Cato Institute Publishes First Comprehensive English-Language Account of Madrid’s Market-Oriented Transformation

As governments across Europe and North America debate economic growth, taxation, regulation, and competitiveness, The Madrid Model offers a detailed examination of one jurisdiction that pursued a markedly different policy path over the past quarter-century.

Over the past 25 years, the Madrid region quietly carried out an ambitious set of market reforms. While much of Europe moved toward expanding regulation and growing state control, Madrid chose a different path, lowering taxes, cutting red tape, opening markets, and partnering with the private sector to improve public services.

The results are concrete and measurable: faster growth than the national average, stronger job creation, rising incomes, and increased foreign investment. Madrid’s economy, roughly the size of Portugal’s, now stands as one of Europe’s most dynamic regional success stories.

The Madrid Model is the first comprehensive English-language account of how this transformation happened and what it means. Drawing on nearly 1,000 official documents and more than two decades of fiscal, regulatory, and economic data, Sánchez de la Cruz examines more than 140 tax cuts and nearly 500 deregulation measures to explain how Madrid’s reforms reshaped the region’s economy.

Madrid’s story, Sánchez de la Cruz argues, is not only about economic policy. Nearly half of the region’s residents were born elsewhere. Rather than resorting to identity-based politics, Madrid fostered integration through opportunity and equal treatment under the law. The book connects economic liberalization with social cohesion, making the case that freedom and inclusion are complementary, not competing, values.

In his preface to the book, Tyler Cowen of the Mercatus Center at George Mason University states: “Madrid has been one of Europe’s biggest success stories. Here is where you can learn about its foundations and principles.”

Diego Sánchez de la Cruz is a Spanish policy analyst specializing in economic freedom, tax competition, and regulatory reform. He is Head of Research at the Instituto Juan de Mariana, CEO of Foro Regulación Inteligente, and a frequent commentator in Spanish and international media.