During the 1990s, Spain’s economy stabilized, unemployment declined (largely because of the rapid expansion of the services sector), and inflation eased. This economic recovery resulted partly from continuing integration into the single European market and from the government’s stability plan, which reduced budget deficits and inflation and stabilized the currency. The government pursued this policy of economic stabilization to enable Spain to qualify for the European economic and monetary union outlined in the 1991 Maastricht Treaty (formally the Treaty on European Union). The government also began privatizing state-owned enterprises. Moreover, Spain succeeded in qualifying for the euro, the EU’s common currency; in 1999 the euro was introduced as a unit of exchange, although the Spanish peseta (the value of which was locked to that of the euro) remained in circulation until 2002. In the early 21st century, Spain had one of the strongest economies in the EU. Foreign direct investment in the country tripled from 1990 to 2000. Moreover, since 2000, a large number of South Americans, eastern Europeans, and North Africans have immigrated to Spain to work in the construction industry, which contributes about one-tenth of the gross domestic product (GDP).
The global financial downturn that began in 2008–09 took root in the euro zone (see euro-zone debt crisis), and Spain was one of the countries hardest hit. Spanish banks, undercapitalized and suffering the effects of a burst housing bubble, dragged down an already ailing economy. The government’s initial attempts to stimulate the economy proved insufficient, and Spanish bond yields—the benchmark of the country’s ability to borrow—rose to dangerous levels. Unemployment skyrocketed as a succession of governments introduced austerity measures in an effort to restore confidence in the Spanish economy. In 2012 Spain accepted a €100 billion (about $125 billion) bailout package from the EU, the European Central Bank, and the International Monetary Fund to recapitalize its banks. Agriculture, forestry, and fishing Agriculture
Basque shepherds, Navarra, Spain.Koldo Chamorro/Ostman Agency
Because of the relative decline of agriculture since the 1960s, Spain’s rural population decreased and many farms disappeared. Spanish agriculture has remained relatively backward by western European standards: capital investment per hectare is about one-fifth the average for the Organisation for Economic Co-operation and Development (OECD), and the vast majority of farms are small. Since Spain joined the EEC in 1986, the Spanish agricultural sector has had to respect Europe-wide policies. As a result, many small-scale operations, especially in grape growing and dairying, had to cease. Since the mid-1990s, however, the amount of agriculturally productive land (especially land dedicated to organic farming) in Spain has increased through irrigation and the conversion of fallow lands.
Vegetables, fruits, and cereals are the principal crops, accounting for about three-fourths of Spain’s agricultural production (in terms of value), with cereals the principal crops. Barley and wheat, the major crops in Spain, predominate on the plains of Castile-León, Castile–La Mancha, and Andalusia, while rice is grown in coastal Valencia and southern Catalonia. Corn (maize), grown in the north, is a major fodder product. Other crops include cotton; tobacco (grown in Extremadura); sugar beets (grown mainly in the Duero and Guadalquivir valleys); olives (produced in the south), a large portion of which are used for oil; and legumes (beans, lentils, and chickpeas). Fruit growing is also significant, with citrus fruits, especially oranges (grown in the regions of Valencia and Murcia), being of greatest importance. Other fruit crops include apples, apricots, bananas, pears, peaches, and plums. Spain also produces vegetables (especially tomatoes, onions, and potatoes) and nuts (almonds).
Because Spain is one of the world’s largest producers of wine, grape growing is of considerable importance. The main wine-producing areas are La Rioja, the Penedès in Catalonia, Valdepeñas in Castile–La Mancha, the Duero valley in Valladolid, and Málaga and Jerez de la Frontera in Andalusia, which is also the centre of sherry production.
The raising of livestock accounts for just under half the value of Spain’s total agricultural output. Pigs are raised mainly in Castile-León, Aragon, and Catalonia, and pork leads meat production in Spain, followed by poultry, beef, and lamb. In the Atlantic coastal regions and the dry southern interior, sheep and dairy cows are raised. Forestry
Forests cover more than one-third of the total land area of Spain, with much of this woodland in the Cantabrian Mountains. Forestry contributes only a tiny fraction to Spain’s agricultural production. Important forestry products are cork, eucalyptus, oak, pine, and poplar. Because centuries of erosion, harvesting of firewood, and the creation of pastureland had resulted in the disappearance of many of the country’s forests, the government initiated reforestation efforts in the 1940s that are still in progress. Fishing
With about 5,000 miles (8,000 km) of coastline, Spain has long had an important fishing industry, which relies on fishing grounds off its coast and as far away as the Pacific and Indian oceans. The main fishing ports are in the northwest, especially Vigo and A Coruña. The activities of the commercial fishing fleet led to conflicts between Spain and a number of other countries, especially Morocco and Canada. On a number of occasions Spanish fishermen have been arrested for fishing illegally in these countries’ waters. Spain’s total catch declined during the 1980s and ’90s, but the fishing sector still accounted for about 1 percent of GDP, and fish remain an important component of the Spanish diet. Moreover, as the catch from sea fishing has declined, Spanish producers have increasingly developed coastal fish farming as an alternative. Resources and power
Spain has one of Europe’s most important and varied mining industries. Coal—produced mainly in the Cantabrian Mountains, the eastern Iberian Cordillera, and the Sierra Morena—accounts for a significant proportion of the country’s total mineral production. Other major products include metals such as iron, copper, lead, zinc, tungsten, uranium, mercury, and gold. In order to compete with other EU countries, however, the Spanish mining industry has been forced to restructure. This need has been most urgent in Asturias, where it has led to strong protests by coal miners against government policies.
Despite the long-standing prominence of the mining industry, in general, Spain’s mineral resources are limited, and the country’s once-plentiful coal reserves are no longer sufficient for its energy needs. Moreover, Spain has virtually no petroleum of its own, and the commercial potential of its natural gas fields is limited. As a result, Spain, once a mineral-exporting country, now imports minerals on a large scale, including both coal and petroleum.
Thermal power plants, located near coal fields or ports that receive imported oil, supply about half of Spain’s electricity needs. The country also relies heavily on hydroelectric power, mainly provided by its northern rivers, which create about one-sixth of its electricity. To address its energy shortage, the Spanish government adopted an ambitious nuclear energy program in the 1960s. The first nuclear power plant began operating in 1968, and several additional plants went online in the 1980s. In 2006 the 1968 plant was closed, and the government sought to move toward renewable energy. In fact, in the early 21st century, Spain became one of the EU’s leading exponents of renewable energy, including solar and wind power. In 2007 solar thermoelectric power plants opened near Sevilla, and there are wind parks throughout the country. Manufacturing
Spain’s early industrialization took place behind high tariff walls, and most industries remained small in scale, partly because of a lack of adequate raw materials and investment capital and partly because of weak domestic demand. Historically, industrial production has been concentrated on the northern coast and in the Basque Country, Catalonia, and the Madrid area while other parts of Spain underwent little industrial development. The liberalization of the economy in the 1960s and the influx of foreign investment, however, added a number of large firms. It also helped Spanish industry to diversify. The most striking example of this change was the automobile industry. Before 1960 Spain built few motor vehicles, but by the end of the 1980s it was producing 1.5 million vehicles in factories owned by Ford, Renault, General Motors, and the Spanish firm SEAT (largely owned by Volkswagen). During the 1990s, further liberalization of Spanish industry took place as the government privatized state-owned industrial enterprises, and telecommunications deregulation spurred an expansion of infrastructure. Meanwhile, Spanish firms, encouraged by government policy, began to address their traditional reliance on imported technologies by increasing their budgets for research and development.