Spain has become the leading economy in Europe and was named by The Economist as the best economy in the world in 2024.
What led to this achievement? Experts pointed to a difference compared to its European neighbors: a remarkably different government approach to immigration.
Unlike its counterparts in Italy, Germany, or France, Pedro Sánchez, the Prime Minister of Spain, decided to unite his country around a markedly different approach than what has been seen in more developed nations:
“Spain needs to choose between being an open and prosperous country or a closed and poor country,” he told parliament last October.
“Migration is not just a matter of humanity,” he said, but – in a country where the birth rate is among the lowest in the EU – it is the only realistic means of making the economy grow and sustaining the welfare state, he continued.
Months later, his position was confirmed by economic data: Spain’s economy expanded by 3.2% last year. This far surpassed Germany’s contraction of 0.2%, France’s growth of 1.1%, and Italy’s 0.5% growth. The number also outpaced Britain, whose total GDP grew by 0.9% last year and the Netherlands’ growth of 0.8%.
Crucial to this growth was the movement of people, said Javier Díaz-Giménez, an economics professor at IESE Business School, in an interview with The Guardian. And this was achieved thanks to the influx of tourists and immigrants, he said.
A record 94 million tourists visited Spain last year — a 10% increase from the previous year — creating jobs in hotels, restaurants, and other tourism services.
Coupled with this, high immigration rates allowed Spain to take advantage and push unemployment levels down to the lowest since 2008, as immigrants filled gaps in a labor market where the working-age population is aging.
Of course, there are other factors behind the country’s economic growth. Spain’s abundance of wind and solar renewable energy helped keep energy relatively cheap, while EU recovery funds for Covid boosted the economy and allowed the government to finance initiatives such as pension increases and hiring in the public sector.
But the positive consequences of immigration are undeniable: a working-age population that has nearly doubled compared to other Western European countries. Of the 468,000 jobs created in Spain last year, about 409,000 were filled by immigrants or people with dual nationality, many of them from Latin America, but also from across Europe and Africa.
“Overall, the analysis from the Bank of Spain suggests that immigration contributed over 20% to the nearly 3% growth in per capita GDP during 2022-2024,” noted a report from JPMorgan.
On the contrary
The Spanish experience occurs as countries across Europe grapple with a dilemma: far-right and right-wing politicians compete for votes by promising to expel immigrants, while on the other hand, an aging population is shrinking the pool of workers who can pay for pensions and support the welfare state.
Germany is on the brink of an election that could be decisive for the future of its economy. While some politicians call for Syrians to return to their homeland, a study from the German Economic Institute highlighted that about 80,000 of them were working in sectors facing deep labor shortages, from the automotive industry to dentistry and childcare.
More than 5,000 Syrian doctors are also fully employed in the country, meaning that the return of these individuals could result in a “critical shortage” in medical services, the study noted.
The Need for Immigration
Studies conducted in Europe and the U.S. have long demonstrated the economic benefits of migration, Jean-Christophe Dumont, head of the OECD’s international migration division, told The Guardian. “What is clear is that immigration makes a positive contribution to the economy, as long as it is well managed.”
“Immigration has long been shown to be positive for productivity and per capita income in the long term,” Dumont said. Furthermore, “migrants contribute more in income tax and social contributions than they receive in individual benefits across all OECD countries.”
In Spain — which has become one of the main recipients of immigrants in the EU in recent years — the government has promised to invest in improving integration, from helping immigrants navigate the labor market to ensure they are not confined to low-skilled and low-paying jobs, to reducing bureaucracy for residency applications.
It is clear that Spain’s relative openness to immigration is certainly an advantage and an opportunity, but it needs to be well managed; otherwise, it could lead to significant imbalances and tensions that could turn into social unrest or fuel populism, as has been happening in other countries.
Source: The Guardian