Spain

Spain industrialized in two coastal strips while the interior remained frozen in agrarian time—a geographic pattern that persists into the 21st century and explains tensions that periodically threaten to fracture the nation itself.

The Iberian Peninsula's geography created natural barriers to unified development. The Pyrenees isolated Spain from overland European trade. The central meseta—high, dry, and landlocked—supported grain cultivation and sheep grazing but little else. Coastlines faced outward: Catalonia toward the Mediterranean and France; the Basque Country toward the Atlantic and Britain. When industrialization arrived, it came through these peripheral windows, not the Castilian center.

The first surge came in 1832 when Catalonia's first steam-powered cotton factory opened in Barcelona. Mechanical looms followed rapidly, and within decades Barcelona anchored a major textile region attracting chemical and metalworking enterprises. The city's orientation toward Mediterranean trade—and its distance from Madrid's regulatory scrutiny—enabled industrial culture to flourish. Catalonia became Spain's workshop, its bourgeoisie growing wealthy while Castilian aristocrats managed declining agricultural estates.

The Basque Country industrialized differently, built on iron rather than cotton. The province of Vizcaya held substantial iron ore deposits, and British coal ships returning empty from delivering fuel provided cheap backhaul transport for ore. By the late 19th century, steel works proliferated around Bilbao, shipyards lined the coast, and the Basque merchant fleet ranked among Europe's largest. A successful banking sector emerged to finance it all—the Banco de Bilbao and Banco de Vizcaya would later merge into BBVA, today one of Spain's largest financial institutions.

Railway expansion connected these peripheral engines, with Spain's first line opening between Barcelona and Mataró in 1848. By 1913, over 15,000 kilometers of track crisscrossed the country—built largely by foreign capital, serving mining interests often controlled from London and Paris. The Spanish economy exported raw materials and imported manufactured goods, a semi-colonial pattern that industrialization in Catalonia and the Basque Country only partially offset.

The 20th century brought devastation and delayed recovery. Civil war (1936-1939) destroyed infrastructure and killed perhaps 500,000 people. Franco's autarky isolated Spain from European growth for decades. Only after his death in 1975 and EU accession in 1986 did Spain finally converge with European income levels—a transformation fueled by construction booms, tourism development, and massive EU structural funds.

Today Spain has become the eurozone's surprising success story. GDP growth hit 2.5% in 2025—versus Germany's 0%, France's 0.6%, Italy's 0.7%—contributing half of all eurozone growth while representing only a tenth of its economy. Two factors explain the outperformance: renewable energy investment begun in the 2000s lowered electricity costs by 40% as wholesale prices dropped, insulating Spain from the post-Ukraine energy crisis that crushed German manufacturing. And tourism set records: 94 million visitors in 2024, generating 12% of GDP.

But the old geography persists. Catalonia still produces roughly 20% of Spanish GDP and periodically demands independence. Housing costs in Barcelona and Madrid have become politically destabilizing—a crisis that any construction boom only partly addresses. China announced €11 billion in Spanish investment for 2025, but productivity growth lags northern European rates.

By 2026, Spain must convert energy advantage into industrial upgrading before cheap electricity alone stops mattering. The renewable head start could enable green hydrogen production and attract energy-intensive manufacturing fleeing high-cost Germany. Or it could simply sustain tourism and property development that look impressive until the next eurozone downturn reveals their fragility.