As a part of my Honors MacroEconomics class, we were tasked with researching an idea of our interest in the macro economic environment. With my interest in Spanish language and culture, and intent on studying abroad in Spain, I chose to do my research paper on the Catalonia Crisis, in the midst of its most severe period in time, back in the Spring of 2018. It's interesting looking back on my thoughts then and knowing how the climate has changed over the year.

1. Madlin Deignan
Economics 2002.03H
William J. White
4/22/2018
The Spanish Economy and The Catalonia Crisis
Despite the recent rise in news regarding the economy and conditions in Northern Spain,
or Catalonia, and their movement toward independence from the country, the region has
struggled toward autonomy for centuries. Beginning back before the years of Franco, in the early
20th century, central Spain nationalists, right-wing conservatives conflicted with perspectives of
the peripheral regions, like Basque Country and Catalonia in many different sectors of the
economy.1 Much of these issues derived from differences in opinion with roots in the
immigration to the regions over many years; peripheral regions hosted many different
immigrants from France and Italy, along with many gypsy communities, and boasted very liberal
perspectives that began to define the regions much earlier than the 21st century. Such issues
during this tumultuous period consisted of: divorce, abortion and female rights, education
reform, progressive agricultural reform, and religious freedom.2 The introduction of Franco in
Spanish society did little to alleviate the pressures across different regions of Spain. The harsh
and conservative government that dictated Spain over the next forty years increased tensions
across the country, and targeted Catalonia and Basque Country in particular given their more
liberal perspectives. Catalonia, and Barcelona in particular, began to develop a very personalized
culture in reaction to the nationwide oppression over freedom of expression and individualism.
The rise of art and architecture through artists like Salvador Dalí, Antoni Gaudí and Pablo
1 Carmen Pereira-Muro, Culturasde España,(Texas Tech University, Cengage Learning, 2013), 207.
2 Ibid., 207-208.

2. Picasso provide examples of personalities that began to comprise the liberal culture of Catalonia
that permeates the area to this day.3 Since the Francoist period of Spain, Catalonia has enjoyed
some political freedom given from the central government of Madrid; however, recently, with
the leadership of Artur Mas under the popular political party Convergencia Democratica de
Catalunya (CDC), the conservative nationalist party has adjusted to a pro-independence
platform.4 Thus, the rise in a drive for independence throughout the region, with a slogan
“Catalonia, a New European State,” has grown over years and years of tensions, and now
accumulates into the current crisis in Spain; the economic impacts for the country as a whole and
the region in particular have likewise grown.5 In analyzing the economic impacts on Spain from
the Catalonia Crisis, two impacts inspire the most influential changes in the years to come:
unemployment and workforce characteristics, and national economic climate. Depending on the
future of these conditions, Spain could alter significantly in its economic position nationally, and
its influence on the global market.
A surefire indicator of economic health relies in employment statistics and workforce
accountability. After the expansion in human rights and expression after the Franco years, a drive
shifted from family life to working life, especially as contraceptive rights and abortion laws
changed in Spain.6 This resulted in an interesting impact on the Spanish workforce: the ageing of
the working population. The birthrate fell in Spain after the Franco years, causing the working
population to age in comparison, something that currently impacts the United States as the Baby
Boomer generation begins to retire.7 Thus, along with the impact of the economic recession in
3 Ibid., 211-212.
4 Henar Criado et. al., "The Unintended Consequences ofPolitical Mobilization on Trust.", (Journal of Conflict
Resolution,62, no. 2: 231-53, 2017), 237-238.
5 Ibid., 238.
6 Pereira-Muro, Culturas,288.
7 Ibid., 287.

3. Spain that followed the recession in the United States, the smaller size of the working population
impacted the employment opportunities available in Spain during this time, and the job climate
that industries’ needed to find good retention.8 At 2014, over 800,000 jobs were destroyed due to
the crisis, and the unemployment rate stood at 25%; likewise, marked losses in working
conditions and overall poorer work environments constituted a condition of the recession and
year.9 In comparison to today, the unemployment resides at 17.5%, and growth rate projects
downwardly at 2.1%, according to the Organization for Economic Co-operation and
Development (OECD)10 The research provided by Diaz and other contributors argues the
importance of working conditions in the overall reliability of the workforce. Following their
data, in the midst of the recession and prior to the full intensity of the current Catalonia crisis, job
quality in Spain actually improved; furthermore, during the crisis, an underlying importance of
inner work dimensions existed that promoted hard work and function.11 This meant good news at
the time, however looking at the national state of affairs now, it bodes negatively for the future
of the workforce. The researchers found that “perceptions of job security” and “the importance
of… working environment and social relation dimensions in employment public policies”
provided a large impact on improving job quality, and thus foreshadowing higher employment.12
These data points institute worrisome indicators for modern Spanish employment, as the
country’s job security prospects and internal state struggles. Correa-Lopez and Mingorance-
Arnaiz propose a similar sentiment in their research, arguing that despite slow growth in the
employment rate and labor force, positive impact on the growth rate and economic output will
8 Ángel Díaz-Chao et. al., "Economic Crisis and Job Quality in Spain: A Multi-dimensional and Micro-data
Empirical Approach.",(Social Indicators Research, 125 no. 2: 613-33, 2014), 615.
9 Ibid., 615.
10 "Spain - OECD Data.", (The OECD, 2017).
11 Díaz-Chao et. al, “Economic Crisis…”, 629.
12 Ibid., 630.

4. not surface without stabilization of the economy on a national level13 - something that will not
settle with the stresses of the Catalonia Crisis underway. When state officials and economic
leaders consider the future of the Spanish economy, they must emphasize positive work
environments and job security for employees to regain confidence, and thus stabilize the
employment rate during the tumultuous period.
Besides the overall impact on employment that results from the tensions of a national
society – typically sourced from war, natural disaster, or in this case, movements for
independence and internal power struggle – the national relationship with the Catalonia region
also greatly affects the economy of the country as whole. The Catalonia region makes up solely
six percent of the nation’s territory, and sixteen percent of its population, however a major part
of the economic output and startup investment, with the percentage of GDP sourced from the
region at 20.1% in 2015, and 56.3% in investment in startups.14 Given as aforementioned that the
region notably provides liberal and forward-thinkers, it provides a source of innovation for the
country as well. In 2017, studies showed strong growth momentum, and positive forecasts for an
annual rate of 2.1% in 2019; however, this status relies on containment of the crisis in
Catalonia.15 Because private consumption and technology drive GDP, and especially in Spain,
private consumption remains a main force in GDP growth, future conditions of the Catalonia
Crisis prove essential in the entire economy’s safety. For example, with the future of the state
unknown, households will feel unstable in their living conditions, and this will increase
proclivity to avoid consumption, especially within Catalonia and the small businesses that reside
there. The most concerning aspect of these changes lies in that each condition of the national
13 Mónica Correa-López et. al., "Demografía, mercado de trabajo y tecnología: El patrón de crecimiento de
Cataluña, 1970-2020.", (Estudios De Economía Aplicada 30, no. 1: 1-33, 2012), 28.
14 "What Spain Has to Lose from Catalan Independence." (POLITICO., 2018).
15 “Economy, Spain - Economic Forecast Summary (November 2017).", ( The OECD, 2018).

5. economy leads to a further condition; for example, if aggregate demand begins to fall as Spanish
citizens hold on to their money more, investment will lessen, interest rates will rise, and overall
economic activity will begin to drive downward. This will pressure the government to get
involved, and equally provide another problem as the biggest issues of the Catalonia Crisis reside
in the government and its control over Catalonia. How will the government effectively input
policy into a region that majorly defies its rule? The fact that Catalonia provides such a large
portion of the economic activity makes the issue more worrisome. As evidenced, Catalonia
provides a large part of the nation’s wealth and small businesses, and insecurity within the
country alongside insecurity within the region bode negatively for the future of the region and
country. Stated bluntly, the tensions throughout the region could dampen consumer and business
confidence, equally impacting domestic demand and international trade.16
When considering the impacts of these conditions on the overall wellbeing of Spain’s
economy, it currently holds little quantitative impact. However, in the years to come, if
continued tensions prevail, the nation’s economy may suffer due to individual uncertainty and
lower confidence levels on a widespread scale. This claim also assumes that the struggle for
independence fails, and that Catalonia does not successfully separate from Spain. If the region
does indeed secede from the nation, it will definitely impact the growth and economic status of
the country; as previously detailed, the region contributes significantly not only to the culture
and touristic value of the country, but to its overall growth and productivity. Furthermore, in
regards to unemployment, with a focus on the work environment, the concept of stability again
consists of great importance, and the tensions from the Crisis equally impact the work
environment nationally, as personal relationships and traditions deteriorate. Regardless of the
16 “Spain - OECD Data.", (The OECD, 2017).

6. outcome of the Crisis, the predicament must meet resolution soon to alleviate and mediate the
possible ramifications in the regional and national economy that may follow.
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