Autonomous financing: an element of tension in the Valencian economy

Abstract

Regional financing in Spain represents a source of territorial tensions in the Valencian economy. Current commentaries and controversies raised by its configuration and results make pertinent a critical analysis of the current state of play. A first section is dedicated to review the historical process of regional finance and its main weaknesses. A second section studies the 2002 and 2009 model data, with special attention to the Valencian case. Thus, we confirm that Valencian economy receives insufficient resources from the autonomous financing system, jeopardizing its spending capacity in essential public services. Likewise, lack of income makes its spending in other regional policies lower than the average levels and, in any case, forces it to perform credit operations while feeding into the regional divergence process.