Spain - in a Business Perspective

The Kingdom of Spain, also simply known as Spain is located at the crossroads of European and African civilizations. Over the course of its entire history, Spain has enjoyed a truly rich and complex history, having been invaded, inhabited and dominated by both European as well as non-European civilizations.

Introduction

It was Spain's location at the narrow Gibraltar, which perhaps provided for the nation's interaction with a number of pre-classical and classical civilizations. A brief on the geography of Spain shows that she is located in the southwestern part of the European continent at the Iberian Peninsula, occupying some 80 percent of this Peninsula. The remaining 20 percent are occupied by neighboring country of Portugal. On the north, Spain has common borders with France and Andorra with the Pyrennes range of mountains serving as their natural frontiers. In addition, the Balearic Islands of Mallorca, Menorca, and Ibiza located in the Mediterranean Sea, the Canary Islands in the Atlantic Ocean and the Islands of Ceuta and Melilla located in northern Africa are also part of the Spanish dominion today. A comparison with her European neighbors, Spain enjoys the position of being the 3 largest nation, while standing 5th as far as her population is taken into account. The topography of Spain also shows that it is home to Europe's five big mountain ranges, of which some 50 percent are located at elevated plain. However the landscape of each has extreme variations from green and fertile, to almost desert-like, in addition to the long coastline overlooking the Mediterranean Sea. (Yahoo-Spain, 2004; CIA World Fact Book, 2001; Coutsoukis, 2004)

A brief on the climate of Spain shows that she has three types of climates namely continental, maritime, and Mediterranean. However, the majority of the peninsular Spain is covered by the continental climate, which is characterized by wide diurnal and seasonal variations in temperature and by low, irregular rainfall including high rates of evaporation which results in an arid landscape. With the annual rainfall ranging between 30 to 64 centimeters, the Spain has two rainy seasons, first between the months of April and June and the second during October ad November, with spring being the wettest time of the year. The winters are cold, despite the high humidity, with the regions of Iberico home to the coldest areas including frost. Summers are warm with average daytime temperatures averaging at 21 degrees in the northern regions and between 24 and 27 degrees centigrade in the southern Meseta regions. The nighttime temperatures too have slight variations averaging between 7 and 10 degrees centigrade. (CIA World Fact Book, 2001)

Spain - Socio-Economic and Cultural Factors

Statistics as of year July 2001 reveal that Spain has a population of approximately 40 million inhabitants, with the growth rate at a stable 0.1 percent, birth rate at 9.26/1000 population, and death rate at 9.13 deaths per 1000 inhabitants. An overview at the age structure of the Spanish population shows that some 14.6 percent of the lie within the ages of 0-14 years, while the majority lying between the ages 15 and 64 comprise of 68.2 percent of the entire population. The average infant mortality rate is 4.9 deaths per 1000 live births, while average life expectancy at birth for the entire population is 78.93 years. The females enjoy a higher life expectancy at 82.623 years as compared to the males averaging at 75.46 years. (Fowler, 2002)

Cultural Minorities and Ethnic Groups

A national of Spain is given the title of Spanish, while Spain is also home to other ethnic groups comprising of people from the Mediterranean and Nordic regions. As of 1978, the Spanish Constitution has given complete guarantees and autonomy to a number of different nationalities and regions, which comprise of the entire Spanish nation. Major ethnic groups include Basques, Catalians, Galicians, Andalusians, Valencians, Asturaians, Navarrese, Aragonese as well as small number of Gypsies. (Fowler, 2002)

Majority of the Spanish population belongs to the Roman Catholic with 97 percent share, while the remaining 3 percent are shared by other religions including Protestants and Muslims. The major languages spoke in Spain include Castilian Spanish which is also the official language spoken by 74 percent of the population, Catalian Spanish spoken by 17 percent, Galician by 7 percent and Basque language spoken by some 2 percent of the people living in Spain. Spain enjoys a healthy 97 percent literate population with all those above the age of 15 years able to read and write. (CIA World Fact Book, 2001; Coutsoukis, 2004)

Political and Legal Climate

A brief on the political transition from dictatorship to democracy in Spain shows that the death of General Franco in 1975 perhaps proved to be a turning point as the nation entered a new era of democracy. This was followed by the legalization of political parties and first free elections in more than 4 decades, duly held in 1977. A year later, a new democratic constitution was approved through a referendum, which restored the monarchy of King Juan Carlos and his heir apparent Felipe. The new constitution also repealed a number of laws in practice during the era of General Franco. Nearly a decade later, in 1986 Spain joined the European Community, later also known as the European Union. Since then, it has been a progressive era for Spain's political parties as well as the Monarch, both of who have vowed to make Spain one of the most active members in the EU and NATO alike, a strategy which has been more than accomplished. This can be evidenced in the Spain's membership as one of the founders of the European Monetary Union as of January 1999. (Gains, 2001)

Spain has a parliamentary form of government with the majority of power resting in hands of the 350-strong Lower House, also known as the Congress of Deputies. The upper house or the Senate has 208 seats and another 51 regional representatives who are directly elected from their respective regions. The Spanish Parliament or Cortes is sworn into for a four-year term, with the possibility of early dissolution if and when found necessary. The emphasis of all these members of Parliament has been to take the nation towards decentralization, and though it may some time for the entire system to achieve its targets, the move alone has provided considerable autonomy to the more than 17 autonomous communities spread across the breadth of Spain. (Perry, 2004)

One of the major gains accomplished by Spain from the joining of the European Union has been the numerous benefits and advantages gained though the use of the EU's single currency including but not limited to the maintenance of adequate balance between the national fiscal policy and the monetary policy of the Euro, the single currency introduced by the European Union.

Spain - Economic Climate

A brief on the economic climate of Spain reveals that the nation with a population of more than 40 million inhabitants and the population growth rate averaging at 0.6 percent, the Gross Domestic Product as of 2002 statistics was 675 US dollars with real GDP growth rate at 3.5 percent. The GDP per head as of the same years was US dollar 16,225 while inflation averaged at 2.9 percent. The purchasing power parity (PPP) per head was 22,271 US dollars for the same year. The ration of current account balance with that of GDP was -2.3 and that of Foreign Direct Investment to GDP was 3.8 percent. (Economist, 2004' The Columbia Electronic Encyclopedia)

A brief at the various measures taken to improve taxation showed that as of January 2003, the personal income tax was reduced from 48 to 45 percent, with simultaneous fall in standard rate of capital gains witnessing a fall from 18 to 15 percent. As for corporation tax, this has s uniformly applied at the rate of 35 percent. While companies with a turnover of less than 5 million Euros, the same corporation tax is levied at 30 percent for the first 90,000 Euros. In addition, the areas of job creation, investment in research and development, environmental investment, and investment abroad, there is a facility of corporation tax. The Value Added Tax or VAT is however uniformly levied at 16 percent across the board. (CIA World Fact Book, 2001)

A brief on the export and imports of Spain show that the sector of merchandising have witnessed a rise from US dollar 113 billion in 1999 to US dollar 125.8 billion as of 2002. However, a strong demand for imported products has raised the trade deficit from 30.3 billion US dollars to that of US dollars 33.1 billion during the same period. The enhanced trade deficit also resulted in increasing the current account deficit, which reached at 2.4 percent of GDP as of 2002. (Perry, 2004)

The statistics as of 2001 exports showed that 43 percent comprised of intermediate goods, 41.1 of consumer goods, and 13.9 percent of capital goods. In similar context import figures for the same period showed that 47.9 percent comprised of intermediate goods, 27.1 percent consumer goods, and 18.5 comprised of capital goods during the same period. The leading markets for Spanish exports were France with a share of 19.1 percent, Germany at 11.6 percent, and Portugal at 9.7 percent, and Italy receiving 8.9 of the total Spanish exports. As for the Spanish imports, this was shared by Germany's exports at 16.45 percent, France at 16.4 percent, Italy at 8.9 percent, and United Kingdom's exports to Spain at 6.4 percent. (Economist, 2004; Economist, 2002; The Columbia Electronic Encyclopedia)

Analysis

From the above detailed data, statistics, reports and comments from a number of organizations including the World Bank, the CIA World Fact Book, and famous magazine such as the Economist, Spain indeed presents one of the most attractive and alluring nations for any potential business venture. This is amply confirmed from that fact that Spain has enjoyed more than d decades of economic and political success, as well as foresees a further development of its continuous economic and political policies. This accomplishment is indeed unique, as there is hardly any other example of a European nation, which has accomplished so much in so little a time. (Fowler, 2002)

From the political perspective, one can easily observe that over the last more than 3 decades, Spain has created a democratic system wherein the political parties duly alternate in governments, and the government on its part ensures that the goods and services as required by the larger Spanish population are delivered with least set of criticism, if any. Though, one must also take into account this has not been an easy ride altogether, as also evidenced from a failed military attempt in 1981, or for that matter the scandal involving the Socialist government of Felipe Gonzalez in the middle of 1990 regarding the introduction of so called death-squads used against Basque terrorist. However, in both the cases the nation's rule was broken, and as was expected, it was tactfully tackled by the able monarchy of King Juan Carlos.

In pursuing such stable political and economic set of policies, Spain has certainly attracted attention from all around the world, as also providing ample evidence for a nation where businesses and enterprises are sure to succeed.
In praising the economy and political structure of Spain as one of the most ideal nations for businesses, one must also take into account some of the risk factors that may well bring awareness for all potential business investors. For example, one may note that the Spain has painstakingly constructed a democratic system of governance which allows a minimal amount of conflict between its various political faction and parties, there have been instances which have served as a signal for the presence of flaws in the same democratic set up. For example an insight on the Spanish government's hold on its internal affairs, in particular its security concerns showed that it was equally vulnerable, as also evidenced from terrorist bombings of March 11, bringing the government to its knees, and practically shaking the entire government structure. For the People's Party headed by Jose Maria Aznar, it was perhaps one of most dreadful experiences as the government had begun to think that their party will be voted into power for the second 4-year term as well. Yet, with the terrorist attacks, this has virtually broken the composed and stable government, and forced them to think otherwise. (Gains, 2001)

Nevertheless, Spain has truly emerged as a successful economy as well as a stable political government, one, which takes pride in not only producing policies, but also implementing them with the true essence of a democratic government and an equally loving monarchy under King Juan Carlos. Perhaps one of the most striking aspects is Spain's tremendous economic growth, duly making the average Spaniard approximately 75 percent richer as compared to some 3 decades earlier. This is in addition to the national economic growth, which has continued its growth pattern for the last more than a decade, and has not seen any rival even when one take into account the European average. (Perry, 2004)