Spain PESTEL Analysis - Spain is a parliamentary monarchy led by a prime minister. Several autonomous regions like Catalonia are pushing for independence. Corruption among officials is an issue. - Spain's economy suffered during the 2008 recession but GDP is growing again. Unemployment was high but decreasing. Small businesses are important to the economy. - Income inequality in Spain is among the highest in the EU. The wealthy Catalonia region wants independence, which could impact Spain's economy. - Spain is advancing in renewable energy, healthcare, and high-speed rail. The government funds much research and development. Technology companies are based in Spain. - Spain is among the top emitters of carbon dioxide

1. Spain PESTEL Analysis
By: Pheonix Ray, Punit Ganjara, Priyanka Rayapudi
Politics
Spain is a parliamentary monarchy where the head of the state is the monarch and the
prime minister is head of the government and serves under the official title of “President of the
Government”. This multi­partied system is mainly dominated by the Spanish Socialist Workers’
Party (PSOE) and the People’s Party (PP). Because Spain is state with 17 autonomous regions, it
naturally has several fully functional sectors which could potentially survive on their own. One
of these such regions is the Catalonia region, which is currently striving for independence and its
right to call itself a separate state recognized by the world. This region includes the city of
Barcelona which once held the Olympics.

2. Basque Country, Catalonia, Galicia and Andalusia are mainly the provinces of Spain that
could be described as their own nation. In fact, there is currently must dispute about the
autonomy of these regions. One such example is Catalonia which has for several years and with
growing interest, started to protest for its own independence. Although they provinces have
finally been given the right to practice their own traditions and speak their own languages, they
have found themselves wanting to separate from the country of Spain.
Corruption has been a raising issue among public officials in Spain. Their questionable
activities include frude, bribery, nepotism, and much more. This lack of integrity could lead to
an unhappy populace, followed by an unstable government. While this does not automatically
negate Spain as a potential country to invest in, it could raise some concerns about possible
future rebellions and political instability.
Economics
Having a 7.6 freedom score, Spain claims the 49​th​
freest economy in the 2015 index.
Increasing by a small .4 from last year, we still see an encouraging growth in this budding
country as it emerged into the “moderately free” category within the past five years. While this
is not greatly impressive, it is still a growth from the severe recession that it saw from the 2008
dip. Referring to the graphs below, we can see that Spanish unemployment rates were increasing
exponentially, and that industrial production was decreasing. Sales went down, and exports took
and disastrous dip. This decline in the market lead to severe deficits and increase in debt. Now
has come the time for Spain to start paying off its debts, but it is at a loss on how to come up
with the large amounts of money.

3.
Despite the economic recession, Spain is cautiously seeing an increasing growth in its
GDP. This emerging market could mean potential for smart investments and opportunities to
capitalize in resources. While organizations like Barcelona Activa work to help provide a
footing for private innovators and entrepreneurs to start their businesses, we could see much
increase in the middle class, thus increasing a need for more luxurious products rather than the
necessary staples. The picture below shows the movement of quarterly growth rates of GDP,
and clearly illustrates the cyclical movement in the GDP. Within the past ten years, Spain has
seen an unstable economy that suffered long recessions and quickly ending booms.
While it cannot be denied that Spain is not a nation of large corporations, it must be
acknowledged that its economy thrives on the average small business owner. This also means
that its economy is much more susceptible to fluctuations in the market, it also means that there
is room for growth and potential profit.

4.
Sociology
The most important tool that we can use to measure quality of life in Spain is the GINI
coefficient. The GINI coefficient ​is a measure of income distribution of a nation's people, and is
the most commonly used measure of inequality. Amongst economists, a GINI coefficient above
.4 may be seen as a red flag, as a GINI coefficient above this point is a marker of political
instability social tension between residents. A GINI coefficient of 0 represents complete equality,
or zero gap of incomes. A GINI coefficient of 1 represents complete inequality, or 100% gap of
incomes. Spain’s most recent GINI coefficient is a 35.8. (Data.worldbank.org)

5.
(Poverty.org.uk)
The above graph demonstrates GINI coefficients for each of the countries in the
European Union. The graph visually represents how Spain is actually in the highest quarter of
GINI coefficients for the European Union. Their GINI score is higher than the average for the
European Union and higher than many other more developed countries in the EU, which is an
unfavorable statistic for business prospects. Spain’s score of 35.8 is not too distant from the
economic danger zone of 4.0. Much of the reason for this is attributed to the financial crisis
currently progressing in the European Union. This high score often indicates a state of social
unrest, and in the case of Spain, this assumption is at least partially true.

6.
(WanderingTrader: Travel Blog. Living Overseas. Day Trading.)
The map above shows the country of Spain in its entirety, with the region of Catalonia
highlighted. Although the region appears small on the map, the autonomous area is far more
significant than its size indicates. By coastline, Catalonia is the fifth longest. With over seven
million inhabitants, Catalonia has the second largest population of the autonomous communities,
making it roughly the population of the entire country of Serbia. In 2010, Catalonia was first
with regards to Gross Regional Product, with a GRP comparable to the GDP of Austria.
(Wikipedia) Obviously, Catalonia is an extremely important economic region in Spain.
Unfortunately for the other 18 autonomous regions, Catalonia has been protesting for complete
independence from Spain for generations. The citizens of Catalonia do not identify culturally
with Spain as a whole, and it is almost impossible to find a Spanish flag in the region. Instead, a

7. guest will find Catalan flags hanging from every balcony and storefront, a size of Catalonia’s
fight for independence. For this reason, any business looking to relocate or market in Spain
should focus their sights on Catalonia, lest it becomes independent anytime soon, taking with it a
significant portion of Spain’s GDP.
Technology
Technologically, Spain appears to be in much better shape than it is socially. Especially
with regard to the industries of transportation, healthcare, and renewable energy, Spain is
showing exemplary progress in recent decades. President Obama has even referred to the high
speed railways of Spain as a model for which the United States should aspire. The healthcare
system in Spain is extremely efficient, using only a small portion of the GDP compared to other
countries, while simultaneously providing first­rate healthcare to its citizens. Renewable energy
sources are also continually being researched and utilized in Spain, where it is not uncommon to
see electric vehicles or solar panels in populated areas. (Icex.technologyreview.com)
In spite of the recent financial crisis, Spain has reached an impressive ninth in the
rankings of world science. One unique aspect of the research and development climate in Spain
is that these ventures are rarely funded by private entities, instead being financed by the
government, unlike many other developed companies. (Wikipedia) Although Spanish
entrepreneurs often find themselves dependent on government support in the beginning, there are
many international Technology and Telecommunications based out of Spain, including: ApeSoft,
Privalia, Terra Networks, Amper, and Jazztel just to name a few. The technological climate in

8. Spain appears to be very fair, with their industry advancing faster than many other developed
countries.
Environment
∙ Based on 2008 fossil­fuel CO2 emission estimates, Spain ranks as the 19th
highest national emitter of CO2 with 90 million metric tons of carbon. Liquid fuels have been the
dominant source of CO2 from Spain since 1966, contributing 53% of emissions in 2008 after
averaging almost 70% in the mid­1970s. Coal was the dominant CO2 source before 1966 and
still contributed 16% in 2008, although emissions from coal have changed little since the 1980s.
Emissions from natural gas use have grown twenty­fold since 1980 and now result in a release
from Spain of 22 million metric tons of carbon. Annual per capita emissions remain low, in
contrast with those of most other Western European nations, at a rate of 2.02 metric tons of
carbon.
∙ Spain's commitment under the Kyoto Protocol is to limit the increase of its GHG
emissions to 15% against the base year.
To achieve this objective, the Spanish State has drawn up a plan based on a maximum
increase of 37% against the base year, made up of the following percentages:
­ 15% free increase according to the Kyoto Protocol commitment
­ 2% to be offset by increasing sinks (mainly woodland)
­ 20% emission rights bought by the State to offset the excess in non­ETS emissions
throughout the country.

9. In 2012 the emissions in Spain were 340.8 million tonnes of CO2equivalent an increased
emissions compared to the base year by 18%. The average annual total emissions for the period
2008­2012 (Kyoto period) was 358.4 million tonnes of CO2equivalent, 24% above the value of
the base year. Regarding non­ETS avarage emissions for that period was 220.4 million tonnes of
CO2equivalent, 22% above the target value that we wanted to achieve.
In addition to this, and in accordance with the target set by the European Union to reduce
its GHG emissions by 20% by 2020 in the Climate and Energy Package, Spain is bound to
reduce its non­ETS emissions (emissions not covered by the European emissions trading system)
by 10% against 2005 emission levels.
∙ Terrestrial and marine protected areas (% of total territorial area) in Spain was
7.63 as of 2010. Its highest value over the past 20 years was 7.63 in 2010, while its lowest value
was 6.38 in 1990.
Definition: Terrestrial protected areas are totally or partially protected areas of at least
1,000 hectares that are designated by national authorities as scientific reserves with limited
public access, national parks, natural monuments, nature reserves or wildlife sanctuaries,
protected landscapes, and areas managed mainly for sustainable use. Marine protected areas are
areas of intertidal or subtidal terrain­­and overlying water and associated flora and fauna and
historical and cultural features­­that have been reserved by law or other effective means to
protect part or all of the enclosed environment. Sites protected under local or provincial law are
excluded.

10. ∙ Source: United Nations Environmental Program and the World Conservation
Monitoring Centre, as compiled by the World Resources Institute, based on data from national
authorities, national legislation and international agreements.
Year Value
1990 6.38
1991 6.61
1992 6.65
1993 6.68
1994 6.93
1995 7.12
1996 7.23
1997 7.49
1998 7.51
1999 7.57
2000 7.57
2001 7.58
2002 7.62
2003 7.63
2004 7.63
2005 7.63
2006 7.63

11. 2007 7.63
2008 7.63
2009 7.63
2010 7.63
∙ Sept 21, 2014. According to the newspaper, El Mundo, the province of Alicante
in the south east is suffering the worst drought in history. The article starts dramatically: "The
products of Alicante are dying of thirst." The average precipitation for the last 12 months (Aug.
31, 2013­Sept.1, 2014) has been 153.6 liters per square metre compared to an average of 426.4
l/sq.m. between 1981 and 2010. From Aug. 2103 to Sept. 2014, 69.8 l/sq.m. of rain fell in the
city of Alicante where normally it could expect around 311 l/sq.m. The impact on agriculture, a
major economic resource heavily dependent on irrigation, has been disastrous. Even drought
resistant olive and almond trees are affected. In addition, warmer than usual winters have also
contributed to the problem. Exported goods such as artichokes, broccoli, lettuce, celery and
potatoes are especially affected. To add fire to the fuel, The European Union has withdrawn
subsidies vital for helping alleviate the effects of the drought.
∙​ ​Renewable energy in Spain represented 42.8% of total energy generation in 2014.
Overall 27.4% of Spain's electricity was generated from wind and solar in 2014. Spain has set
the target of generating 45% of its energy needs from renewable energy sources.
Spain is the world's fourth biggest producer of wind power. In 2014, the year­end
installed capacity was 23 GW and the annual production was 51,439 GWh, a share of total
electricity consumption of 21.1%.
∙​ ​Laws and Regulations: Spanish environmental laws derive from the transposition of
EU legislation. The main regulated fields are:
1.​ ​Integrated Environmental Control
2.​ ​Natural Heritage and Biodiversity protection

12. 3.​ ​Air quality and atmosphere protection
4.​ ​Environmental responsibility
5.​ ​Nuisance activities
6.​ ​Environmental Impact Assessment
7.​ ​Contaminated land
8.​ ​Waste
Legal
1.​ ​Spanish law permits foreign investment up to 100% equity.
2.​ ​According to the World Bank’s Doing Business 2015, it takes 13 days to start a
business in Spain.
3.​ ​It takes six procedures to start business in Spain.
4.​ ​In Spain there are two main ways to structure a business: the first one is to work as a
Freelancer (Autónomo), and the second one is to incorporate a Spanish Limited Company
(Sociedad Limitada).
5.​ ​First of all, any foreigner interested in starting a business in Spain, either as a
freelancer or through a Spanish Company, shall have a foreign identification number (NIE).
6.​ ​Freelance (Autónomo)
To be an Autónomo means to begin a business as a self­employed person. There are two
steps to become an Autónomo; first of all you have to notify to the Spanish Tax Administration
(Agencia Tributaria) that you are going to start an economic activity, and then you should
register to the regime of self­employed persons in the Social Security (Seguridad Social), with a
notification validated by the Tax Administration.
Once you are registered in the Social Security, you will have to pay a monthly fee, being
the base fee 256,72 euros. However, current reductions for new Autónomos have recently being
approved by the government, including the following features:
For new Autónomos under 30 years old the following reductions will apply:
An 80% Social Security fee reduction during the first 6 months. (50 euros
approximately);
A 50% Social Security fee reduction during the next 6 months after the previous period
of time;
A 30% Social Security fee reduction during the next 18 months after the previous period
of time.
For new Autónomos with 30 years old or over the following reductions will apply:
An 80% Social Security fee reduction during the first 6 months. (50 euros
approximately);

13. A 50% Social Security fee reduction during the next 6 months after the previous period
of time;
A 30% Social Security fee reduction during the next 6 months after the previous period
of time.
Furthermore, an Autónomo must comply with several tax obligations, mainly to present
its quarterly declarations of taxes relating VAT and Retentions made by other professionals.
7.​ ​Spanish Limited Company
A Limited Company is the legal structure most used in Spain to start a company. As
stated above, it is necessary to hold a NIE to become a shareholder of a Company.
The main steps to incorporate a Limited Company are as follow:
a. First of all, it is necessary to obtain the Name of the Company through a
Certificate issued by the Companies Registry (Registro Mercantil).
b. The next step is to open a bank account and to deposit the minimum share capital
to incorporate a Limited Company, which is 3.000 euros. The Bank will issue a Certificate of
deposit that shall be presented at a Public Notary.
c. Both Certificates are necessary to incorporate the Limited Company before a
Public Notary. All the shareholders will have to be present and sign the deed and the Articles of
Associations of the Company.
d. After signing the deed, it will be necessary to obtain the Tax Identification
Number of the Company (NIF = Número de Identificación Fiscal).
e. Finally, the incorporation of the Company will have to be registered at the
Companies Registry, and the beginning of the activity shall be notified to the Tax
Administration.
Bibliography
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June 2015.
Poverty.org.uk,. 'European Union: Gini Coefficient ­ The Poverty Site'. N.p., 2015. Web. 19 June
2015.

14.
WanderingTrader: Travel Blog. Living Overseas. Day Trading.,. 'The Visiting Catalunya
(Catalonia) Experience ­ Spain'. N.p., 2013. Web. 19 June 2015.
Wikipedia,. 'Ranked Lists Of Spanish Autonomous Communities'. N.p., 2015. Web. 19 June
2015.
Icex.technologyreview.com,. 'Spain: Innovations And International Successes ­ New
Technologies From Spain ­ MIT Technology Review'. N.p., 2015. Web. 19 June 2015.
Wikipedia,. 'Science And Technology In Spain'. N.p., 2015. Web. 19 June 2015.
Just Landed,. 'Spanish Government'. N.p., 2015. Web. 19 June 2015.
Heritage.org,. 'Spain Economy: Facts, Population, Unemployment, GDP, Business, Trade'. N.p.,
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The Atlantic,. 'Every Single Economic Indicator In Spain Looks Disastrous: 6 Graphs'. N.p.,
2012. Web. 19 June 2015.