Economy

Until well after World War II, Spain was one of the least developed countries in Europe—one heavily dependent on farming. Lack of progress was due partly to difficulties in recovering from the disastrous Civil War of the late 1930's. Much of it, however, stemmed from the adherence to an economic system bound to the traditional ways of the past.

In 1959, with the nation facing an economic crisis, a government program of reform was begun. For example, it devalued Spanish money (the peseta), removed many of the old restrictions on imports and foreign investments, and gave special inducements for establishing new industries. Recovery was rapid and soon led to a remarkable economic boom. Much of the growth has been in manufacturing, where foreign investments have been particularly heavy.

Private enterprise predominates in Spain, though the government is involved, directly and indirectly, in many sectors of the economy. The government-owned National Institute of Industry, for example, is a major manufacturer of aluminum, fertilizers, petroleum products, automobiles, trucks, and ships.

Although the nation has undergone rapid economic growth since 1959 and the per capita income has risen substantially, Spaniards still have a standard of living below that of many other West Europeans. Many people, particularly in rural areas, live in much the same manner as their ancestors. The worldwide recession of the late 1970's and 1980's slowed Spain's economic growth, but by the late-1990's, the Spanish economy was one of the fastest growing in Europe. Unemployment remained high.

For many years Spain used high tariffs and other means to vigorously protect its manufacturing industries from outside competition and relied almost entirely on its own technology and domestic production. Many industries were small, used obsolete equipment, and were relatively inefficient. As a result, production was inadequate. A reversal of the protective policy in 1959 brought a significant increase in manufacturing, especially by foreign companies attracted to Spain. By the late 1960's manufacturing was Spain's leading industry, both in value of production and in size of employment.

Much of the growth occurred in previously established manufacturing regions, especially the three leading centers—Barcelona, Bilbao and Madrid. Growth also occurred in other localities, largely because of various incentives offered by the national government. Such cities as La Corua, Seville, Valladolid, Vigo, Zaragoza, Velencia, Burgos, and Huelva have benefited from this program.

Spain's heavy industry, such as the making of iron and steel, is concentrated largely in the north. Bilbao is the chief center, though other cities, such as Avils, are also important. Catalonia, with Barcelona as its hub, has long been the leading center for such industries as food processing and the making of textiles. There are also large automobile, machinery, and chemical plants. Madrid, the third major manufacturing area, has many industries similar to the type found in Barcelona.

Though of decreasing relative importance because of the industrial boom, agriculture is still important. It provides livelihoods for about 10 per cent of the Spanish people and supplies a slightly larger percentage of the nation's exports.

Farming is difficult throughout most of Spain. In general, it is hampered by the dry climate, poor soils, and severe erosion. Improvement of agriculture has been limited, partly because of the slow adoption of modern farming methods and machinery. In irrigation, however, the nation has made significant gains.

Probably the greatest obstacle to the improvement of agriculture is the landholding system, whereby a significant part of the farmland is held in large estates by absentee owners. Such estates, which are most common in central and southern Spain, are worked by tenants and hired laborers in much the same manner as they have been for centuries. The remaining land, outside of the large estates, is held primarily in farms so small that they can barely support the families that work them. As a result, many people from rural areas have moved to cities in search of work.

Wheat, barley, and other cereals are the chief crops, particularly in north-central and central Spain. Sugar beets, a major industrial crop, are grown mainly in the Ebro Valley. Also produced in large amounts are olives, grapes, citrus fruits, tomatoes and other vegetables, corn, rice, and cotton. Spain is a world leader in the production and export of wine and olive oil. It is also one of the great exporters of citrus fruits, mainly oranges from Valencia.

Sheep, raised largely for wool, are the most numerous farm animals. Also numerous are goats. Both are grazed on land too dry or otherwise unsuited for crops. Hogs and poultry are major sources of Spain's meat. Dairying and cattle raising are becoming increasingly important, replacing other agricultural activities in some areas. Burros, mules, and horses are also raised, primarily as draft and pack animals. In some parts, such as Salamanca province and Andalusia, the raising of fighting bulls is a specialty.

Spain has long been one of Europe's leading fishing nations. The catch consists chiefly of hake, cod, tuna, sardines, mussels, and squid and octopus. Most of the catch is marketed fresh; the rest is largely frozen, cured, or canned, partly for export. The fishing fleet is made up of oceangoing and coastal vessels, most of which operate out of north coast (Atlantic Ocean) ports, especially La Corua and Vigo.

The forests of Spain, after centuries of wasteful cutting, are now largely depleted, making widespread reforestation necessary. Only slightly more than 5 per cent of the land is in forests of commercial quality, and most of that lies in the northern mountains. Lumber, cork, resin, and turpentine are the chief products. In cork production Spain is a world leader.

Spain is a leading producer of mercury, slate, feldspar, fluorspar, and potash. Normally it provides a significant share of the world's annual supply of mercury. Coal and iron ore are mined in substantial amounts, but production does not meet domestic requirements. Also produced are copper, lead, zinc, uranium, and small amounts of petroleum and natural gas.

Most of Spain's main railways and roads radiate from Madrid, which is centrally located. The highway system carries the bulk of the freight and passenger traffic. Despite its heavy use, the road network is generally inadequate. There are, for example relatively few divided highways or modern expressways, and a large number of roads are unpaved.

Railways link most large cities and connect ports with the interior. Several lines are noted for their ultramodern passenger trains. Virtually all the railways are part of a nationalized system.

Barcelona and Bilbao are the leading ports. Among others of significance are Las Palmas in the Canary Islands, Gijn and Avils, in the north; and Huelva, Valencia, and Mlaga in the south. Rivers are insignificant as transportation routes.

Two national airlines serve Spain. The government-owned Iberia Air Lines flies international and domestic routes; Aviaco, an affiliate of Iberia, provides domestic flights. Numerous international carriers also serve Spain through more than 20 international airports, the largest of which are at Madrid-Barajas and Barcelona.

Most forms of communication—television, radio, telephone and telegraph systems, and the postal service—are owned or controlled by the government.

The multibillion-dollar tourist industry is extremely important to the economy as it greatly offsets the deficit in Spain's foreign trade. Among the chief attractions are the seaside resorts of the Costa Brava and the Costa del Sol on the Mediterranean coast. Also popular are the historic old cities of Spain, such as Seville, Crdoba, and Toledo, and the modern metropolises of Madrid and Barcelona.