Doing Business in Spain
Political risk can be defined as the risk of loss when investing in a given country caused by changes in a country's political structure or policies, such as tax laws, tariffs, expropriation of assets, or restriction in repatriation of profits.
Spain’s government has seen change in the past 30 years for the better. Due to the death of Dictator Francisco Franco, the nation experienced a peaceful transition to democracy and is now a constitutional monarchy, with a hereditary monarch and a bicameral parliament, the Cortes Generales. After the death of Franco, they had a rapid economic modernization and joined the European Union in 1986. Under the constitution formed in 1978, and through its membership in the European Union, both the government and the economy have relative solid footing. Its memberships into the European Community required the country to open its economy to trade and investment, modernize its industrial base, improve infrastructure, and revise economic legislation to conform to EU guidelines. In doing so, Spain increased gross domestic product (GDP) growth, reduced the public debt to GDP ratio, reduced unemployment and reduced inflation.
One major political conflict to be considered is that between the Spanish Government and the Basque nationalists. During the Franco dictatorship, the Basque people were violently suppressed, which resulted in growing Basque nationalism. The Spanish government maintains the position that Spain is an indivisible territory, but they have given the Basque region far-reaching autonomy. While there are reports of numerous attacks since the formation of the ETA Basque for "Basque Homeland and Freedom", the frequency has been steadily dwindling. Even though on the surface this could seem lik ...