The Economy of Catalonia

The reasons for regional economic integration
For reasons connected with regional economic integration or disintegration,
Catalonia cannot afford to be left out of the EU since 50% of its exterior
sales are made in the rest of the Spanish market and, of the remaining
50% made outside Spain, 70% are made in the rest of the EU markets.
While Catalonia maintains a positive trade balance of over 20,000 million
euros with the rest of Spain, it has a negative trade balance with the
rest of the world, as is only natural if one considers its lack of raw materials
and the role it has always played and continues to play as the «factory
of Spain» within the «Spanish single market», no matter how much globalisation
has come to nuance this reality.
Just as Spain’s entry into the European Communities in 1986 had major
static effects on trade creation and minor static effects on trade deviation, as
well as dynamic effects on market expansion, increased competition, improved
technology and increased foreign investment, among other aspects,
Catalonia’s separation from the EU and from the rest of Spain would have
negative static and dynamic effects both on transactions with the rest of Spain
and on those with the rest of the member countries of the EU. Just as was
shown in the Cecchini report (Cecchini, 1987), when the Single Internal
Market was created in 1992 by the Single European Act of 1987. Forming
part of a large integrated market not only allows the expansion of trade (the
static effect of trade creation) but also stimulates the economy as a whole.
Catalonia is discussing whether companies would relocate if it is left outside
the EU. Some companies would leave, of course, while others
would remain and still others would arrive to set up new operations. The
ones leaving would be those that need to import inputs, which would be
more expensive if Catalonia ceases to form part of the European Customs
Union, and those whose reason for being here is to sell to the rest
of Spain or to Latin America from the Spanish platform. The companies
not leaving would be those that would continue to feel comfortable here
once they overcome the always complicated border effect. Likewise,
some companies linked to the demand of the new State and of Barcelona
as its capital would surely find it interesting to establish a base in Catalonia
instead of continuing to work from other places in Spain.
The question is, however, that there is a big difference between forming
part of a market of 500 million consumers (that is to say, the present-day
58 The Economy of Catalonia