AN EXCELLENT, DETAILED analysis of the pros and cons of Spain's booming economy, at The Economist. It's true that the country has become a giant in a couple of decades only, but there are signs that the giant may have feet of clay: lack of diversification in its productive structure, over-reliance in the touristic and construction sectors that can quicky go down if global interest rates go up or if the world's economy goes sour. Outside of that -and consumption, which may stop in its track if things change- there's little more. And entrepreneurial spirit is now difficult to find even in the Spanish regions were it used to be most characteristic, as Catalonia (whose capital is Barcelona).

Here's The Economist:

The two fashion companies are among a gaggle of Spanish conquistadors rapidly building global business empires. Many are much bigger than Mango and Zara, although sometimes less well-known abroad. Firms like Santander, a huge banking group, and Ferrovial, a construction giant, have spent billions buying foreign businesses. Often this has been financed with large borrowings. As a result, the Spanish stockmarket reflects a rising level of corporate debt (see chart).

And therein lies the worry. Spanish companies' overseas adventure has been boosted by the transformation of their home economy from an also-ran into one of the star performers of the European Union. That 14-year domestic expansion has, in turn, been buoyed by low interest rates and a construction and property boom that shows signs of suddenly receding. Does this mean Spain's new global champions will find themselves beached?

[...] But the stockmarket wobble raises concerns. Spain has achieved one of the most rapid increases in wealth in the euro zone, but it remains stuck with an unbalanced economy and low domestic productivity. Its new global champions have built successful businesses, but only in certain industries. As a whole, Spanish business remains limited in its scope. If trouble is brewing at home, these companies need to be global enough to draw on markets outside Spain.

[...] But the stockmarket wobble raises concerns. Spain has achieved one of the most rapid increases in wealth in the euro zone, but it remains stuck with an unbalanced economy and low domestic productivity. Its new global champions have built successful businesses, but only in certain industries. As a whole, Spanish business remains limited in its scope. If trouble is brewing at home, these companies need to be global enough to draw on markets outside Spain.

The new conquistadors mostly consist of a group of banks, builders and service companies. There is little manufacturing in Spain. Its steel mills and shipyards are relics of its pre-democratic days as a closed economy. Most of Spain's manufacturing is carried out by branch factories, such as those expanded by France's Renault and Germany's Volkswagen to take advantage of cheap labour when Spain entered the EU in 1986. But now cheaper labour is available in eastern Europe. Nor does Spain have much of a tradition in high-tech industries, although it is becoming a bigger contender in aerospace as a shareholder in the EADS group, which makes Airbus aircraft.

Take away construction and tourism (60m tourists arrive every year in a country of 43m people) and there is not much left. Moreover, tourism revenues have flattened as more foreigners now own holiday or retirement houses and so spend less on hotels. And there is only so much land (and, as important, water) for more development on the Mediterranean coast.

And I completely agree with that:

Those Spanish companies that have boldly escaped the confines of their home market are betting they can survive a domestic downturn despite their huge debts. But entrepreneurs are still needed to broaden the base of Spanish business or there will not be much else beyond tourism. As Ana Patricia Botín, head of Banesto, a retail bank in the Santander group, says: “It is all very well being the Florida of Europe, but it would be nice to be the California as well.”

Anyway, read the whole piece, it's a very good overview of how things stand.