This article describes the economy of Madrid, Spain.
During the end of the Middle Ages, Madrid experienced astronomic growth as a consequence of its establishment as the new capital of the Spanish Empire. As Spain (like many other European countries) continued to centralize royal authority, this meant that Madrid took on greater importance as a center of administration for the Spanish Kingdom. It evolved to become an important nucleus of artisanal activity that eventually experienced industrial revolution during of the 19th century. The city made even greater strides at expansion during the 20th century, especially after the Spanish Civil War, reaching levels of industrialization found in other European capital cities. The economy of the city was then centered on diverse manufacturing industries such as those related to motor vehicles, aircraft, chemicals, electronic devices, pharmaceuticals, processed food, printed materials, and leather goods.[1]
Madrid is a major centre for international business and commerce. It is one of Europe's largest financial centres and the largest in Spain.
During the period from 1992 to 2006, Madrid experienced very significant growth in its service sector. The most notable of these services are those geared towards companies, followed by transport and communications, property and financial services. These four groups generate 51% of gross value added for Madrid’s economy and 62% of gross value added for the services sector. The importance of the Barajas Airport to the city's economy is substantial. The construction of housing and public works, such as the ringroads and train network, constituted a major pillar of the economy up to 2006. As Spain has become decentralized politically, Madrid has taken on a smaller administrative profile as compared to the rest of the Spanish state. Even so, the Community of Madrid (centered upon the city of Madrid) experienced the highest growth of all the Spanish regions between 2004 to 2006.
The city of Madrid has GDP of 130.067 billion €; thus this area, of 3.273 million people has a GDP per capita of 40,024 € ($57,641) - 69% above the national GDP per capita average and 76% above that of the 27 EU member states. In comparison to the remainder of the Madrid region, the city is also quite a lot richer: regardless of it housing just 52% of the Community of Madrid's population, it generates 67% of its GDP. The rapid growth - throughout the 1990s particularly - which converted Madrid into one of the most prosperous European cities is maintained today, as, relative to 2000, GDP has grown 37.9% compared to the European average of 19.2%. Furthermore, the city's economy is only expected to contract 2.3% as a result of the global financial crisis, whereas the European Commission predicts an average contraction of 4% in GDP for the Eurozone.[2]
Madrid's metropolitan area, of 5.370 million people has too grown to become a significant European financial HUB. In 2008, Madrid's metro area was the 26th richest in the world by purchasing power and third richest in the European Union in terms of absolute GDP, with an economic output of $230 billion (although alternative estimates state an economy $261 billion in size) . This places Madrid behind the considerably larger metropolitan areas of Paris ($769 billion) and London ($564 billion) but ahead of Barcelona and Rome.[3]
As seen in the city of Madrid area, the Community of Madrid is also one of the richest in Europe as well as the richest in Spain. At 133.9% of the European average of 25,800€ (34,572€/$48,313) Madrid is ahead of the all other 8 Spanish regions above 100%.[4] Similarly, Madrid is just 97.8% of New York's purchasing power.
Madrid is a world´s financial leader, rising to the top five Centers of Commerce in Europe. Madrid continues its upward trajectory as a key European city, rising from its 2007 spot at number 16 to number 11 globally and from number 6 to the number 5 spot in Europe. Madrid's stable GDP, exchange rate and strong bond market, coupled with a high standard of living, place this city in the company of Europe's most prominent cities: London, Paris, Frankfurt and Amsterdam.[5]
Madrid is one of the cities in the Iberian Peninsula that attracts most foreign investment and job seekers. The average salary in Madrid during 2007 was 2540€, clearly above the Spanish average of 2085€.[6] In terms of net earnings, Madrid also places first in Spain; Madrid is 28th in the world, at 78.6%.[7]
One downside of Madrid's rapid economic development since 1992 has been the rising cost of living. The city has grown to become the 26th most expensive city in the world in 2009.[8]