Introduction about spain's economy - Essay Example

Your s Spanish economy experienced industrialization in late 18th century, the process of this industrialization and subsequent economic growth extended to 19th century. Overall pace of Spanish economic growth was slow as compared to major western European economies. Therefore, by early twentieth century, Spain was recognized as underdeveloped and poor as compared to Britain, France, Germany, and even Italy (Britannica).Today, Spain is a dynamic country with an advanced economic model. According to an estimate, 87 percent of the total GDP is represented by service sector and industry (National Statistic Institute, 2010 qtd.

in Garrigues).The research paper briefly studies economy of Spain and its growth over a period of time (Index Mundi). Spain has a mixed capitalist economy residing at 13th position amongst worlds largest economies. Its per capita income is approximately comparable to that of Germany and France. After experiencing 15 years of continuous above average DGP growth, economy has to face recession in 2008. GDP decreased to 3.7% in 2009 and by another 0.2% in 2010.Spanish economic growths reversal was primarily caused by considerable decline in construction due to excessive supply of housing and decrease in consumer spending.

Government tried to support economy by stimulus spending, increasing unemployment benefits; and loan provision didnt prevent sharp increase in unemployment rate. Unemployment increased from 8% to 20 % during 2007 and 2010(Index Mundi). Governments budget deficit went from 3.8 percent of total GDP to 9.2% from 2008 to 2010.Despite governments efforts to privatization and labor market reforms; Spain has become vulnerable to financial corruption as compared to other highly-indebted euro zone countries.

According to World Investment Report, rapid growth in Spanish imports and exports has taken her status as one of the major internationally-oriented countries. Spanish foreign investment rates reached to $16,000 million in 2009(qtd. in Garrigues). Spain is one of the most active traders and occupies the status of worlds 7th largest exporter and 9th position as importer(Garrigues).Spanish share of international imports and exports are 1.70% and 2.30% respectively(International Trade Statistics,2010 qtd.

in Garrigues). Spain received inward investment since 1996, and in recent times, Spain established herself as one of the major recipients of foreign direct investment at 7th position worldwide. Spanish economy is highly developed; it is evident from that fact that outward investment flows have surpassed inward investment flows since 1997(Garrigues). Source: Bank of Spain (qtd. in Garrigues) The major factors that led to Spains debt issues, unemployment problem, and slow recovery is not merely an over-expansion of government but downfall in private demand.

Spains housing bubble that collapsed in 2007 and external shocks from recession had huge influences (Weisbrot & Juan 1).Unemployment rate are predicted to be 15.5 percent by 2013(Weisbrot & Juan 1).Government must reconsider its policies and plans in order to take Spain back on the track of economic growth. Work Cited Garrigues, "Spain Profile: Spain in Numbers." investinspain.org. The State Company for the Promotion and Attraction of Foreign Investment, plc,n.d. Web.11 November.2011. "Spain.

"Encyclopedia of Britannica Online.britannica.com. Encyclopedia of Britannica Inc., 2011.Web. Web.11 November.2011. Index Mundi, "Spain Economy Profile 2011."indexmundi.com, 2011.Web. .11 November.2011. "Spain."Encyclopedia of Britannica Online.britannica.com. Encyclopedia of Britannica Inc., 2011.Web. Web.11 November.2011. Weisbrot,Mark & Juan,Montecino.(2010). "Alternatives to Fiscal Austerity in Spain.Center for Economic and Policy Research.CEPR.Web. 11 November.2011.