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Contemporary Madrid came into its own after the death of the Fascist dictator Franco. Years of the Franco regime left Madrid and much the country in economic shambles due to isolation. With his death, Madrid and Spain as a whole began to re-assert itself on the international stage. Within Spain, reaction against the dictatorial bureaucracy centered in Madrid and a history of centralism that pre-dated Franco by centuries has resulted in the successful modern movement towards increased autonomy for the regions of Spain, considered as European regions, under the umbrella of Spain.

Spain's natural surroundings have helped shape the culture of the nation. The success of the Basques in maintaining a separate culture over a period of millennia has doubtless been aided by the mountainous geography of their region. Several separate parts of Spain have strong maritime traditions, including inland ports on rivers: Seville, for example, was a major port until the Guadalquivir silted up. Since the availalability of mass air transport, Spain's Mediterranean beaches, especially those along the Costa del Sol, have drawn millions of tourists, providing considerable revenue (and enormous contact with the outside world) to a long-depressed and isolated area of the country.

Through a policy of alliances with other European nobility and the conquest of most of South America and the West Indies, Spain began to establish itself as an empire. The Treaty of Tordesillas, negotiated by Pope Alexander VI between Portugal and Spain, effectively divided up the non-European world between these two budding empires. Massive amounts of gold and silver were imported from the New World into Spain's coffers. However, in the long run this hurt the Spanish economy much more than it helped it. The bullion caused high inflation rates, which undermined the value of Spain's currency. Additionally, Spain became dependent on her colonies for income, and when Queen Elizabeth I of England began to capture Spanish vessels on the way to and from the New World, Spain suffered massive economic losses. These effects, combined with the expulsion of Spain's most economically vital classes in the late 15th century (the Jews and the Moors), caused Spain's economy to collapse several times in the 16th century, bringing the Golden Age of Spain to a close.

In the 1960s, more than a decade later than other western European countries, Spain began to enjoy economic growth and gradually transformed into a modern industrial economy with a thriving tourism sector. Growth continued well into the 1970s, with Franco's government going to great lengths to shield the Spanish people from the effects of the oil crisis.

Philip V, the first Bourbon king, of French origin, signed the Decreto de Nueva Planta in 1715, a new law that revoked most of the historical rights and privileges of the different kingdoms that conformed the Spanish Crown, unifying them under the laws of Castile, where the Cortes had been more receptive to the royal wish. Spain became culturally and politically a follower of France. The rule of the Spanish Bourbons continued under Ferdinand VI and Charles III. His son Carlos IV was truly incompetent (some say mentally handicapped), and under his reign Spain fell to the armies of Napoleon.

After the fall of the Roman Empire, Germanic tribes invaded the former empire, several turned sedentary and created successor-kingdoms to the Romans in various parts of Europe. Iberia was taken over by the Visigoths after 410.In the Iberian peninsula, as elsewhere, the Empire fell not with a bang but with a whimper. Rather than there being any convenient date for the "fall of the Roman Empire" there was a progressive "de-Romanization" of the Western Roman Empire in Hispania and a weakening of central authority, throughout the 3rd, 4th and 5th centuries. At the same time, there was a process of "Romanization" of the Germanic and Hunnic tribes settled on both sides of the limes (the fortified frontier of the Empire along the Rhine and Danube rivers). The Visigoths, for example, were converted to Arian Christianity around 360, even before they were pushed into imperial territory by the expansion of the Huns. In the winter of 406, taking advantage of the frozen Rhine, the (Germanic) Vandals and Sueves, and the (Asiatic) Alans invaded the empire in force. Three years later they crossed the Pyrenees into Iberia and divided the Western parts, roughly corresponding to modern Portugal and western Spain as far as Madrid, between them. The Visigoths meanwhile, having sacked Rome two years earlier, arrived in the region in 412 founding the Visigothic kingdom of Toulouse (in the south of modern France) and gradually expanded their influence into the Iberian peninsula at the expense of the Vandals and Alans, who moved on into North Africa without leaving much permanent mark on Hispanic culture. The Visigothic kingdom shifted its capital to Toledo and reached a high point during the reign of Leovigild, treated in some detail at its own entry.

The most important minority group in the country are the Gitanos. Other indigenous minorities are Mercheros (or Quinquis) and Vaqueiros de alzada.- The latter, meaning "Mountain cow-breeders" dwell in mountain ranges in the Principality of Asturias and have kept historically apart from the valley dwellers. Foreign minorities include South Americans from countries like Argentina, Ecuador or Colombia; black Africans; Arabs and Berbers mainly from Morocco and other countries of North Africa; and Asians from China, Japan, Korea, and Vietnam.

The first governments of the Republic, were center-left, headed by Niceto Alcalá-Zamora, and Manuel Azaña. In 1933, the right-wing CEDA won power; an armed rising of workers of October 1934, which reached its greatest intensity in Asturias and Catalonia, was forcefully put down by the CEDA government.