• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Spain's Transition to the European Union

Extracts from this document...


Spain's Transition to the European Union Over the last 35 years Spain has developed from an agricultural and rural country into a flourishing nation with a diversified economy made up of a strong manufacturing and service sector. During the 1960's and the early 1970's the growth of the Spanish economy was 7% per annum with a per capita income of on average $500. This altered Spain's image more towards a developed nation. Spain's entrance into the European Union has largely boosted Spain's success and prosperity. After decades of dictatorship, Spain wished to achieve credibility in the political spectrum and saw EU membership as a means of solidifying its shift to democracy. Furthermore EU membership represented a new chapter in the history of Spain, making a clear distinction from the country's past. On the economic side, joining the EU meant access to the EU's agricultural market as well as potential gains from attracting foreign direct investment. Additionally Spain's decision to apply for EU membership was also driven by the large amounts of structural funds that Spain would receive once membership was granted. ...read more.


One of the party's main objectives was to make tremendous efforts in changing the situation of Spain in aims of attaining EC membership through modernization. The Gonzalez government had made an aggressive move to sell off its state-owned enterprises. This dramatically reduced Spain's public sector borrowing requirement and helped trim inflation. Spain was in the process of major national restructuring in order to create privatized newly reoriented and recapitalized enterprises that could eventually become corporations capable of world-class economic performance. In the past the majority state ownership of economic enterprises had crowded out private sector enterprises and initiative, raised costs for goods and services, and created manufacturing and service industries that were in capable of competing efficiently and effectively in international markets. Many of these state controlled enterprises date back to the 1930s. Franco had founded a massive agglomeration of state-owned commercial entities, the Instituto Nacional de Industria (INI). This hugely diverse enterprise consisted of over 150 industrial and service companies which were active in many fields such as electronics, steel, shipbuilding, aerospace and defence production and dominated for decades various sectors of the Spanish economy including manufacturing, mining, and transport. However by the 1980's INI was outdated and largely inefficient. ...read more.


As a result for a decade now, Spain's performance has been impressive. GDP growth increased to 2.7% in 2004 and is expected to rise to 3% in 2006, enabling a real convergence with other EU members. This is highlighted by the fact that the initially huge lag in Spain's standard of living compared with other EU countries has narrowed from 20% below the average to less than 13% during 1995 to 2003. The public debt to GDP ratio and inflation has also diminished along with reduced unemployment from 23% to 15% in 3 years. The main challenges remaining for Spain now include further reducing the public sector deficit, reforming labour laws and investment regulations. Though Spain's per capita income has to be further boosted since it is still low compared to the EU average, it is far above countries like Greece, Portugal and Ireland. Unemployment which is significantly lower than previously still remains a problem at 10.5%. And inflation which still stands above the euro area average is eroding Spain's competitiveness and must be reduced. Specifically, maintaining economic stability and competitiveness while advancing further convergence signifies a difficult task, as this demands speeding up structural reform. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Economics in a European Context Coursework - Monetary Union

    Firms are able to become larger and their scale of operations increase to such an extent that they are able to experience reductions in their costs of production. For example, French supermarket giant Carrefour now has operations across France, Belgium, Italy, Holland, Spain and Germany and is now the 7th

  2. Corporate strategy of Arcelor: how to penetrate the Chinese market?Second world largest steel maker, ...

    Developing vertically and horizontally is the best strategy the group can have to both secure its market and to protect itself against huge price variations. The current Chinese Metal Market is restructuring: the Chinese government entices small steelmakers from all over the country to merge and create economies of scales.

  1. To what extent does remoteness from the geographical core explain the distribution of problem ...

    European map showing the extent of the industrial and economic core, with key problem regions highlighted. Geographical remoteness is most significant in economic terms due to the lack of efficient transport linkage essential to modern, competitive economies of scale. Essentially the lack of integrated, rapid, inexpensive transport in remote regions acts as a deterrent to investment.

  2. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    By using economic reasoning along with their moral debate for personal freedom, the MRP has a better chance persuading the people whom value hard numbers and the people whom value more humanitarian variables. Not all special interest groups, of course, favor legalization.

  1. UK Membership of the European Monetary Union.

    flexibility inside European labour markets to cope with external economic shocks Member economies have not converged fully in a real or structural sense. Although there has been a substantial amount of nominal economic convergence during the run up to the establishment of the Euro, there are still huge differences in the economic performance of member nations.

  2. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    Industry * Bank of England raises interest rate 5 times to cool down the market as house prices escalate & buoyant consumer spending sparked inflation. 11 02/04 - 05/04 Market * General Election created uncertainty in the Market. In January 2001, all the company's share prices were predominately the same.

  1. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    Sarig et al. (1989) as cited in this paper have found further evidence of this. The authors postulate that government bond prices are recorded more accurately than corporate bond prices. This is because of the higher liquidity in the government bond market and higher uniformity of traded assets.

  2. Describe the main economic problem which may arise in transition economies

    This is exactly what happened in the transition economies. So even though there were no shortages in the goods anymore, there was a large scale increase of the costs of goods. For example from Table 4.4 which was a Financial Times survey in Moscow the prices of mandarins increased from

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work