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THE SPANISH PATH TO DEVELOPMENT 1959 / 2005

THE SPANISH PATH TO DEVELOPMENT 1959 / 2005. 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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THE SPANISH PATH TO DEVELOPMENT 1959 / 2005

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  1. THE SPANISH PATH TO DEVELOPMENT1959 / 2005

  2. Political & Economical Isolation Stagnation Protectionism (Tariffs, Quotas, Licenses, Taxes) Interventionism (Public Companies) Controls (Capitals, Wages, Prices) Subsidies Low Fiscal Pressure Overregulation AUTARCHY1939 - 1959

  3. OBJECTIVES: Opening Liberalization Rationalization Internal and External Balance Provide Development Foundations Place Spain in the Global Community STABILIZATION PLAN1959 …

  4. WAYS TO ACHIEVE THE OUTER BALANCE Progressive Liberalization of Foreign Trade Setting new Exchange Rates Liberalizing Capital Movements New Tariffs STABILIZATION PLAN1959

  5. STABILIZATION PLAN1959 • 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

  6. OUTCOME Rapid growth of resources (human, capital) Comprehensive Modernization - Progressive democratization - Freedom of Enterprise, Education, Prices - Industrial Restructuration - End of Subsistence Agriculture STABILIZATION PLAN1959

  7. SUSTAINED GROWTH1960 – 1975 onwards FDI INFLOWS YEAR € Mill. 1965 48,08 1966 49,28 1967 69,12 1968 64,91 1969 91,95 1970 105,18 1971 119,60 1971 121,40 1973 169,49 1974 145,44 1975 137,63 1976 168,28 1977 173,69 1978 320,94 1979 443,55 1980 533,10 1981 602,21 1982 760,88 1983 790,93 1984 1.063,19 1985 1.164,16 YEAR € Mill. 1986 1.936,32 1987 2.665,86 1988 4.154,89 1989 4.851,97 1990 7.565,37 1991 7.312,27 1992 6.328,03 1993 9.168,00 1994 10.393,00 1995 8.440,00 1996 9.428,50 1997 13.732,00 1998 13.773,00 1999 29.946,00 2000 66.990,00 2001 48.188,00 • 55.000,00 • 16.641,00 • 17.857,00 SECTORS Agrofood Automotive Biotechnology Chemicals Electronics Environment Medical Equipment Pharmacy Plastics Public Works Telecommunications Source: SGIEX Registry

  8. FDI (GNP %) 10% 9% From Spain 8% 7% 6% 5% 4% 3% Into Spain 2% 1% 0% 2001 1999 1997 1977 1981 1985 1989 1991 1995 1975 1979 1983 1987 1993 SUSTAINED GROWTH1975 onwards Strong initial inflows in Agrofood, Automobile, Banking, Distribution and Metalmechanics. Even stronger subsequent outflows in Banking, Energy, Telecom Source: OECD

  9. FOREIGN INVESTMENT IN SPAIN Source: SGIEX Registry

  10. SUSTAINED GROWTH1960 – 1975 onwards REMITTANCES Industrialization Rural Depopulation Over supply of Labour Destination: Europe and America Income Transfers Capitalization SMEs Emerging Middle Class External behavioural influences

  11. TRANSITION to a NEW STATE 1975 - 1978 • Monarchy + Welfare State • New Taxation System • Industrial Reorganizing • Internationalization of the Economy • ‘Tertiarization’ • Macroeconomic Stabilization • Accessing to the EU: Preferential Agreement (1970)

  12. New Market Size ∆ x ∆ FDI • Commercial Liberalization (ways to achieve) • Financial Deharnessing • Fiscal Harmonization • Subsidies in the way out • ‘Deregulation’ • Labour Reforms • Privatizations • Industrial Restructuration • Correct use of Structural Funds EUROPEAN UNION 1986 PROS

  13. ECONOMIC & MONETARY UNION 1993 • 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

  14. PCI 4000% since 1960 • 89% GDP per capita (1960 – 2003 = + 26 pp) • Real Convergence with EU based in superior Growth • Interest Rates in minimum levels • Real Income in maxima (consumption + housing) • Cohesion Funds • Deregulation + Liberalization + Competence + Flexibilization • AAA • Zero Public Deficit ( Balanced Budget Law) Telecom Electricity Banking Workmanship THE BLISS POINT 1994 - 2004

  15. EEC / EU Market size No tariffs Costs Profits Homologation • EMU No exchange risk All time low interest rates

  16. PROGRESIVE LIBERALIZATION 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

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