54th Congress of the European Regional Science Association: "Regional development & globalisation: Best practices", 26-29 August 2014, St. Petersburg, Russia
The economic and financial crisis has generated a significant amount of adverse effects in all European economies, although with substantial differences by countries. For Spain the effects have been severe. From the last third of the last century until the middle of 2008 the economy experienced a period of strong expansion, with an average growth rate up of 3.2%, high job creation and a sharp increase in public and private spending. However, this masked low productivity, a growing external imbalance and, among other, high household, corporate and public indebtedness thanks to the lax financing and low interest rates. Construction, real estate, the industries particularly linked to construction and some services led the expansion and they have also led the strong fall of the economy process. The imbalances developed along the expansion process called already for some stabilization of the economy, but the sudden emergence of the international crisis caused a rapid and dramatic turn. The economy as a whole and all the Spanish regions were strongly affected -unemployment, negative growth rates, need for financial adjustment...- albeit with notable regional differences. The aim of this paper is twofold: 1) to evaluate how the crisis has affected the Spanish interregional disparities, which have worsened, and 2) to explain this divergence pattern using the regional productive specialization, the changes in productive structures and their effects in terms of within regional productivity. In doing so, the paper firstly presents a sythetic description of the features that have characterized the Spanish crisis and their most visible regional effects. Secondly, the differences that existed in regional productive structures and the changes they have gone through are analyzed, trying to find a possible explanation for the diverse regional behavior. Finally, the possibilities of future regional recovery are also explored, taking into account the dynamics of the regional productivities. To perform these analyses public statistics are used together with data from reliable sources applying various analytical and decomposition methods and techniques.