1 THE SPANISH EXPERIENCE 1959 - 2005 MINISTRY OF INDUSTRY, TOURISM AND TRADE SECRETARY OF STATE FOR...

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THE SPANISH EXPERIENCE1959 - 2005

MINISTRY OF INDUSTRY,TOURISM AND TRADE

SECRETARY OF STATEFOR TOURISM AND TRADE

S.G.I.E.X.

THE SPANISH PATH TO DEVELOPMENT

1959 / 2005

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THE SPANISH EXPERIENCE 1959 - 2005



S.G.I.E.X.

Political & Economical Isolation

Stagnation

Protectionism (Tariffs, Quotas, Licenses, Taxes)

Interventionism (Public Companies)

Controls (Capitals, Wages, Prices)

Subsidies

Low Fiscal Pressure

Overregulation

AUTARCHY 1939 - 1959

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S.G.I.E.X.

OBJECTIVES: Opening Liberalization Rationalization Internal and External Balance

Provide Development Foundations

Place Spain in the Global Community

STABILIZATION PLAN1959 …

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S.G.I.E.X.

WAYS TO ACHIEVE THE OUTER BALANCE

Progressive Liberalization of Foreign Trade

Setting new Exchange Rates

Liberalizing Capital Movements

New Tariffs

STABILIZATION PLAN1959

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S.G.I.E.X.

WAYS TO ACHIEVE THE INNER BALANCE

FISCAL POLICIES∆ Public Services Prices∆ Monopolies´ Prices∆ Taxes

MONETARY POLICIES Liberalization & Expansion of Credit facilities Interest Rates

COMMERCIAL POLICIES Liberalization of Imports End of Quantitative Restrictions

Multilateralization


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S.G.I.E.X.

OUTCOME

Rapid growth of resources (human, capital)

Comprehensive Modernization

- Progressive democratization - Freedom of Enterprise, Education, Prices - Industrial Restructuration - End of Subsistence Agriculture


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S.G.I.E.X.

YEAR € Mill.

1965 48,08 1966 49,281967 69,121968 64,911969 91,951970 105,181971 119,601971 121,401973 169,491974 145,441975 137,631976 168,281977 173,691978 320,941979 443,551980 533,101981 602,211982 760,881983 790,931984 1.063,191985 1.164,16

SECTORS

AgrofoodAutomotiveBiotechnologyChemicalsElectronicsEnvironmentMedical EquipmentPharmacyPlasticsPublic WorksTelecommunications

YEAR € Mill.

1986 1.936,321987 2.665,861988 4.154,891989 4.851,971990 7.565,371991 7.312,271992 6.328,031993 9.168,001994 10.393,001995 8.440,001996 9.428,501997 13.732,001998 13.773,001999 29.946,002000 66.990,002001 48.188,002002 55.000,002003 16.641,002004 17.857,00

SUSTAINED GROWTH1960 – 1975 onwards

FDI INFLOWS

Source: SGIEX Registry

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S.G.I.E.X.

FDI (GNP %)

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

Into Spain

From Spain

•Strong initial inflows in Agrofood, Automobile, Banking, Distribution and Metalmechanics.•Even stronger subsequent outflows in Banking, Energy, Telecom

SUSTAINED GROWTH1975 onwards

Source: OECD

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S.G.I.E.X.

FOREIGN INVESTMENT IN SPAIN

Source: SGIEX Registry

13.738

17.85717.812

32.160

34.741

38.291

18.432

9.214

6.8205.4735.392

6.5275.427

28.292

7.187

13.588

28.93229.324

4.0824.0432.7703.5443.2383.573

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

GROSS INVESTMENT NET INVESTMENT

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S.G.I.E.X.

REMITTANCES

Industrialization

Rural Depopulation

Over supply of Labour

Destination: Europe and America

Income Transfers

Capitalization

SMEs

Emerging Middle Class

External behavioural influences

SUSTAINED GROWTH1960 – 1975 onwards

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S.G.I.E.X.

TRANSITION to a NEW STATE1975 - 1978

1. Monarchy + Welfare State

2. New Taxation System

3. Industrial Reorganizing

4. Internationalization of the Economy

5. ‘Tertiarization’

6. Macroeconomic Stabilization

7. Accessing to the EU: Preferential Agreement (1970)

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S.G.I.E.X.

EUROPEAN UNION1986

PROS

1. New Market Size ∆ x ∆ FDI

2. Commercial Liberalization (ways to achieve)

3. Financial Deharnessing

4. Fiscal Harmonization

5. Subsidies in the way out

6. ‘Deregulation’

7. Labour Reforms

8. Privatizations

9. Industrial Restructuration

10. Correct use of Structural Funds

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S.G.I.E.X.

ECONOMIC & MONETARY UNION1993

No more Capital Controls

End for Financial and Monetary competences

Withdrawal of Regulatory ability on Agriculture & Industry

Low Financial Costs

Complete Structural Modernization

Umbrella Effect against financial crisis

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S.G.I.E.X.

THE BLISS POINT1994 - 2004

1. PCI 4000% since 1960

2. 89% GDP per capita (1960 – 2003 = + 26 pp)

3. Real Convergence with EU based in superior Growth

4. Interest Rates in minimum levels

5. Real Income in maxima (consumption + housing)

6. Cohesion Funds

7. Deregulation + Liberalization + Competence + Flexibilization

8. AAA

9. Zero Public Deficit ( Balanced Budget Law)

Electricity Telecom Banking Workmanship

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S.G.I.E.X.

EEC / EU

Market size No tariffs Costs Profits Homologation

EMU

No exchange risk All time low interest rates

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S.G.I.E.X.

LEGISLATION

1974 Law on Foreign Investment

1979 Law on Exchange Control

1986 Law on Foreign Investments in Spain ( after accessing EEC )

1986 Royal Decree on Foreign Investment

1992 Law on Foreign Investments in Spain

1999 Royal Decree on Foreign Investment = COMPLETE LIBERALIZATION

PR

OG

RE

SIV

E L

IBE

RA

LIZ

AT

ION

1 THE SPANISH EXPERIENCE 1959 - 2005 MINISTRY OF INDUSTRY, TOURISM AND TRADE SECRETARY OF STATE FOR...

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