The financial crisis of 2008 suddenly halted the process of convergence of the poorer regions of Spain with the richer ones that had accelerated since 1980. That economic shock, which impoverished the country by causing a devaluation of wages, had an especially impact on the poorer communities. poor like Extremadura, who stopped approaching the richest.
A report by the Bank of Spain reveals that it is productivity that explains the convergence and also the subsequent stagnation. In the 1980s, 1990s and early 2000s, poor communities gained productivity and managed to register higher GDP growth than those considered rich, such as Catalonia or Madrid. And it was also stagnant productivity gains that stalled improvement in less developed regions.
“Until 2008 there was a decrease in economic differences between regions, so that the poorest grew more intensely. However, after the financial crisis this trend came to a standstill”, reads the work of the Bank of Spain. The aforementioned study analyzes the role of other variables in slowing down convergence. There are two that act opposite to each other. The labor market has contributed “very little” to the paralysis of convergence. On the other hand, demography has favored convergence, because in recent years “the richest regions have aged faster.” Many of these old people are migrants from poor regions who have retired in rich ones. As there is an older population, its contribution to GDP is less because fewer people work.
The third graph on this page shows the evolution of the dispersion between the GDP (gross domestic product) of the communities in the last 40 years calculated by the Bank of Spain. This dispersion is reduced from 0.25 in the 1980s to 0.19 prior to the crisis. Now that indicator is around 0.20, which means that the communities are distributed with respect to the average between 20% above and 20% below. The lower this indicator is, the greater convergence between regions occurs.
Other studies show that the aforementioned process of rapprochement between rich and poor territories in economic terms is usually very slow and, in any case, it is very difficult for the order of the communities to vary from the richest to the poorest. The differences are reduced, but there are no changes in the ranking. For example, a recent report by Fedea showed that in 1955 Extremadura was where wages were on average lowest, and in Madrid, highest. Almost 70 years later that difference remains. In this work it is also verified how Madrid in recent years has managed to position itself as the locomotive region of the Spanish economy. It is the one with the highest GDP, surpassing Catalonia, which had held that position almost without interruption until 2017.
However, if the data for the generation of activity (GDP) per person are analyzed, but taking into account purchasing parity (discounting the effect that in a region the prices of products and services are more expensive or cheaper), it is the Basque Country the richest Spanish community. These are data from a report prepared by UPF professor Guillem López i Casasnovas and by professor Roger Sabater.
López i Casasnovas points out that the Basques are in first place due to a combination of three factors. The first, because the Basque Country is a community with a lower weight of immigrant population. The second, because the disposable income of families is higher there once the effect of the State has been incorporated by deducting the taxes paid and adding the aid or public subsidies received. The third is the cost of living. With 100 euros you buy more products and services in the Basque Country than in Madrid or Catalonia.
As can be seen in the graph, after the Basque Country is Catalonia, slightly above the Community of Madrid.
