Management accounting has gained increased importance in Spain since the early 1980s. Part of the increased importance is due to the increase in competitive pressures. The profitability of many Spanish firms has eroded, and firms see the need for more formal mechanisms of control, such as budgeting and standard costing A second reason is the shift from a sheltered economy and political dictatorship to a democratic society. The previous dictatorship favored external methods of control, reinforcing a coercive political and social structure. The system was isolated from the rest of Europe, with a highly regulated economy. The shift to a more democratic society and a loosening of the regulatory environment has allowed Spanish firms more freedom of action in business and has led to the need for management accounting control.