Madrid
Philip II's 1561 administrative fiat created the only major European capital with no natural advantages—Madrid's precise centrality generated 19% of Spanish GDP through headquarters gravity. 2026: regional resentment tests centralization.
Madrid exists because Philip II needed a capital—and in 1561 chose an obscure Castilian town with no river, no port, no natural advantages except its precise geographic centrality on the Iberian Peninsula. That deliberate choice made Madrid the only major European capital created entirely by administrative fiat.
Before Philip II, Madrid barely registered—a Moorish fortress captured by Castile in 1083, occasionally hosting itinerant royal courts but never capital of anything. The Habsburgs chose Madrid for its central position equidistant from all Spanish territories, its lack of established power structures to challenge royal authority, and its location on the high Castilian plateau where water was scarce but political interference scarcer. The court's arrival transformed a town of 20,000 into a city of 100,000 by 1600.
The Bourbon dynasty (from 1700) built the infrastructure—Palacio Real, Museo del Prado, the paseo corridor along which banking and commerce concentrated. Franco's dictatorship (1939-1975) reinforced centralization: Madrid became headquarters for every state-owned enterprise and most private ones. Democratic Spain devolved power to regions but couldn't reverse centuries of path dependence. Today 3.4 million madrileños (6.7 million metro) generate 19% of Spanish GDP. Telefónica, Santander, BBVA, Iberdrola, and Repsol headquarter here. The Madrid Stock Exchange trades €1.5 trillion annually.
The 2026 trajectory reveals Madrid's paradox: administrative centrality creates economic primacy but political resentment. Catalonia and Basque Country claim Madrid extracts more than it contributes; independence movements partly target Madrid's gravitational pull. Housing costs doubled 2015-2024, exacerbating inequality. Yet Madrid attracts 60% of foreign direct investment into Spain. The city bets on finance, tourism (8 million annual visitors), and its role as gateway to Latin America—Spanish multinationals use Madrid as command center for $400 billion invested in the Americas. The capital created by decree remains the capital by momentum.