The industrial development of Navarre has been delayed but strong. It is now in the top rank among regions in terms of economic welfare, with high levels of per capita income. It has a low unemployment rate, and at the end of 1997 was the Spanish region that was least affected by unemployment, although it also has a pool of long-term unemployed. Its physical capital allocation has grown by a factor of 3.5, with higher growth in the public than in the private sector. The comparison of the levels of employment productivity in the private sector in Navarre with the rest of the Spanish regions indicates the high level of productivity in the region. One of the still unresolved weaknesses of this economy is the limited investment in R&D. The work is part of the framework of collaboration between the BBV Foundation and the Valencian Institute for Economic Research (IVIE) to study the regional Spanish economy.