studies, and it is mainly due to the
internship possibilities that these kind of institutions offer as a part of
their programs.
Nowadays, the percentage of students that graduate is increasing but the
majority will not go to graduate school, although the percentage of graduate
students is increasing as well. It is mainly because there has not been a
strong tradition in the past of attending graduate schools. However, since
Spain is expanding economically and internationally wise, more and more
people are not willing to stop studying after graduating from the
undergraduate school. A great deal of job opportunities abroad are also
available now for Spanish students, which challenges youth. Spain is
preparing better every day to compete with professionals from other
countries educationally wise.
Overall, Spanish students are having available more and more everyday
different resources to expand their knowledge as well as opportunities to
face international competition and get jobs abroad. However, the
unemployment rate still plays an important role in encouraging students to
finish their studies and prosper or start making money to be independent,
settle down by themselves or starting a new business.
Sources (besides personal opinion):
http://www23.bcn.es/bcnngc/bng0fcon.nsf/wFrm?readform&idi=CT&c=A&opt_menu=XBF22362.
Ajuntament de Barcelona. Barcelona Activa. Data of access: 10/19/01.
http://www.mtas.es/. Ministerio de Trabajo y Asuntos Sociales. Data of
access: 10/19/01.
http://www.mec.es/educacion/index.html. Ministerio de Educacion y Cultura.
Data of access: 10/19/01.
9. Social Mobility: 2.5
In Spain there are not as many ethnicities such as in the United States, and
thus, the society is not divided in terms of the ethnicity. However, it is
true that Spain, although it has been a socialist country for a vast number
of years after the dictatorship and the rights for all have been defended by
the Constitution, not all the people in Spain have the same opportunities
and means to join the more elite classes. Class differentiation is still
present in Spain and it is hard for any individual that belongs to the lower
classes to climb up to a higher class.
High levels of education, like in any country, is the only way by which
people from these lower classes could improve their level of living.
However, and although universities are public, not everybody have the same
opportunities to have the same level of education. Those who had a different
or more prestigious level of education, like a Masters Degree, or studied in
private schools can acquire a better paid job and thus higher standards of
living, standards they already had. Since not everybody has the money or the
time to spend both in Masters or in private schools, it can be really hard
for people who don’t belong to high social status to obtain the same
well-paid jobs as wealthier people and therefore promote social mobility.
Source: personal.
10. Freedom from outside control: 5.0
Before Spain was part of the European Union there was no agency, police
corps, or countries that had a major sovereign power to control Spanish
citizens. Only Spanish laws, stated by the Government, who has been elected
by its citizens democratically, and the Constitution that was established in
1978, had control over Spaniards. Since nowadays Spain nowadays belongs to
the European Union, Spain is free from control of laws of other countries
that do not belong to the Union.
Spain, as a member of the European Union delegates sovereignty for certain
matters to independent institutions which represent the interests of the
Union as a whole, its member countries and its citizens. Just in the matters
that this independent institutions represent Spain could not be considered
free, although Spain government, and therefore citizens, have decided to
delegate this sovereignty.
Source (besides personal):
http://europa.eu.int/inst-en.htm. European Union on-line. Data of access:
12/19/01
11. Foreign currency transactions: 5.0
The “peseta”, and the Euro, are the only currencies used in Spain. Some
businesses and banks do their transactions with Euros, but Spanish citizens,
the buyers still use the “peseta” as currency. It won’t be until January
2002 when everybody will be supposed to use the new European currency, the
Euro. Tourists can not make use of their currencies when they come to Spain,
they ought to convert their currencies in “pesetas”, in Euros in the next
future, to be able to make use of their capital.
Source: personal
12. Border control: 2.5
There are two main issues as far as border control in Spain is concerned.
First, and since Spain belongs to the European Union, Spain is exposed to
the constant visit or immigration of Europeans, who, legally, can cross the
Spanish borders and settle down, be mainly for labor purposes. However,
since Spain has problems with unemployment and does not have a very rich
economy, Spain is not the most attractive country for other Europeans to
come to work and settle down.
Secondly, Spain has become the “promised land” for a large number of people
from Africa, mainly from Morocco, who are constantly trying to arrive to
Spain, of course, illegally. The Spanish government have not used strong
measurements or restrictions to avoid massive immigration. When immigrants
make it to Spain they have no legal status in and they are exposed some
times to exploitation. Their chances are few mostly because of their illegal
status, the unemployment rates in Spain and their lack of language skills,
which force them to work in construction (if they have skills though) or
other kind or physical jobs that most of the times are hard to find and as I
said exploitative. Many of these immigrants have to rob or sell drugs, which
eventually promotes racism within the Spanish society. Eventually, the
Spanish government, since they could not control, restrict, or limit the
immigration of people from the South, and since they thought it could be
beneficial for the development of the country, decided to legalize all these
people. Nowadays there are 1.6 million of immigrants with legal status but
there are many more that are already in Spanish territory with no legal
authorization.
Sources : personal.
13. Currency: 5.0
The “peseta” is the domestic currency of Spain. The “Banco de España” is
the central bank of Spain and the responsible for issuing this currency;
there is no other bank that issue a different currency in Spain. Although
the French and German currencies have been always stronger than the
“peseta”, Spaniards and Spanish banks have not used other currency than
their own as a mean to buy or sell. However, in addition to the peseta the
Euro is going to be the official currency from January first of the coming
year. Although the peseta will disappear as official currency of Spain, it
may not happen at the beginning of this period of change or transition of
currency. It may be a radical and abrupt change for the population to get
used to it all of a sudden. Thus, the peseta and the Euro will be official
currencies for a while. The Euro as a common currency among all countries
that belong to the European Union will facilitate commerce, trade, within
and among them. Thus, the Spanish economy will supposedly and hopefully
become stronger, as well as other European economies, that together will
help create an only one and more competitive European economy.
Sources (besides personal):
http://www.hg.org/guide-spain.html; Legal Research Center. Data of Access:
12/10/01.
14. Cultural, language homogeneity: 3.5
Spain is more homogeneous than United States, France or England, where
different people from different ethnicities settled down several generations
ago. The vast majority of its citizens are Spanish, white, and catholic.
However, Spain is not purely homogeneous. In terms of culture we could find
different cultures in Spain. For instance we should mention the
internationally known Basque culture, the Catalan culture, the Galician
culture, and some other micro cultures, for instance the gipsy culture and
the culture from the South, who historically has been highly influenced by
the Moslem culture. Moreover, all this cultures have their own language.
Besides the Spanish as the official language, there are the Basque, the
Catalan, the Galician, and dialects such as the “Aranes”, “Menorqui”,
“Mallorqui”, “Valencia”, and others.
But even though there are different cultures within the Spanish framework,
almost everybody speaks and understands Spanish. Moreover, the majority of
values are shared by everybody. But there are cultural differentiations,
which are mainly brought by the resentment that the dictatorship brought. If
it hadn’t been by the oppression that these cultures suffered by the
dictatorship, nowadays everybody would be more integrated to the Spanish
culture and would respect better the other cultures. Nowadays some people
don’t want to be Spanish or consider themselves Spanish. But overall Spain
is a homogeneous country, where people don’t have any cultural or language
barrier to understand each other or treat each other, although it could
delicate sometimes, mostly because of the historical, political, economical,
and cultural backgrounds that exist in different parts of Spain.
Sources: personal
15. Political effectiveness: 4.5
In Spain there are several regions that have their own autonomous political
organs and may make their own decisions regarding health systems, education
and infrastructure. Moreover, municipalities and provinces have their own
political bodies as well as areas of autonomy that they manage
independently. The political responsibilities are distributed among
municipal governments, autonomous communities and the central government in
order to fulfill the needs of small and concrete regions of the country
where the central government solely could not take care of as efficiently.
In case of catastrophe the different autonomous political organs act in
general effectively, but since they are independent some may be more
efficient than others. Two of the most challenging tests that both the
central government and different autonomous political organs had were the
Olympic Games and the International Exposition in 1992, which forced them to
start a huge development campaign in a very short time span. Both the Games
and the Exposition were a success, although the Exposition was not
profitable while the Games helped the economy of Catalunya to grow and
became the best promotion for tourism.
In general, the central government and all the autonomous political organs
are also efficient when it comes to repair catastrophes. Fortunately Spain
has not experienced any serious natural disaster but in some parts of the
country there have been cases of floods, for instance the last summer’s
floods in Montserrat, Barcelona.
Source (besides personal):
http://www.hg.org/guide-spain.html. Hiero Gamos. Legal Research Center. Data
of access: 12/10/01.
16. Institutional stability: 3.0
Most of the institutions and political parties in Spain remain stable.
Although democracy is still young in Spain and there was a period of
delicate transition after the dictatorship, challenged by several intents by
the military to take over again, Spain enjoys social and political
stability. After the dictatorship there have only been two political parties
in power in a stable basis, which have been elected again after their first
four years in power. The Legal system is also stable. But the Educational
system has changed twice in less than ten years, which have not helped
students to succeed better academically and in their professional careers.
Health care system is also going down, not stable. After the current
government was elected less money is put in social security and health care,
which makes it unstable and unreliable.
Source: personal
17. Honest government: 2.0
Politicians in Spain, as well as in other countries, defend a political
perspective and their interests. They are elected in a democratic society
because they have convinced a majority of its citizens they are going to
help and improve the community and its services. The problem lies on how the
government accomplishes its promises. Thank to the political background,
diversity, activism, and awareness that we enjoy in Spain, no political
party that is elected to preside at the government is able to make use of
corruption without being revealed sooner or later by other parties.
Similarly, the political and social pressure prevent politicians to make an
abusive use of their power to fulfill their wishes or personal interests.
However, there have been cases of corruption such as the case of GAL or the
current Gescartera. Politicians in Spain still have too many interests in
private businesses and companies, like Bush has in oil companies. Although I
don’t think there is no honest government and that probably there are worse
governments than the Spanish, Spanish government is not the best example of
honesty.
Source: personal
18. Common laws: 5.0
The Constitution, which dates from 1978, contains all the set of laws that
apply to every Spaniard. These constitutional laws make no distinction among
Spanish citizens. Besides the Constitution as the major exponent of
legality, Spain has also the Spanish legal system, which is a civil law
system. This means that laws are never created by court decisions. However,
case law issued by the Supreme Court is highly valued as a source of
interpretation and application of the law. The decisions of a court can be
challenged if they do not conform with the case-law decided by the Supreme
Court on the same issue in at least two judgments.
In absence of an applicable law, custom has the force of law, provided that
it is substantiated and is not contrary to moral standards or public order.
The general principles of law are those that stem from the legal rules,
which are the underlying basis of the legal system. General principles may
be applied in the absence of legislation and custom.
However, when it comes to citizens to justice and make use of these laws
that protect the rights of all and every individual in Spain, not all
Spaniards have the same possibilities. Like in other countries, wealthier
people can afford better lawyers and therefore have better chances to have
more fair, or maybe unfair but at their favor, trials. For instance, I could
mention the case Banesto, in which one of the most popular, successful
bankers in Spain never got imprisoned by all the scamps he had been doing
while he was the director of this Spanish bank, Banesto. Some other people
that may have done something that goes against the law have been punished
with, in comparison and proportionally, with worse charges.
Sources (besides personal):
http://www.hg.org/guide-spain.html. Hiero Gamos. Legal Research Center. Data
of access: 12/10/01.
19. Central bank: 4.0
The Banco de España is the central issuing bank of Spain and its general
functions are: to implement the monetary and exchange policy set forth by
the government; provide payment services with respect to the national debt;
to administer Spain's foreign currency reserves; and control international
payments to or from Spanish residents with the assistance the credit
institutions operating in Spain. The Bank of Spain is also the ultimate
lender for banks and other lending institutions operating in Spain; the
administrator of Spain's foreign currency reserves; and the controller of
international payments to or from Spanish residents with the assistance the
credit institutions operating in Spain.
On June 7th 1962, the bank became again a private company, after the
dictator Franco’s regime assigned most of the powers over monetary policy to
the Government, making the Bank a mere appendage of the Ministry of Finance.
Today the Banco de España is independent from the Government and is
recognized as a central bank with full responsibility for the regulation and
supervision of the financial system.
As an integral part of the European System of Central Banks (ESCB), the
Banco de España shall follow the guidelines and instructions emanating from
the European Central Bank (ECB). The Banco de España defines and implements
the Community’s monetary policy; conducts currency exchange operations and
holding and managing the States’ official currency reserves; promotes the
sound working of payment systems in the euro area; and issues legal tender
banknotes.
The Banco de España manages the commercial banks in the country as well as
the currency of the country independently of political control, but it
actually works as an economic advisor of the government and prepares and
publishes the reports and studies it considers necessary.
Sources:
http://www.bde.es/homee.htm. Banco de España. Data of access: 11/19/01
http://www.hg.org/guide-spain.html. Hiero Gamos. Legal Research Center. Data
of access: 11/19/01.
20. Domestic budget management: 3.0
At the treaty of Maastricht, it was decided that there are five economic and
monetary conditions that have to be fulfilled before a nation state is
allowed to join the European Monetary Union. The first of the five economic
criterion's concerns price stability in the nation states. An effective way
of calculating price stability is to analyze the inflation rate for each one
of the nations. The rate of inflation of the nation states may not exceed
1.5 percent of this control value. Spain does not qualify.
The second criterion that was considered to be important is the long-term
interest rates of the nations. Therefore, the nations must have a long-term
interest rate below 9.8 percent. Spain does not qualify.
The third condition that has to be met regards the stability of currencies.
Currencies are not allowed to fluctuate more than 2.5 percent on an upper
and lower boundary of the ECU. Spanish currency has not devaluated more than
2.5, and thus qualify for this condition.
The fourth economic condition that the nation states have to satisfy deals
with the national average budget deficit. The treaty states that the
national average budget deficit may not exceed three percent of a nation's
Gross Domestic Product. Spain dos not qualify.
The fifth condition states that public cumulative debt may not exceed sixty
percent of the national Gross Domestic Product. Presently only five nations
meet this requirement. These nation states are; Germany (45.0%), France
(39.2%), Britain (47.3%), Spain (48.8%), and finally Luxembourg (7.3%).
Sources:
http://dsbb.imf.org/country/espcats.htm. International Monetary Fund. Data
of Access: 12/10/01
http://www.hri.org/docs/Maastricht92/. Hellenic Resources Network.
Maastricht. Data of Access: 12/10/01
21. Government Debt: 2.5
According to official country data, Spain’s government’s debt last year was
the 67.80% of its GDP. However, and although the percentage is still high,
the government has been successful in decreasing this percentage over the
course of the last and recent years. In three years Spain has been able to
reduce the spending of its GDP on public debts to a 10%. This is mainly due
to the privatization of different companies, now state-owned companies,
which turns to be controversial. Some people think that it is good to
privatize in order to decrease debts, while some others think that it may
benefit Spain now but that it generates other debts that in the future will
make the total spending in debts increase again.
Source (besides personal):
http://www.economist.com/countries/Spain/profile.cfm?folder=Profile%2DEconomic%20Data.
The Economist magazine, in partnership with the Economist Intelligence Unit.
Data of access: 11/19/01.
22. Economic statistics: 5.0
Statistics in Spain are available, accurate, and reliable sources to obtain
information, and therefore promote business activity. The central bank
issues statistical information, as well as the different departments of the
government, and the national institute of statistics, where you can find
accurate data about any kind of issue or theme. All of these resources are
highly reliable and totally subjective, based on statistical and recorded
statistical information.
Sources:
http://www.ine.es/. Insituto Nacional de Estadistica. Data of Access:
12/10/01
http://www.bde.es/. Banco de España. Data of Access: 12/10/01
23. Protection of public health and safety: 4.0
Spain is an active country with regard to management of waste. This coming
year, 2002, Spain will be the host of the International Conference on Waste
Management, where scientists will address the need for the exchange of
information amongst experts in this rapidly growing area of research and
applications. Spain acknowledges that waste management is becoming one of
the key problems of the modern world. Spain is committed to improve current
disposal methods such as landfill, incineration, chemical and effluent
treatment, but also on recycling, waste minimization, clean technologies,
waste monitoring, public and corporate awareness, and general education.
Spain also has The National Waste Management Company (ENRESA), which was
established in 1984 to be responsible for all radioactive waste management
in Spain. Its activities are defined in the General Radioactive Waste Plan
(PGRR) which must be submitted yearly to the Ministry of Industry and Energy
(MIE) for its approval.
Moreover, the “Dirección General de Alimentación”, through the “Subdirección
General de Calidad y Normalización Agroalimentaria”, has attributed, within
the competitions of the Ministry of Agriculture, Fishing and Feeding,
functions in the matter of control of the agro-alimentary quality, in
collaboration with the competent organisms of the Autonomic Communities and
the European Union.
When it comes to diseases, Spain is a healthy country but it its health
could be in a better shape. Spanish epidemiologist have not noticed any rise
in TB cases, but Spain has the E.U.'s highest number of AIDS cases, and
HIV-weakened immune systems are particularly vulnerable to TB. Drug addicts,
who account for many new AIDS cases, are also least able to exercise the
discipline necessary to complete conventional TB treatment.
Overall, Spain is a country where the quality of food is one of the bests,
be for its natural resources and the control of quality the food is exposed
to, where the public health is covered by a public health care system, and
where the management of wastes is improving everyday a little bit more.
According to Hieros Gamos research and data, “Spaniards can boast of having
one of the best lifestyles in Europe or for that matter, in the world. It is
the sunniest country in Europe and its climate is ranked among the
healthiest in the world according to the World Health Organization”.
Sources (besides personal):
http://cobweb.quantisci.co.uk/VRepository/esp.htm. Nuclear InfoRing. The
Database of Nuclear waste Information. Data of access: 12/10/01.
http://www.wessex.ac.uk/conferences/2002/waste02/. Conference on Waste
Management. Data of access: 12/10/01
http://www.mapya.es/indices/pags/aliment/index.htm. Ministerio de
Agricultura, Pesca y Ramaderia. Data of access: 12/10/01
http://www.hg.org/guide-spain.html. Hiero Gamos. Legal Research Center. Data
of access: 12/10/01.
24. High wage Policies: 4.5
Although the minimum wages that Spanish workers are paid for their labor are
not high compared to other countries, they allow workers to fulfill their
basic needs and enjoy one of the best lifestyles in the world, according to
the a recent study made by The Economist. It is so due to the protection
that workers receive both from the government and its internal laws and the
unions.
Spanish labor relationships are regulated by internal laws, collective
bargaining agreements, individual employment agreements and international
treaties. Minimum working conditions, such as salary and working hours, are
established in the Statute of Workers and applicable collective bargaining
agreements. Salary includes fixed and variable wages and fringe benefits in
cash or in kind. Collective bargaining agreements usually determine the
amount and the structure of the salary, including basic salary and bonuses
due to seniority, duties and so on. The fixed salary is paid monthly with
two additional payments, usually in June and December. Employees are
entitled to a weekly uninterrupted rest period of one and a half days.
Overtime is considered to be all work performed in excess of the normal
workday and workers must be compensated for it. This compensation may be
economic but it must not be less than the value of an ordinary hour.
Compensation may also be in the form of a longer rest period. The legal
minimum period of paid vacation is thirty calendar days per year but
collective bargaining agreements can establish a longer vacation period.
All employees have the right to join unions for the promotion and defense of
their social and economic rights. The most important and representative
trade unions ("Sindicatos") in Spain are the communist "Comisiones Obreras"
(CC.OO) and the socialist "Union General de Trabajadores" (UGT), which have
the largest memberships among the major Spanish industries. On the other
hand, there are also employers’ associations, of which the most important is
the "Confederación Española de Organizaciones Empresariales" (CEOE).
Sources (besides personal):
http://www.hg.org/guide-spain.html#X.%20LABOR. Hieros Gamos. Legal Research
Center. Data of access: 10/19/01
http://www.economist.com/countries/Spain/. The Economist. Data of access:
10/19/01
25. Environmental Protection: 4.0
Environmental awareness and sensitivity has increased in Spain in the past
few years. One of the reason is the strong influence of other European
countries, such as Denmark or Germany, and most recently France, which are
already very concerned about environmental issues. Moreover, the influence
of green parties, such as “Iniciativa-Els Verds” among others, has increased
also the sensitivity towards the environment, both politically and socially.
This influence has been stronger since Spain has wanted to be part of the
EU. Spain had to start thinking and adopting higher standards of protection
towards its/our/the environment. As a consequence Spain started signing and
taking part in environmental international agreements and treaties related
to environmental issues, such as Conventions on Air Pollution, Air
Pollution-Nitrogen Oxides, Air Pollution-Sulphur 94, Air Pollution-Volatile
Organic Compounds, Antarctic-Environmental Protocol, Antarctic Treaty,
Biodiversity, Climate Change, Endangered Species, Environmental
Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Marine Life
Conservation, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution,
Tropical Timber 83, Tropical Timber 94, Wetlands and Whaling.
The main environmental issues in Spain are the pollution of the
Mediterranean Sea from raw sewage and effluents from the offshore production
of oil and gas; water quality and quantity nationwide; air pollution;
deforestation; and desertification. However, recycling still is one of the
points issues that could be improved enormously in comparison with the
mentioned European countries. Although important recycling campaigns have
been promoted and are constantly pushing people to recycle and have a higher
awareness of the impact our garbage has on the environment, the majority of
people’s habits and mentality has not changed or adopted yet an efficient
and complete recycling attitude. However, factories in Spain are submitted
to stricter inspections and legally enforced to have a higher standards for
recycling and protection to the environment, mostly of the Mediterranean
Sea. A great deal of pressure and inspections are constantly pushing those
factories who don’t qualify the environmental protection standards to
replace their machinery. In my opinion and according to official data,
Spaniards could use energy more efficiently but the awareness and
sensitivity towards the environment has increased positively.
Sources (besides personal opinion):
http://www.cia.gov/cia/publications/factbook/. Central Intelligence Agency.
Data of access: 10/19/01
http://www.eia.doe.gov/emeu/cabs/spain.html. Energy Information
Administration. Data of access: 10/19/01
26. Strong Army: 4.0
Not so long ago, male Spaniards were obligated to serve one to two years to
the military force. Back then the Spanish military force was composed by its
male citizens who were healthy or did not have any serious health problem
and were between 15 and 49 years old . Nowadays, the military service has
been abolished by the government in pursuing a private Army. Therefore,
Spaniards do not have to do the military service any more if they do not
voluntarily decide to do so. This model has been adopted from the United
States model or other countries’, such as Denmark, models, who had already a
private Army. Now it is common to watch commercials on TV about the military
service.
One of the reasons the government has trimmed the involvement of its
citizens in military activity is the signing of several international
security agreements with other countries since 1982, which has provided a
strong framework of safety and security. These agreements have allowed Spain
to spend less in military purposes. According to official data, Spain
invests in military supplies 1.1% of its GDP, which is an amount of $6
billion, not much in comparison with other European countries or even less
in comparison with USA, with whom Spain has specific security agreements
(see policy #33, International Security Agreements). Spain nowadays has not
to worry about any serious conflict, although if that was the case, other
countries would help militarily.
Since Spain belongs to the EU and its members signed a policy that states
that any country or any member can declare war to any other member and that
all members would defend each other in case one of them was attacked by a
foreign country that is not a members of the EU, it is called the European
Security and Defense Policy (ESDP), it is not most likely that any Spain’s
neighbors, since they belong also to the EU, declare war or attack
militarily Spain. The role that international agreements play nowadays in
these conflicts would prevent that to happen. For this particular reason,
and although Spain may not have a really strong Army in comparison with
other countries, Spain’s Army is not solely its own, it is bigger than that.
Sources (besides personal):
http://www.cia.gov/cia/publications/factbook/. Central Intelligence Agency.
Factbook. Data of access: 10/19/01
27. Foreign Trade Impact: 4.0
According to Spain’s last year GDP, which was $558.3 billion in current
prices (seventh-largest OECD economy), we can say that Spain’s economy is to
47 percent depended on its foreign trade.
According to the data collected last year, Spain’s trade exceeded in
imports. Spain bought more than sold. The total value of the exports was
$113.7 billion. Spain exported to major markets such as other countries of
the EU (70.63%) and U.S. (4.4%). The imports were valued $153.4 billion,
money spent in petroleum, oilseeds, aircraft, grains, chemicals, machinery,
transportation equipment, fish among others.
Source:
http://www.state.gov/r/pa/bgn/index.cfm?docid=2878#econ. U.S. Department of
State, Bureau of European and Eurasian Affairs. Data of access: 10/19/01
28. Protection of foreign currency earning enterprises: 4.0
Spain exports among other products automobiles, tourism, power generation
equipment, fruits, foodstuffs, minerals, metals, electrical machinery,
petroleum and chemical products, clothing, footwear, textiles, which are
$113.7 billion of its GDP, approximately 20%. Its major markets are France,
Germany, Italy, United Kingdom, United States, Portugal. Moreover, in terms
of energy, out of the 197.694 billion kWh of electricity Spain produces
annually (data of 1999), Spain also exports 6.23 billion kWh. Spain exports
are one of the big foundations of its economy and the government knows it,
mostly because Spain has a trade deficit and without these exports the
economy would be weaker. In order to promote exports earnings Spain has
within its Ministerio de Economia, Economy Ministry, the ICEX, which is the
Spanish Institute of Exterior Commerce. This institute offers its assistance
to Spanish enterprises in order to promote their exports and their
implantations in foreign countries. In order to do so, the Institute designs
and put into work programs of promotion and investment and spread
information about the current Spanish supply and the foreign markets demand.
Sources:
http://www.state.gov/r/pa/bgn/index.cfm?docid=2878#econ. U.S. Department of
State. Data of access: 10/19/01
http://www.eia.doe.gov/emeu/cabs/spain.html. Energy Information
Administration. Official Energy Statistics from the U.S. Government. Data of
access: 10/19/01
http://www.cia.gov/cia/publications/factbook/. Center Intelligence Agency.
Data of access: 10/19/01
http://www.icex.es. Instituto Español de Comercio Exterior. Data of access:
10/19/01
29. Management of Foreign Currency Budget: 2.5
Spain’s entry into the European Community was followed by a dismantling of
restrictions on international capital flows. Initial trade deficits and real
exchanges rate appreciation were followed by trade surpluses and real
exchange rate depreciation. Spanish economy experienced a consumption and
investment boom that lasted until 1992. Spanish peseta appreciated against
the currencies of Spain’s major European trading partners. Since 1993 the
transfer of both money and goods within the EU, according to the Amsterdam
Treaty, was liberalized. Today, the balance of imports and exports in Spain
was still shows deficit, being -$33.4 billion, which is not close to zero.
Source (besides personal opinion):
http://www.cia.gov/cia/publications/factbook/. CIA’s country briefing. Data
of access: 12/10/01.
30. Layers of Collective Action: 5.0
Spanish constitution dates from 1978, which established Spain as a
parliamentary monarchy. The King Juan Carlos I, who was proclaimed King on
November 22, the same year Franco died (1975), is the maximum exponent of
sovereignty. Notwithstanding the unity of the nation, several regions have
their own autonomous political organs and may make their own decisions
regarding health systems, education and infrastructure. Moreover,
municipalities and provinces have their own political bodies as well as
areas of autonomy that they manage independently.
Spain therefore has three different levels of government; municipal
governments, autonomous communities, and the central government. The
political responsibilities are distributed among each in accordance with
principles that from time to time give rise to disputes between these
different governing bodies. With respect to business activities, the basic
commercial, company and intellectual property regulation, as well as the
monetary policy, are decided and implemented by the central state, while
certain specific issues, such as consumer rights and retail sales
regulations, are decided by the Autonomous Communities.
The central state's political power is divided between the Parliament, the
Government and the Judicial System. The Parliament, called "Las Cortes," is
formed by two chambers: the Congress and the Senate. It is invested with the
power to pass legislation and approve the annual budget. The Government
exercises the executive power. The Parliament elects the President of the
Government who, in turn, appoints the Ministers. The Judicial System is
governed and controlled by the General Council of the Judicial Power, an
independent body.
The Autonomous Communities and Local Entities are each organized with a
popularly-elected legislative body and an executive. The members of regional
or local parliaments elect the chief executive of the community or entity in
question.
Source:
http://www.state.gov/r/pa/bgn/index.cfm?docid=2878#econ. U.S. Department of
State. Bureau of European and Eurasian affairs. Data of access: 10/19/01.
http://www.hg.org/guide-spain.html. Hieros Gamos. Legal Research Center.
Data of access: 10/19/01.
31. Pro Business Climate: 4.0
There are several aspects that promote a favorable climate for business.
These are, among others, education, employment, investment, and economic and
business expansion.
The average in number of years that a student would take to graduate from an
undergraduate program in Spain is high, mainly because students have had the
tendency to think they won’t find a job due to the high rates of
unemployment. To start fixing this issue the Government changed the
educational system and decided to offer more specialized programs in any
different area. However, most institutions, mainly public, offer a lot of
theory but few practices in their academic programs, which makes education
less efficient. Only people who attend private institutions are more likely
to find a well-paid job after they finish their studies, mainly because
these institutions include professional internships as a part of their
programs. Nowadays unemployment is decreasing in Spain, which makes more
jobs available and therefore it gives students more enthusiasm and hope to
study. But this factor does not necessarily promote a pro-climate for
business yet, since people are still afraid of changing jobs when they
finally have one, and also because they expect unemployment rate to change.
However, in Spain local business development agencies have increased in
number, where they help and assist you if you want to start your own
business. Also Spanish economy and companies are expanding both nationally
and overseas. Banks are enlarging their variety of loans and credits so
entrepreneurs have more choices and opportunities to start their own
business. Everyday a greater number of people are investing and buying in
the market. All these factors together with the decreasing rate of
unemployment and the prosperous outlook for students make people be more
optimistic in terms of investing and creating new businesses. However, it is
still true that the majority of Spaniards are still afraid of investing in
owned-new-businesses since it is risky and there are not a great deal of
opportunities, jobs, to back up later the money that has been lost if so
yet.
Sources (besides personal opinion):
http://www23.bcn.es/bcnngc/bng0fcon.nsf/wFrm?readform&idi=CT&c=A&opt_menu=XBF22362.
Ajuntament de Barcelona. Barcelona Activa. Data of access: 10/19/01
http://www.mtas.es/. Ministerio de Trabajo y asuntos socials. Data of
access: 10/19/01
http://www.mec.es/educacion/index.html. Ministerio de Educacion, Cultura y
deporte. Data of access: 10/19/01
http://www.ine.es/tempus/cgi-bin/arbol.pl?M=IsDgC&O=/. Instituto Nacional de
Estadistica. Acceso a las operaciones estadísticas por organismo
responsible. Data of access: 10/19/01
32. Government Enterprises: 2.5
In 1986, after joining the European Community, Spain began to open its
economy with a privatization program that significantly reduced the size of
the government. This would dramatically reduce Spain's public sector
borrowing requirement and help trim inflation. This trend was continued
throughout the 1990s with liberalization of the banking (such as the case of
Argentaria), energy, and telecommunications sectors and deregulation of the
labor market. As a result of these reforms, Spain enjoyed economic growth
and job creation, with unemployment decreasing from 22.9 percent in 1995 to
15.9 percent in 1999. The Economic improvement strengthened the peseta and
allowed Spain to peg its currency to the euro.
However, nowadays, after the right wing won the elections in 1996,
government consumes 18.26 percent of GDP, and state ownership of industry
remains extensive. The privatization of state-owned businesses in the
telecommunications (such as the cases of Telefonica and Retevision-98), gas
(such as the cases of Gas Natural, Endesa, and Enagas) and petrochemical
industries (such as the case of Repsol) has proved so successful that the
government of the current Prime Minister José María Aznar is accelerating
the privatization of state-owned industries. However, there are several
controversies with this impulse of privatizing because it may benefit the
Spanish’ economy nowadays but it can cause a large deficit in the public
sector in the next future since the profits of the privatizations are not
spent on supporting the public sector as it was done at the beginning of the
privatization program. It could bring the end of the public health care
system among others public services, which would end up being sold to
private institutions as well.
The privatization’s impact on the Spanish economy, as we have seen, does not
necessarily help its citizens to start a business. The economy may be
growing due to the profits of the privatizations but they are not profits
that benefit Spaniards directly. Their incomes are not higher and people do
not want to risk their money. They rather save or deposit it in saving
accounts in case they have to become their own providers of pension and
health care when they retire because by then, the public sector may not work
any more. Only people who is already wealthy or can risk capital will be
able to start a business, which is not even a small percentage of the
Spanish population.
Sources (besides personal experience and opinion):
http://www.heritage.org/index/2001/country_pdfs/Spain.pdf. 2001 Index of
Economic Freedom. Data of access: 10/19/01
http://www.ccp.es/miembros/index.htm. Consejo Consultivo de Privatizaciones.
Data of access: 10/19/01
http://www.cipe.org/ert/e09/eurpt1-3.php3. Center For International Private
Enterprise. Data of access: 10/19/01
http://www.cipe.org/ert/e09/eurpt2-3.php3. Center For International Private
Enterprise. Data of access: 10/19/01
33. International Security Agreements: 5.0
In October 1982, after the return of democracy, Spain joined NATO (North
Atlantic Treaty Organization) and the European Union (EU).
The Treaty of Nice provided the EU with a common security policy called the
European Security and Defense Policy (ESDP). This policy is part of the
Common Foreign and Security Policy (CFSP), which was incorporated in the
Maastricht Treaty. Since then the European Union as such can make its voice
heard on the international stage and express its position on armed
conflicts. The ESDP could lead to a common defense if the fifteen Members
were so to decide, but it is also compatible with the policy conducted in
the framework of NATO.
As a member of NATO, Spain has established itself as a major participant in
multilateral international security activities. Besides, on January 11,
2001, the United States and Spain signed a Joint Declaration that lays out a
roadmap for expanded cooperation in six areas: political consultation;
defense; economics and finance; science and technology; culture and
combating new threats and security. Moreover, defense and security relations
between the two countries have been regulated by a 1989 Agreement on Defense
Cooperation.
Spain is able to expand its economy since it is being supported for both the
Members of the EU and the Members of the NATO, not only in security issues
but also in the area of economics and finance. Although these treaties and
agreements may not seem to be a clear reason why business could be
benefited, they allow the government to invest money in other areas instead
of in military resources. For this reason economy and investment can be more
focused on expanding industrially and supporting private businesses.
Sources (besides personal opinion):
http://www.state.gov/r/pa/bgn/index.cfm?docid=2878. U.S. Department of
State. Bureau of European and Eurasian affairs. Data of access: 10/19/01
http://europa.eu.int/comm/external_relations/cfsp/intro/index.htm. European
Union. External Relations. Data of access: 10/19/01
http://ue.eu.int/pesc/default.asp?lang=en. The Council of the European
Union. Common Foreign and Security Policy (CFSP). Data of access: 10/19/01
http://www.bde.es/. Banco de España. Data of access: 10/19/01
34. Protection of Domestic Enterprises from Government Mandated Costs: 2.5
Spanish firms are supposed to follow the Law of Prevention of Risks at Work,
which is the mainstay of the politics of prevention of Risks at Work. The
Law intends to establish an appropriate level of protection of the health of
the workers in front of the derived risks of the work conditions. Firms also
have to pay a certain amount of money if they want to lay off their
employee, which guarantees them some security. Likewise, they are supposed
to provide professional paid training to new employers if the tasks to
develop are dangerous or need some kind of training for further prevention
of accidents and re-adaptation. Firms are also have to guarantee necessary
rest through limitations on the length of the work day, paid periodic
vacations, and the promotion of suitable centers.
Spanish resident corporations and other business entities are subject to a
35% corporate tax (CT) levied on the entity’s worldwide net taxable income,
including capital gains. Non-residents operating in Spain through permanent
establishments must comply with tax procedures normally applicable to
Spanish CT payers, except in respect of transfers of profits made to head
offices that are subject to the branch profits tax of 25%.
All businesses are also subject to VAT (value added tax). VAT taxable
operations include the supply of goods, the provision of services and
imports. The rates are: 4% on a few goods and services considered
necessities; 7% for certain intra-community purchases; and 16% for most
goods and services.
Sources (besides personal opinion):
http://www.hg.org/guide-spain.html#III.%20BUSINESS%20ENTITIES. Hieros Ramos.
Research Agency. Data of access: 10/19/01.
http://www.cdc.gov/niosh/occup.html. National Institute for Occupational
Safety and Health. Data of access: 10/19/01.
http://www.ey.com/global/gcr.nsf/EYPassport/Spain-EYPassport#2. Ernst and
Young. Data of access: 10/19/01.
http://www.imsb.bcn.es/HsPro/indexcast.html. Promosat. Servicio de Promocion
y de Salud y Seguridad en el Trabajo. Data of access: 10/19/01.
http://www.mtas.es/insht/. Ministerio de Trabajo y Asuntos Sociales. Data of
access: 10/19/01.
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