The Economy of Catalonia

Although the Spanish market has steadily declined in importance (especially
since Spain joined the EU), it is still Catalonia’s top commercial
customer. It is not easy to analyse the potential effect of secession
on Catalan exports to the rest of Spain and the impact on GDP, especially
when even studies and reports by academics of acknowledged
prestige are influenced by political feelings. Thus it should come as no
surprise that Spanish authors tend to prophesy all kinds of disasters
should independence be achieved, whereas Catalan authors tend instead
to minimise the consequences. Despite this difficulty, it may be
useful to summarise the main arguments and estimates that have been
put on the table.
One negative consequence for trade is undoubtedly the so-called border
effect, which predicts that, all other things being equal, the mere existence
of a border very significantly lowers trade between neighbouring
territories. Rodríguez Mora (2012) has calculated, for example, that this
effect would slow down trade between Catalonia and Spain to the same
levels as trade between Portugal and Spain (80% lower) and this would
mean a drop in the overall GDP of Catalonia and the rest of Spain of
around 3.3%, a percentage that can be broken down into a 9% fall-off in
Catalan GDP and a 2.2% decline in Spain. This impact would be strictly
due to the border effect: it does not allow for the possible effect of a boycott
on the consumption of Catalan products.
However, other authors, like Paluzie (2009), Cuadras & Guinjoan (2011,
2012), Antràs (2012), Antràs & Ventura (2012) and Amat (2013) offer
very different results. According to their estimates, the impact would be
much less than this 9%, for a variety of reasons, first and foremost because
the border effect does not arise overnight but is the result of multiple factors
acting over the years. So a sudden 80% plunge in trade flows between
Catalonia and Spain is quite unthinkable.
Secondly, though the Spanish market is still the top destination for Catalan
exports, its share has been declining steadily in recent decades. In
2011, the destination of goods (excluding services) produced in Catalonia
was as follows: the Catalan market absorbed 26.7% of sales, the rest of
Spain took 34.5%, and the rest of the world took 38.8%. That is, an independent
Catalonia would export 47.1% to the Spanish market and
52.9% to the rest of the world.
two preliminary remarks... 35