Spain is one of the European Union member countries. The economy of Spain is the world’s thirteenth-largest by nominal GDP, and it is also one of the largest in the world by purchasing power parity. Spain has a mixed capitalist economy. The Spanish economy is the fifth-largest in Europe behind Germany, the United Kingdom, Italy and France; and the fourth-largest in the Eurozone, based on nominal GDP statistics. In 2012, Spain was the twelfth-largest exporter in the world and the sixteenth-largest importer (Wikipedia,2019).
Madrid as the region that I will stay in the second largest industrial center after Barcelona in Spain. According to the website Encyclopedia (2019), the industries there including manufactures aircraft, electrical equipment, agricultural machinery, and leather goods. The city is the Capital city of Spain, and it is also the center of finance, insurance, and the national transportation hub. It is also one of the most essential publishing centers of Spanish language materials in the world. Tourism is an essential element of the economy. Wheat, vines, and olives are some of the agricultural products grown in the province of Madrid.
In addition, Madrid located in central Spain which is a perfect strategic position to enter a potential market with a population of 13 million. This has made the region an excellent condition for controlling the Iberian Peninsula, Europe, and North Africa. Good location also provides businesses with a variety of business opportunities and a stable economic landscape. According to the Instituto Nacional de Estadistica, in 2016, it reached a gross domestic product (GDP) of €210,813m which translates into an average income per capita of €32,723. Furthermore, Madrid was the recipient of 70.7% of the Foreign Direct Investment received by Spain in 2016. The countries that invested the most were Canada, the United Kingdom, and France, particularly in real estate and storage and transportation activities. Madrid has also been recognized by its excellence in services related to renewable energies, retail trade, aerospace and aeronautics, tourism and professional services, among which can be highlighted the financial and banking sector, the legal services and those related to advertisement and marketing, consulting, cleaning and security (European Commission, 2019).Here are some representative company in Madrid. Banco Santander is the leading banking group in Spain which founded in 1857. the bank has 190,000 employees and 125 million customers, the company now serves over ten countries, providing products in retail baking, wholesale banking, and insurance. Headquartered in Madrid, Santander enjoyed the revenue of €56,041 million in 2017. Telefónica is the largest telecommunications company in Spain and undoubtedly one of the most prominent mobile network operators globally. its headquarters located in Madrid. Telefónica provides mobile network services, TV subscriptions, and fixed telephone products. Current global sales figures reached $59.7 billion, with revenue of €52,007 million.
Repsol is a true market leader in the energy sector, operating worldwide with products marketed in more than 90 countries. It currently works across all aspects of the oil and gas sector, including exploration, production, and distribution. The company acquired the Canadian oil business Talisman Energy in 2015 for around $13 billion. Revenues for 2017 were €41,668 million. ACS Founded in 1997, now it has a global presence, carrying out construction projects all over the world. As well as construction and infrastructure, the headquartered of the company located in Madrid, ACS had revenues of €34,898 million in 2017(Global Database, 2018).
The employment situation in Madrid is more severe due to the financial crisis in 2008, the unemployment rate in Madrid is at a relatively high level. This year, due to the promotion of tourism and the slow recovery of the economy, the unemployment rate has gradually declined. Madrid’s labor market figures were positive for Q3 2018. According to LFS data: the workforce in Madrid grew by 1.10 % year-on-year with an activity rate of 62.53 %, one of the highest in Spain. The working population increased by 1.67 % with an employment rate of 55.11 %. Unemployment fell by 2.97 % to 11.89 %. The breakdown of the working population by economic sector confirms the predominance of the services sector, accounting for 84.80 % of Madrid’s working population, followed by industry (8.90 %) and construction (6.00 %). While services account for the bulk of the working population, it is also the sector with the highest number of unemployed persons. According to information from Madrid’s Public State Employment Service’s Occupational Monitoring Centre, the number of unemployed persons registered in Madrid fell by 8.19 % in September 2018 with respect to the same month last year. Employment was down across the board, for men and women, all ages, all sectors, foreigners and nationals (European Commission, 2019).
According to the Economic Complexity Index (ECI), Spain is the 16th largest export economy in the world and the 28th most complex economy. In 2017, Spain exported $296B and imported $332B, resulting in a negative trade balance of $35.7B. In 2017 the GDP of Spain was $1.31T, and its GDP per capita was $38k.
The top exports of Spain are Cars,Refined Petroleum , Vehicle Parts , Packaged Medicaments, and Delivery Trucks while Its top imports are Crude Petroleum , Cars , Vehicle Parts , Packaged Medicaments and Petroleum Gas .The top export destinations of Spain are France , Germany , Portugal , Italy, and the United Kingdom . The top import origins are Germany, France, China, Italy and the United States (OEC,2109).
Spain is a constitutional monarchy based on parliamentary democracy. Power is highly decentralized; the autonomous communities have a high level of legislative, executive and fiscal autonomy (Santander, 2019). In addition, in order to encourage investment and economic development, the Spanish government has introduced relevant preferential measures. For example, income tax favors both foreign and local companies. Individual beneficial tax rates apply to companies entering the market.According to current legislation (Real Decreto Legislativo 4/2004, de 5 de Marzo, Ley del Impuesto Sobre Sociedades), new businesses and SMEs who have a total of EUR 8 million revenue can apply for a 25% taxation rate up to €120, 000 instead of the standard 30% ( Carballo,2018).
Generally, the Spanish are very open and communicative people; they value their families, personal relationships and cultural traditions highly. They usually do not put too much emphasis upon work, as they like to focus on their leisure and live each day to the fullest. Spanish people do not share the same concept of time as other western European nations. In Spain being late is usually not considered impolite and deadlines are often considered as objectives to be met where possible but are not viewed as binding.In Spain, business people do not usually give gifts to each other. However, gifts are sometimes offered at the end of a successful negotiation or to say thank you for a favor. Gifts should not be too expensive; the gift could be the food, drinks,books or souvenirs from your home country. . Gifts are usually opened as they are received.Spanish people are very conscious of personal presentation and will perceive your appearance as an indication of your professional achievement and relative social standing.However, Spain has, a higher level of corruption than other western European countries(passport to trade, 2019).
In conclusion, Madrid’s financial position in Spain is in a higher position, and Madrid has an excellent geographical advantage. In addition, Spain is at a moderate level in the world economy. The unemployment rate and the problem of corruption have a more significant impact on the Spanish economy. The service industry remains an integral part of the Spanish economy. Spain’s economic development will still face enormous challenges in the future. I am looking forward to further observation and understanding in Spain and Madrid.
Yunhao is an International Business major with an emphasis in Spanish and Western Europe who is studying abroad at Universidad Antonio de Nebrija in Madrid, Spain for Fall 2019.
Reference
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International Business Experience 