Spain's Economic Integration into the European Union

Spain's Integration into the European Union and its Impact on Foreign Economic Specialization

Spain's foreign trade policy is characterized by accelerating economic globalization, increasing trade globally, and the expansion of direct investment and financial capital movements. This has been facilitated by trade liberalization, promoted by institutions like the GATT and its successor, the World Trade Organization (WTO), established in 1995. Spain, whose economic internationalization process started in the 1960s, fully joined this phenomenon of globalization in the 1980s. Its accession to the European Community (now the European Union) in 1986 was essential in this regard.

Spain now has a system of business regulation similar to that of other EU countries. This has allowed specialization in productions that have been able to gain a competitive advantage. The entry of foreign capital has also been facilitated, encouraging the country's productive potential.

Strengthening Competition and Regional Policy

The construction of the single European market has required the strengthening of competition policy and regional levels to avoid possible imbalances. The policy of export promotion, which initially led to a credit crunch of concessional export credits and tax relief, was fully eliminated with the introduction of VAT. In exchange, a more active approach has gained weight, with increased advice and growing support for international action by Spanish companies.

Trade Liberalization and Increased Competitiveness

The process of external opening of the Spanish economy has resulted in total trade liberalization with EU countries and an apparent reduction of nominal and effective protection against the rest of the world. Consequently, the conditions of competition in our productive system have been altered.

• Imports have improved access to the Spanish market.
• Spanish companies have been provided with inputs at lower costs, increasing their competitiveness both domestically and internationally.

Growth of Imports and Exports

Since the mid-1980s, high growth of both imports and exports has been recorded. The opening rate of the Spanish economy increased from 33% in 1985 to 45% in 1998. Integration into the EU has intensified trade relations with other members, growing from 52% to 70% between 1985 and 1998.

Shifting Trade Relations

This intensification of trade between Spain and the EU has been at the expense of other geographic areas. The relative weight of other OECD countries has decreased. Developing economies in transition showed improvement in the 1990s. However, the relative position of Latin America, Eastern Europe, and some Mediterranean countries has diminished. In the case of imports, the relative weight of most non-EU suppliers has been reduced. It is also highlighted that the increase in imports has generally been higher than that of exports.