Spanish Industry: Historical Development, Structure, and Crisis
1. Historical Development of Spanish Industry (1855-1975)
a) Commencement of Industrialization (1855-1900)
Spain’s industrialization began later than in other European countries. Several factors contributed to this delay:
- Limited raw materials and energy resources.
- Low entrepreneurial spirit.
- Scarce capital.
- Significant technological backwardness.
- Limited demand for industrial products.
- Unfavorable external factors.
- Inadequate industrial policies.
b) Industrial Growth in the First Third of the 20th Century
This period saw industrial growth driven by:
- The coal mining boom.
- Decline in mineral exports.
- Incorporation of advancements from the Second Industrial Revolution.
- Increased domestic investment.
- Momentum in public works.
- Industrial protectionism that reduced foreign competition.
c) Interruption of Industrial Growth During the Civil War and Post-War Period
Industrial growth was interrupted due to the destruction of war industries and the autarkic policies of the post-war period. These policies deprived the industry of essential resources like energy, raw materials, and machinery.
d) “Industrial Development” Between 1960 and 1975
This stage witnessed significant industrial growth fueled by:
- Import liberalization, which facilitated the supply of necessary resources.
- Expansion of the global capitalist economy and Spain’s advantageous position for attracting industrial capital.
- Low energy prices.
- State-led industrial development through development plans.
2. Industrial Production (1855-1975)
During this period, Spain adopted technological innovations from both the First and Second Industrial Revolutions. In the latter half of the 19th century, the First Industrial Revolution boosted the iron and steel industry and cotton textiles. From the early 20th century, sectors related to the Second Industrial Revolution became the driving force.
a) Basic Sectors
These sectors were driven by the state during the Franco era through the National Institute of Industry (INI). The INI focused on sectors that required substantial strategic investments but offered low returns, making them unattractive for private investment.
b) Consumer Goods Industries
These industries grew alongside the increasing population.
c) Capital Goods Industries
These industries developed at a slower pace, reflecting Spain’s technological backwardness.
3. Industrial Structure
The Spanish industrial structure was characterized by:
- Mass production in the cotton manufacturing system.
- Abundant and low-skilled labor required by the production system.
- Contrast between small and large enterprises.
- Technological backwardness and dependence on foreign technology, energy, and finance.
This situation resulted in multiple limitations for the industry, placing it in a peripheral position within the global context.
4. Factors and Trends of Industrial Location
a) Classical Factors
- Proximity to raw materials and energy sources.
- Existence of a broad consumer market.
- Presence of abundant labor.
- Availability of efficient transportation systems.
- Access to capital.
- Presence of supporting industries.
- Favorable industrial policies.
b) Industrial Concentration
During this period, industries tended to concentrate in urban-industrial areas, where companies could benefit from external economies of scale.
5. Industrial Areas
a) Initial Industrial Centers
From the beginning, Spanish industry concentrated in peripheral regions of the peninsula and in Madrid. The following areas emerged:
- Extraction-based areas.
- Port-based areas.
- Urban-industrial areas.
b) Consolidation and Imbalances
During the first third of the 20th century and the Franco era, territorial imbalances in industrial distribution were consolidated. Established industrial regions strengthened their dominance by attracting more industries. These included the Cantabrian strip, the Mediterranean regions, and the Madrid area. Some new industrial centers emerged, while industrialization remained limited in other parts of Spain.
6. Industrial Policy
a) Protectionist Policies
Protectionist policies were implemented to shield Spanish industries from foreign competition.
b) Public Enterprises and Development Initiatives
Public enterprises were established, and initiatives were undertaken to address territorial imbalances in industrial distribution and promote development. Various activities were carried out for industrial promotion, including the establishment of development centers, preferential industrial zones, and large industrial expansion areas.
Industrial Crisis and Restructuring
The Industrial Crisis
Causes of the Crisis
a) External Causes
These relate to changes in the global economy:
- Rising energy prices.
- Depletion of the previous technological cycle.
- Emergence of new technologies and industries.
- Adoption of flexible production systems.
- Changes in demand patterns.
- Globalization and competition from newly industrialized countries (NICs).
b) Internal Causes
- Structural weaknesses of Spanish industry.
- Historical circumstances.
Implications of the Crisis
The crisis led to numerous business closures, decreased production, reduced profits, increased debt, and rising unemployment.
Industrial Restructuring
To address the crisis, OECD countries adopted industrial restructuring policies from 1975 onwards. These policies had two complementary aspects:
a) Industrial Restructuring
This aimed to ensure the medium-term sustainability of struggling industries. Actions focused on aligning supply with demand, eliminating excess capacity, and facilitating the adaptation of traditional industries.
b) Reindustrialization
This involved two approaches:
- Technological modernization of sectors with clear future viability.
- Creation of new industries. Urgent Reindustrialization Zones (ZURs) were established to support these efforts. Companies could apply for inclusion in a ZUR if they were undertaking the installation, expansion, or relocation of factories within these zones.