Korman

Tyler Korman
Mr. Herman
Capstone Paper
4/27/15

How has Spains economy developed in

comparison to the global economy?
There are many types of economies, however the one that will be
examined in this paper is the global economy, specifically in regards to
Spain. Before diving into this topic, specific questions must be
answered such as, what is an economy? According to the dictionary, an
economy is, The wealth and resources of a country or region
especially in terms of production and consumption of goods and
services. A few examples of the goods in Spain span from food
products like citric fruits and olive oil, to products such as clothing and
textiles. On the other hand, a few of the services that are offered in
Spain are childcare, computer services, and tourism as well as
countless others.
Since there is a never-ending demand for products in the world,
industries are created to provide each one. For example, the retail
industry deals with everything ranging from selling products like video
games, to groceries. Furthermore, since retail is such a broad category,
there are many subcategories that compensate to break it down.
Whether it is online retail or brick and mortar stores, these are both
common examples of the retail sub category that are used by massive

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amounts of people daily. While companies like Amazon.com and eBay

are good examples for large online companies, this makes it easier to
understand how the online retail industry alone contributes an
incredibly large amount of money to the economy. Likewise, when
small brick and mortar and family owned shops might not bring too
much money in on their own individually, all together they also
contribute a large sum of money to the economy.
Now just like with how each industry is very broad in terms of what
it is made up of, so is the economy. As mentioned previously, an
economy is, The wealth and resources of a country or region
especially in terms of production and consumption of goods and
services. This definition just defines the economy as a whole. Digging
deeper into economy, one sub-category that stands out is the global
economy. Before jumping into the global economy however, it is a
necessity to understand what globalization is. In the end this paper will
gather information from various sources to define, How has Spains
economy developed in comparison to the global economy?
When the term globalization is brought up, it is a common
misconception that it is the exact same thing as the global economy,
just worded differently. In reality, globalization refers to the way that
people, companies, and even governments of other nations come
together and interact. Not only is globalization the product of
international trade and investment, but also it is supported by

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information technology. Globalization has been around for thousands of

years and a common example of this is how it had existed ever since
countries had begun to trade with one and other. Today, author
Thomas Friedman has even stated that, Globalization has grown to be
further, faster, cheaper, and deeper. (Globalization101.org)
Additionally, globalization today has ben stimulated by policies that
had the effect of opening economies both domestically and
internationally. This can be even further reinforced with the fact that
post World War 2 governments had gained interest in free-market
economic systems. According to Globalization101.org, a defining
characteristic of globalization is an international and financial business
structure. Consequently, technology is one of the core principals that
have driven globalization. This is true despite the fact that when there
is an advance in technology, it revolutionizes most if not all industries,
however when it came down to this advance in the economy, there
were even greater substantial transformations. One of these
transformations would be such as, Providing tools that are essential
for identifying or pursuing economic opportunities. Now that
globalization has been defined, it is now possible to dive into what a
global economy is.
Unlike how globalization is often confused as being the exact same
thing as the global economy, in this case, the world economy is
practically the same as the global economy with the addition of a

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unified market for every product. According to one source, The global
economy refers to an integrated world economy with unrestricted and
free movement of goods, services, and labor trans nationality.
(http://www.economywatch.com/world_economy/world-economicindicators/global-economy/define-global-economy.html)
To simplify this, the global economy is essentially depicting how the
world is becoming more increasingly interconnected with the addition
of the spread of capital across other countries. While the global
economy is constantly evolving, so are its pros and cons as well as its
goals.
One goal that stands out is how the global economy is incessantly
working to streamline the price of products globally so that each
product would cost an equal amount of money in every country. To put
this into perspective if one were to purchase a cup of coffee in
Columbia, the price paid for that cup of coffee would be different than
if it were to be bought in the United States. On the contrary, despite
the difference in each price, that does not mean that it will cost the
same amount of money forever. To reinforce this, one source has
stated that, With the reduction in the levels of tariffs and quotas
under new WTO (World Trade Organization) restrictions free flow of
goods between the developed and developing countries has become a
distinct possibility. (Economywatch.com) On the contrary, there are

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quite a few significant conflicts that a global economy could come to

face, specifically growth with inequality.
Growth with inequality occurs when first world countries outsource
the parts for their products or even their products as a whole from third
world countries. Below is a graph that highlights the pros and cons of
outsourcing.

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What can be perceived from this graph are some of the benefits that
outsourcing has. For example, it would cost a lower amount of money
as well as workforce flexibility. However while there are benefits to
outsourcing, there are also disadvantages and risks that come with it.
Whether they cause a risk of miscommunication between the company
that is producing the products and the company that has hired them to
do so, or something more serious such as giving the outsourcer the
idea that needs to be built, only to find that they stole it in the end, it is
important to recognize that outsourcing is definitely a gamble. To
conclude, outsourcing does not just play a role in product production
for large corporations, but also plays a role in smaller companies that
are run by entrepreneurs.

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What is an entrepreneur? Steve Jobs, founder of Apple, Bill Gates,

founder of Microsoft, and Mark Zuckerburg, founder of Facebook are all
examples of entrepreneurs, and sure while they all started out with
small businesses, overtime they had reached the status of famous and
even became millionaires, some billionaires, does that shed any light
upon what an entrepreneur is? It may give way to part of the definition
of the term entrepreneur, but in reality, that analogy is simply
scratching at the surface and many are okay with accepting that as the
definition despite having only tackled a single aspect of the definition.
To elaborate, it is quite difficult to define what an entrepreneur is as a
whole, because it is an enormously broad term, and furthermore
because of the fact that there are different types of entrepreneurs thus
spawning different definitions that pertain to each type of
entrepreneur.
Now that it is known that there is a multitude of definitions for the
term entrepreneur, lets circle back to the three that we had mentioned
prior to this point. Steve Jobs, Bill Gates, and Mark Zuckerberg would
all fall into the category of creative disrupters and innovators.
According to the Global Community for Advancing Studies on
Entrepreneurship, (GCASE) creative disrupters and innovators are
defined as, Entrepreneurial-engineers who look to technology to solve
problems in ways that unlock value. Additionally it is stated that,
They have an optimistic passion for an idea that borders on the

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embarrassing and a restless urge to make a difference in the world.

(http://news.gcase.org/2014/10/27/what-is-an-entrepreneur-2/) While
each of these entrepreneurs indubitably were passionate in what they
were doing, it is safe to say that they had also contributed countless
amounts of blood, sweat, tears, and time to transform what initially
started as an idea to what is now a part of the world.
Another type of entrepreneur is known as a franchise entrepreneur.
While franchises alone tend to traditionally be larger, it is important to
recognize that they had all started out as a small business at one point
in time. For instance, McDonalds and Subway, both examples of
franchises, and while today they are both massive companies, they did
not start out this big. On the contrary, look at Eternalla, a company
that tends to graves that was founded in 2011 initially serving the City
of Murcia. Now this venture has expanded to create a franchise in six
different cities in Spain. (wsj.com) Before transitioning into the next
category of entrepreneurs, it should be noted that franchise
entrepreneurs do not always have to involve food.
According to GCASE, There are three basic types of franchising. The
first type is product franchising which deals with businesses like
automotive dealers. The second type is service franchising, which
essentially has to do with the real estate industry. The last type of
franchising is business format, which is exactly what the fast food
industry is like. (http://news.gcase.org/2014/10/27/what-is-an-

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entrepreneur-2/) While franchise entrepreneurs and their businesses

are always around, it is shocking that they are not the most common
type of entrepreneur.
The last types of entrepreneurs that will be examined are the small
business, lifestyle, and family entrepreneurs. These are the
entrepreneurs who are referred to the most and are typically
interpreted as being the overall definition of what an entrepreneur is.
Upon further research, it is quite easy to understand why many think
this, as these types of entrepreneurs comprise 90% of all
entrepreneurial activity in the United States.
(http://news.gcase.org/2014/10/27/what-is-an-entrepreneur-2/) Even
though this statistic pertains exclusively to the United States that does
not mean that these types of entrepreneurs are not prevalent in Spain.
Additionally, the Global Entrepreneur Institute also found that small
businesses were mainly part of the retail sector, which is also not
surprising as everywhere these days there is somebody trying to sell a
product whether it is a phone charger or some new clothing. Take for
instance a decent sized company such as Mango. Mango was founded
in 1984 in very close proximity to Catalonia, Spain. (Wikipedia.com)
Not only does Mango sell clothing in Spain, but also they have
expanded to become worldwide. In the end, while most large retail
companies are succeeding, it should be understood that the majority of

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smaller businesses are failing as a result of the collapse in Spains
economy.
In 2008, Spain had experienced an economic crisis that was fueled
by its massive housing bubble among other issues. To put this into
perspective the graph below highlights a few of the issues and effects
that have been brought up as a result of this crisis.

From this graph it can easily been seen that not only industrial
production and consumption such as cement has declined rapidly, but
also unemployment has risen to over 22% since 2009. Furthermore,
this graph also project how despite Spanish exports falling below -16%
they had been able to work towards growing the export rate, and
successfully did so. As a matter of fact, the export rate had increased
in 2009 to 16%, which is 4% higher than what it was at its peaks in
2000. Despite the export rate reaching this percentage, it should be
made clear that this unfortunately not lasted to long, and in 2011, this

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rate has begun to fall again. To conclude, while Spain has definitely had
its ups and downs within its economy, it should be known that their
economy is developing in comparison to the global economy.

Works Cited:
"What Is Globalization? |
Globalization101." Globalization101. N.p., n.d. Web.
07 May 2015.
"Define Global Economy." Define Global Economy.
Economy Watch, n.d. Web. 07 May 2015.

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Price, Robert W. "What Is an Entrepreneur?" Global

Entrepreneurship Institute. N.p., 27 Oct. 2014. Web.
7 May 2015.
Moffett, Matt. "New Entrepreneurs Find Pain in
Spain." WSJ. N.p., 27 Nov. 2014. Web. 07 May 2015.
"Mango (clothing)." Wikipedia. N.p., n.d. Web. 7 May
2015.