Abstract:

This report analyses the trajectory of the Community of Madrid, considering the influence of its status as the capital of Spain on its economic dynamics. In this 21st century, the weight of the public sector in the Madrid economy has been reduced, but it has not ceased to play a very relevant role that reinforces its trajectory in several ways. Some act through the concentration in the capital of the State Public Sector units and others derive from the exercise of the powers of the Community of Madrid in the current State of the autonomous regions. The research carried out shows how, in this 21st century, the levers by means of which the State Public Sector and the government of the Region of Madrid contribute with their policies to the continuity of the process of concentration in the capital of growing percentages of the Spanish population, income and wealth, accentuating the powerful mechanisms of agglomeration generated by private activity.

In the last decade this trend has been reinforced because Madrid is now the capital of a decentralised State in which the regional governments assume relevant fiscal competences, and the Community of Madrid has opted to compete fiscally with the rest of the communities for the location of tax bases and the domiciliation of their taxpayers, despite being the capital.

Reference:

IvieLAB (2020): Madrid: capitalidad, economía del conocimiento y competencia fiscal, IVIE, Valencia.