Spain | Defense spending boosts the economy with unequal effects

Summary

The increase in military spending in Spain to 2% of GDP will boost the economy and technological sectors through direct and indirect effects. However, the impact will be unequal due to the high dependence on foreign inputs and the strong territorial concentration of the industry.

Key points

• Key points:
• The volume of awarded contracts reached nearly 21,000 million euros in December, with the aeronautical and armament industry concentrating 50% of the total amount.
• The inclusion of indirectly benefited activities raises the weight of defense from 1% to 11% in manufacturing production and from 0.4% to 16% in value added.
• Spain presents a lower degree of military industrial specialization and a higher import content compared to European economies such as Germany, France or Italy.
• Basque Country, Navarre, Madrid and Catalonia emerge as the most favored territorial hubs by concentrating the highest number of technological and industrial companies linked to the sector.

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