José Luis Barceló
Director of El Mundo Financiero
Over the past 15 years, Catalonia has been going through a political process that has generated great tensions that have placed it in a serious economic decline compared to other more competitive regions in the rest of Spain, such as Madrid, the Basque Country and Valencia.
Or at least that is what two professors from the Department of Geography and Environment at the London School of Economics, Andrés Rodríguez-Pose and Daniel Hardy, think. They recently published a paper entitled “Reversal of economic fortunes: Institutions and the changing ascendancy of Barcelona and Madrid as economic hubs”, in which they attribute Barcelona’s loss of economic dynamism in comparison with Madrid to the social fracture generated by the independence process. This is a very serious statement but, according to these authors, it is supported by data that corroborate it, in a very similar way to what happened to the Canadian city of Montreal for the same reasons: the French-speaking secessionism of the North American lands that are enclaved in the territories of Quebec, which are of French descent.
Can a process of secession be motivated by language or linguistic difference? Is the differential fact of language enough of an argument, or would it not be enough to proclaim a territory independent of another?
If we stick to ethnic criteria, we would be on the wrong track, a track that few, if any, would justify. If we look at language criteria, this does not seem to be enough justification. In the end, what we are left with is a lot of political arguments, a few drops of romantic idealism and a lot of dust of pride. But does this have a cost?
In Catalonia, we have seen that it is true, that there has been a tendency over the last 15 years to destroy the economy and the basis for attracting foreign investment. For the authors of the London School of Economics, the process has resulted in a divergent economic and growth trajectory between Madrid and Barcelona, and that in the last few phases, this trajectory has been very negative for Barcelona, which has been left behind. The authors attribute this process to the economic decline derived from the independence process, the so-called “Procés”, which has closed the doors to foreign investment and has even led to the disinvestment of Spanish business groups.
“Madrid and Barcelona”, the authors state in their work, “have long been the two economic powers of Spain. However, over the last three decades, Madrid has overtaken Barcelona in practically all economic indicators, becoming a much larger city and the centre of economic activity in Spain”. For the analysts, “the consolidation of Madrid as the undisputed dominant city in all areas, whether political, administrative, financial or cultural, has produced a profound rupture in Barcelona’s historical status” as a Mediterranean reference point and a major cultural and economic hub.
The authors draw on some data already published both by Spanish studies services and by the media, such as the information published in December 2019 by various media about Madrid’s “surprise” in Gross Domestic Product with regard to Barcelona. And as an illustration, he refers to the editorial published by La Vanguardia on 23 December 2019, in which he addressed “the exodus of Catalan companies, the decline in confidence and the deterioration in consumption and the freeze on investment”.
While Madrid has given way to becoming a global and dynamic city, Barcelona has gradually decreased in demographic and economic growth. All the indicators point to the hegemony of Madrid over Barcelona: GDP, GDP per capita, unemployment, direct foreign investment, creation of companies… All this has put an end to the very positive evolution of Barcelona, since the beginning of the 1980s, when it was placed as the Spanish city with the greatest economic prospects. Trends that have been frustrated since the beginning of the 90s.
What has been left of all those prospects? Well, at the moment, nothing. Since the beginning of the 1990s, Madrid has been overshadowing Barcelona unstoppably, and if in 1975 the overall size of the Catalan economy was 25% larger than Madrid’s, and the GDP per capita was slightly higher than Madrid’s in 1980, the fact is that today the GDP per capita is 15% lower than Madrid’s, and between 2010 and 2018 Madrid attracted almost 62% of all foreign investment coming into Spain, with Catalonia falling below 16% of the total.
Therefore, for the authors, “the main explanation for the economic divergence between the two cities can be found in the different institutional decisions that prevail in Barcelona and Madrid”. In this sense, Madrid “was for a long time dominated by a constellation of small and relatively weak social, economic and cultural groups, incapable of shaping the direction of the city by themselves and therefore obliged to interact with each other. This created an ecosystem in which links between small groups were the norm, leading to the formation of a more open and inclusive society, which facilitated the transformation of ideas and talent into economic activity”.
The authors handle the information from Giner, Santa-Maria and Fuster in 2017, who maintain that Madrid has become the preferred destination for high-growth national and international companies to establish themselves, and its stock exchange has grown to become one of the largest in Europe. Airport transit is also an indicator. In 2019, Madrid and Barcelona airports were between the fifth and sixth largest in Europe, both in terms of traffic and passengers. Many studies prior to this one have not agreed on the causes, which have been attributed to the concentration of power in Madrid, to the survival of the central and radial system of Spanish transport and communications, and also to the presence of economic concentration in Madrid.
As a conclusion, the authors believe that both Madrid and Barcelona are and have been the great economic powers of Spain, although in the last three decades, Madrid has overtaken Barcelona in practically all economic indicators, becoming a much larger city and the neuralgic centre of economic activity in Spain, with Barcelona being relegated to a decreasing second place. Part of the blame for this process of deterioration of Barcelona, which the whole of Spain is generally blaming, lies with the process of independence. For the authors, Barcelona could have become the economic capital of Spain, as is the case with Milan in Italy, but that moment seems to have passed, because Madrid is the political and administrative capital but also the economic one.
As in the case of the Canadian city of Montreal, Rodríguez-Pose and Hardy conclude, a divided community environment in Barcelona has “generated low levels of confidence and led to a lack of participation in constructive economic activities, which helps to understand the reason why groups, individuals and companies have hesitated to cooperate in new initiatives”.
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