The whole idea of the Spanish Inquisition having an absolutely devastating impact that lasts forever sounds attractive to many ears and eyes, and when you give it a first round of thought it sounds reasonable: the Inquisition persecuted religious dissidence (protestants, false converts, etc), so it would severely limit a free exchange of ideas, which would result in a less literate population. This would lead to a lack of scientific and economic progress, which in turn would lead to less economically developped places in the very long term. Is it true, though? The correlation seems to be there, but if there is something we have to always bear in mind is that correlation does not necessarily equal causation.

The Inquisition grew less agressive and active over the course of its existence, with a complete decline in the 18th century, but with high activity in the 16th and 17th centuries. In the 16th century the Inquisition was absolutely hiper-active, and for good reasons, it's the time of the Reformation, with the protestant ideas having a chance of gaining a foothold in Spain thourgh extremely well-versed preachers who had really high-ranking followers. This early lutheranism was especially popular among the high-class, not among the populace, as it came to Spain through books.

Of the truly active protestant circles in the mid-16th century Spain, we have to note the two that resulted in the biggest show of force by the Inquisition: Valladolid and Seville. Alcalá de Henares also had some protestant circles too.

In Alcalá de Henares the protestant circle was linked to Miguel de Eguía, a succesful and rich printer, with ties to the University of Alcalá. Miguel de Eguía was from Navarre, a place that borders France. Other printers involved in the protestant circles of the center of Spain were the Brocar family, of French origin, most notably Arnao Guillén de Brocar and Juan de Brocar. These two played also a role in establishing protestant circles in Toledo.

In Seville, the protestant group was lead by Constantino Ponce de la Fuente, a great intellectual who had been close to Emperor Charles V and who had worked as a censor and book reviewer for the Inquisition in Triana (outskirt of Seville). Most of the people related to Ponce de la Fuente's group were rich merchants or noblemen.

In Valladolid, the leader of the protestant group was Agustín de Cazalla, who had been a preacher for Emeperor Charles V. The people who frequented Cazalla were very educated and well off. The least conspicuous of them was a silversmith, and the most prominent of them was the Vivero family, including a daughter of the marquess of Alcañices.

The protestant coenaculum in Alcalá eventually faded away, but the ones in Seville and Valladolid were ended in a hard way, with most of the people involved being sentenced to death at the stake. The autos de fe of Seville and Valladolid of 1559 had a very strong deterrent effect, more or less ending protestantism in Spain.

Prior to these cases there had been some individual efforts to introduce the protestant doctrines in Spain, like the one made by Francisco de Enzinas and his brother Diego in 1542. Francisco had translated one of Calvin's texts, had it printed, and tasked his brother Diego with introducing 300 or 400 copies in Burgos. This effort was known by the Inquisition, as we know from internal memos, and the books ended up being discretely confiscated and destroyed, as had been asked by Francisco and Diego's uncle who was the treasurer of Burgos' cathedral. Diego would later try to preach the Reformation's doctrines in Rome, which resulted in him being burnt in the Eternal City.

The fact that Valladolid and Seville, which had the most brutal crackdowns by the Inquisition are far less affected by the apparent results shown in the paper seems to be quite detrimental to the conclusion of the long-term effects.

There are also other elements one has to consider against this paper that recently made the rounds in Spain. The Inquisition finally disappears in the 19th century, and soon afterwards the Industrial Revolution starts impacting Spain.

The economic dynamics prior to the Industrial Revolution don't support the paper's conclusions either. The regional economic structure of Spain has changed dramatically in the last two centuries. Andalucía was an extremely rich region prior to the Industrial Revolution, and was among the first regions to get some industries going, like the foundries and syderurgies in the province of Málaga. From an economic perspective in the 19th century, however, it was far more convenient to promote the installation of industries in the Basque Country and Catalonia, as they had important ports, and bordered the neighbouring country of Frace, which would result in a superior capability of exportation of goods. The Basque Country also has some phenomenal iron mines, which in the age of steel comes in extremely handy.

Some other reforms from the 19th century had heavy economic effects, like the confiscations of Madoz and Mendizábal. They were extremely well-intentioned, as those confiscations (desamortizaciones) were passed with the idea of taking lands from the "dead hands" of the clergy, nobility, and public corporations, and auctioning them so that the people who worked the lands could become owners instead of labourers. Problem is, the nobility had the means to outbid any labourers in the public auctions, so the former jurisdictional lords became legal owners in full accordance with the law. The loss of the Spanish Empire has to be factored in somewhere as well, and should be the consequences of the many civil wars and coups d'état Spain had in the 19th century.

Extrapolating an apparent correlation of the two isolated points of Inquisition and current economic situation, without adequately considering the myriad of potential factors affecting the economic dynamics of Spain in the past two centuries, certainly seems a bit lacking in the rigor department.